TEF acceptsYell's bid for TPI

Telefonica SA
04 July 2006


Press Release



04/07/2006


The Company accepts Yell's bid for 100% of TPI


THIS DEAL WILL GROSS TELEFONICA 1.838 BILLION EUROS


The Company owns 216,269,764 shares of Telefonica Publicidad e Informacion,
59.905% of its share capital


•   The bid, targeted at 100% of TPI shareholders, is €8.50 for every
    share of Telefonica Publicidad e Informacion

•   This valuation represents a premium of over 18% above TPI's weighted
    average share price in the three months prior to the bid announcement


Madrid, 4 July 2006.-  The timeframe provided for in law for presenting
counterbids has elapsed and the Board of Directors of TPI issued its report in
favour of the transaction on Tuesday, 27 June so that Telefonica S.A. can today
accept the Public Tender Offer launched by Yell Group Plc for TPI, tendering its
216,269,764 TPI shares.

As owner of 216,269,764 TPI shares, equivalent to 59.905% of the company's share
capital, the transaction will gross Telefonica 1.838 billion euros and net
capital gains of 1.577 billion euros.

By accepting the Public Tender Offer, Telefonica is complying with its
commitment to accept Yell's bid, made in an agreement signed on 28 April,
pursuant to which the Company, in its capacity as controlling shareholder of
TPI, is transferring all its shares to Yell.

As agreed by Telefonica, which owns shares equivalent to the minimum acceptance
percentage required by Yell, the bid is being offered on 100% of TPI's
outstanding share capital. This is a total of 361,022,184 shares at a par value
of 5 euro cent each (€0.05). The bid is therefore fair, offering the same
conditions to all shareholders wishing to sell their stake in TPI.

According to the terms of the Offer, shareholders electing to accept the bid
will receive €8.50 for every TPI share tendered, valuing the company at over 3
billion euros. This valuation represents a premium of 18.38% over TPI's average
share price, weighted by volume, in the three months before the bid was
announced (28/02/2006).

TPI, which ended 2005 with net earnings of 126.9 million euros, held its
Ordinary Shareholders' Meeting on 8 April, in which a gross dividend per share
of €0.40 was approved. The dividend was paid on 5 May.


Next steps

The acceptance period for the bid launched by Yell began on 23 June and will end
on 24 July. After this period has elapsed, the Spanish securities regulator, the
CNMV, will be informed of the number of shares that have been tendered in the
bid. Subsequently, the CNMV will announce the results of the transaction and
will make the corresponding payments at the end of July or beginning of August.

As we have already disclosed, Telefonica's decision to dispose of TPI is part of
a larger sector trend. In the last four years, European directories businesses
have been spun out from the large telecommunications companies.



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