TdeEspana -strategy & outlook

Telefonica SA
25 April 2005

                            ANTONIO J. ALONSO UREBA
                          Director, General Secretary
                    and Secretary to the Board of Directors
                                TELEFONICA, S.A.


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



                              SIGNIFICANT EVENT
                              
During the Fourth Investor Conference that is being hosted in Barcelona on April
25th and 26th, the company has presented the strategy and business outlook for
its subsidiary Telefonica de Espana. In relation to the information disclosed in
this presentation, special emphasis is placed on the communication of the
expected performance of this subsidiary for the period 2004-2008, based on key
financial indicators.

These financial projections are as follows:


TELEFONICA DE ESPANA GROUP
                                                  2004 Reported under IFRS (Euros     CAGR (*) 2004-2008
                                                            in Million)                       (%)

Revenues                                                     11,202.2                      +0.5%/+2%

Operating Income Before D&A                                   4,560.0                       +3%/+6%

Operating Income                                              2,192.4                      +12%/+16%

CAPEX over Revenues                                            10.8%                         <12%

(*)CAGR stands for Compounded Annual Growth Rate.



In terms of guidance calculation, Operating Income before D&A and Operating
Income exclude other exceptional revenues/expenses not foreseeable in 2005-2008.
These exceptionals amounted to 68.8 MM€ in 2004 and are therefore also excluded,
meaning a calculation base for guidance of 4,491.2 MM€ for Operating Income
before D&A and 2,123.6 MM€ for Operating Income, respectively. Personnel
Restructuring and Real Estate Programs are included as operating revenues/
expenses.

All projections exclude changes in consolidation.


Madrid, April 25th, 2005




This document contains statements that constitute forward looking statements of
the Company or its management, including statements regarding the intent, belief
or current expectations of the customer base, estimates regarding future growth
in the different business lines and the global business, market share, financial
results and other aspects of the activity and situation relating to the Company.

Such forward looking statements are not guarantees of future performance and
involve risks and uncertainties and actual results may differ materially from
those in the forward looking statements as a result of various factors.

Analysts and investors are cautioned not to place undue reliance on those
forward looking statements which speak only as of the date of this
communication. Telefonica undertakes no obligation to release publicly the
results of any revisions to these forward looking statements which may be made
to reflect events and circumstances after the date of this communication
including without limitation changes in Telefonica's business or acquisition
strategy or to reflect the occurrence of unanticipated events. Analysts and
investors are encouraged to consult the Company's prospectus as well as periodic
filings made with the relevant financial regulatory authorities.


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