Terra' s share capital

Telefonica SA
29 May 2003



                            ANTONIO J. ALONSO UREBA

                          Director, General Secretary

                    and Secretary of the Board of Directors

                              TELEFONICA, S.A.




In accordance with article 82 of the Spanish Stock Market law 24/1988 of July
28th, 1988 (Ley del Mercado de Valores) and regulations thereunder, and to
supplement the information set out in the Significant Event and the press
release attached to the same which have been previously notified under RNS no.
6137L and 6568L, we hereby inform the following:




                               SIGNIFICANT EVENT




The share capital of TERRA NETWORKS S.A. is represented at the date hereof by
608,160,259 shares. The Tender Offer is for the acquisition of 377,367,931
shares, arrived at by subtracting from total share capital, the number of shares
in the target company already owned by TELEFONICA S.A., that is, 230,792,328
shares.


Also, there are a total 41,898,735 shares which, though included in the number
of shares the Offer addresses, are earmarked for the employee stock option
scheme of TERRA NETWORKS, S.A., and a total 6,692,344 pending cancellation as
part of a share capital reduction.














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