Sogecable capital increase

Telefonica SA
03 July 2003

                           JOAQUIN DE FUENTES BARDAJI

                             General Vice Secretary

                  and Vice Secretary of the Board of Directors

                              TELEFONICA, S.A.


'Telefonica S.A.', as provided in article 82 of the Spanish Stock Market Law
(Ley de Mercado de Valores), hereby reports the following


                               SIGNIFICANT EVENT

On July 2nd, 2003 Telefonica de Contenidos S.A.U., a subsidiary of Telefonica,
S.A., subscribed the increase in share capital of Sogecable, S.A., whose
Prospectus was approved and entered in the registers of the Spanish National
Securities and Market Commission on July 1st, 2003. The subscription was
effected by the contribution of its entire interest in DTS, Distribuidora de
Television Digital S.A. (VIA DIGITAL). The remaining shareholders of the latter
company have also subscribed the aforementioned capital increase. Telefonica de
Contenidos S.A.U. will in consequence, subject to the relevant registration and
stock exchange procedures, receive in the forthcoming days shares representing
22.227% of the share capital of Sogecable, S.A.

                                                          Madrid, July 3rd, 2003


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