UMTS Licenses in Italy

Telefonica SA
6 November 2000


                     TELEFONICA MOVILES WINS RIGHT TO ONE
                    OF TWO LICENSES WITH GREATEST BANDWIDTH
                          IN ITALIAN UMTS AUCTION


-  Luis Lada, executive president of Telefonica-Moviles, said: 'Our success in  
  Italy consolidates the European strategy of Telefonica Moviles, which we are  
 carrying out in parallel to our strategy in Latin America. With the UMTS       
licenses we now have in Spain, Germany and Italy, three of the principal       
markets in Europe, we will provide services for 180 million Europeans.'

-  Telefonica Moviles will have a greater spectrum of frequency than the three  
  incumbent operators, giving it greater capacity and a competitive advantage.


        Attention: This material cannot be distributed or used in the United    
       States, Canada, Japan or Australia. 


 Madrid, 27 October, 2000 - The Italian ministry for telecommunications
announced today that the auction of third-generation, mobile-telephone licenses
in Italy is now officially closed. This means that the IPSE 2000 consortium, led
by Telefonica Moviles, has the right to be awarded one of the two UMTS licenses
with the largest bandwidth of those auctioned. 

Telefonica Moviles has the right to a license with 2x15 Mhz of paired and 5Mhz
of unpaired capacity in the auction, where two licenses of this bandwidth will
be awarded to new operators and another three of 2x10 Mhz of unpaired spectrum
to incumbent operators. The result will give Telefonica Moviles the advantage of
greater spectrum capacity.

IPSE 2000 paid a total cost of 2.443 billion euros for the 2x10 MHz plus 5 MHz,
plus 827 million euros for the additional specturm of 2x5 MHZ, which corresponds
to the minimum price in the auction for the additional frequency bloc.

The price, which comes out to 1.63 euros/inhabitant/Mhz, will facilitate network
rollout and allow the company to offer competitive prices to its customers.
Telefonica Moviles will be responsible for managing the operator, which plans to
start operations in Italy in the year 2002.

Telefonica InterContinental, the Telefonica Moviles affiliate in charge of
developing the mobile telephone business in Europe, leads the IPSE consortium,
with a 39.25% stake. The other partners in the consortium are: Sonera (19%),
Atlanet, (12%), Banca di Roma, (10%); Xera, (5.0%), Goldenegg (4.8%), Edison,
(3.0%); Falck, (2.0%), Planetmobile (0.5%); and a group of industrial companies
and municipal governments, with 4.45%.

'Our success in Italy consolidates the European strategy of Telefonica Moviles,
which we are carrying out in parallel with our strategy in Latin America. With
the UMTS licenses we now hold in Spain, Germany and Italy, three of the
principal markets in Europe, we will provide services for 180 million
Europeans,' said Luis Lada, executive president of Telefonica Moviles.

Italy has one of the most attractive and dynamic mobile telephony markets on the
European continent. Its penetration rate is high at 61.3% and estimates say it
could reach 100% by the year 2010. By contrast, its Internet penetration is
below the European average. These figures suggest a promising future for
third-generation services, in which Telefonica will be able to exploit its
position as an integrated operator to offer Internet via mobile telephones. The
new UMTS technology will enable development of the mobile Internet market and
will provide access to all types of personalized information services and
entertainment on the Italian market. It will also be possible to develop 
m-commerce as well as to implement financial services over mobile Internet.

Achieving a UMTS license will allow the Telefonica Group to strengthen its
presence in the Italian market. Telefonica already provides fixed telephony and
internet services in Italy, as well as data transmission, through Atlanet, a
company in which it participates together with ACEA and FIAT/Ifil, and which
started operations at the end of the spring, 2000. The Telefonica Group also has
a significant presence in Italy through Terra-Lycos, one of the portals
registering the highest number of visits in Italy, and through Endemol
Entertainment, the largest independent television producer in Italy through its
shareholding in Aran Endemol (100%) and Palomar (51%).

Telefonica Moviles intends to participate in other competitive bidding processes
and auctions in Europe, the Mediterranean basin and in the Americas in order to
broaden its client base, within its strategy of transatlantic consolidation.

Applying figures from June 2000, Telefonica Moviles currently has around 20
million customers under its management (not including recent acquisitions in
Mexico), of which nine million are in Latin America, making it one of the ten
largest mobile telephone companies in the world.



These materials contain certain forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 including,
but not limited to: the ability of Telefonica Moviles and that of the Telefonica
S.A. to capitalize on their positions as telecommunications providers in Italy;
estimated costs per customer; the ability of Telefonica Moviles to timely
build-out the UMTS network; and expected participation of Telefonica Moviles in
auctions for other UMTS licenses. Forward-looking statements may also be
identified by words such as 'believes', 'expects', 'anticipates', 'projects',
'intends', 'should', 'seeks', 'estimates', 'future' or similar expressions.

  The foward-looking statements included in these materials are based on current
expectations, but actual results may differ materially from anticipated future
results due to various factors, many of which are beyond the control of
Telefonica, S.A. and its subsidiaries.  Certain factors which could cause the
actual results of Telefonica, S.A. and its subsidiaries to differ materially
from the expected results include, among others: failure to receive any required
approvals or consents; inability to participate in other UMTS auctions;
inability to timely build-out the UMTS network; and increased competition and
its effect on pricing, spending, third party relationships and revenues:


  This communication shall not constitute an offer to sell or the solicitation
of an offer to buy, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.