Stake acquisition in CNC

Telefonica SA
30 June 2005




Telefonica S.A., as provided in article 82 of the Spanish Securities Market Act
(Ley del Mercado de Valores), hereby reports the following


                             SIGNIFICANT EVENT



Telefonica, S.A. has acquired 2.99% of the equity of the Chinese
telecommunications company, China Netcom Group Corporation (Hong Kong) Limited
(CNC), at a price of  11.45 Hong Kong Dollars per share, which is the quoted
share price at June 27th 2005,  and which, at current exchange rates, represents
a total amount of 240 million euros. Telefonica intends to reach up to 5% stake
in CNC and will have the right to appoint one representative to the Board of
Directors.


Upon acquisition of this stake Telefonica and CNC will start discussing and will
seek a framework for strategic cooperation that could include, among others, the
areas of joint purchasing of technology and infrastructure, the exchange and
sharing of managerial, technical and operational expertise and resources;
co-operation and sharing in areas of business development, network operations,
customer acquisition and management, technology implementation, sales, marketing
and branding; technology transfers in key areas of fixed line, internet, mobile
voice communications, wireless data services and other related services and
joint research and development by the Parties of key technologies,
infrastructure, applications and solutions required for the provision of
advanced telecommunications services.



Madrid, June 30th, 2005.




















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