Strategic Agreement

Telefonica SA
17 January 2000


              TELEFONICA AND 'LA CAIXA' REACH A STRATEGIC
                      COLLABORATION AGREEMENT

Telefonica  and 'La Caixa' have decided to incorporate a joint venture aimed  at
the development and marketing of electronic forms of payment, as part of  the
strategic collaboration  agreement signed by Juan  Villalonga, Chairman of
Telefonica, and Isidro Faine, managing director of 'La Caixa'.

The  new company, in which each of the aforementioned entities will hold a  50%
stake, will act as a financing entity issuing brand cards shared by Telefonica
and 'La Caixa'.   These  cards are targeted at the customers of the
telecommunications group who will be entitled to special offers and value added
services.  This  new  company  will also carry out electronic sales activities
through the development and marketing of new forms of payment adapted to the
Internet and cellular services.

Through  this  agreement Telefonica and 'La Caixa' are branching  into several
areas  of  strategic  cooperation such as forms of  payment, electronic sales,
professional services and others, to be launched in immediate future.

Financial services bank

One of the  most  pressing  objectives is that of  incorporating a financial
services bank via the Internet, specialising in corporate needs, in which  'La
Caixa' will hold an 80% stake and Telefonica Data 20%.

In  the  area of business to business it is foreseen that an exclusive  Internet
gateway will be created for companies offering a wide range of professional and
electronic services. To achieve this, a company will be incorporated in which
'La Caixa' will hold 10% and Telefonica 90%.

Among  the  services to be offered through this gateway, which will be  accessed
from both fixed and mobile sources, the most worthy of mention are those of the
control of the purchase of goods and services, fiscal and financial advisory
services, virtual fairs and markets, travel agencies,  labour markets and
telework services, electronic mail services, the distribution and printing of
publications, virtual communities in each  business sector, and real state
services.

Services aimed at the retail customer

The previously mentioned agreement also includes the incorporation of
subsidiaries  jointly  owned  by 'La Caixa' and Terra for the development of
services  specifically aimed at the retail customer, which will range from  the
labour market and telework services, virtual communities and travel agencies to
real state services and ticket sales among others.

The two companies have also agreed to participate in a  consortium  that  will
invest in European cellular telephony projects (UMTS  -  Universal  Mobile
Telecommunications System).

This agreement comes within the framework of the close collaboration that has
always existed between 'La Caixa' and Telefonica, taking advantage of their
respective synergies. These entities have together announced the creation of the
first ticket sales system via cellular access to Internet.