Subsid's Strategic Alliance

Telefonica SA
3 February 2000


                 STRATEGIC ALLIANCE BETWEEN TERRA NETWORKS AND THE 
                              BRAZILIAN GRUPO ESTADO


The Telefonica subsidiary Terra has signed a strategic alliance with the
Brazilian communications entity Grupo Estado, made up of the companies ' S.A. O
Estado de Sao Paulo', 'Jornal da Tarde', 'Agencia Estado, Ltda.' and 'Radio
Eldorado, Ltda.' As a result of this alliance, the Terra-Brazil gateway will
have exclusive access to the media content belonging to Grupo Estado.

This agreement links Terra, the leading Internet service provider for the
Spanish and Portuguese-speaking markets, with one of the largest and most
long-standing Brazilian communications groups.

This agreement aims to increase both Terra's and Grupo Estado's audience
throughout Brazil, as well as creating new opportunities for the generation of
revenues derived from advertising, Internet services and electronic sales.