Via Digital capital increase

Telefonica SA
10 April 2003

                            ANTONIO J. ALONSO UREBA

                        Director, General Secretary and

                      Secretary of the Board of Directors

                               TELEFONICA, S.A


As provided in article 82 of Spanish Stock Market Law (Ley del Mercado de
Valores), and further to the reports submitted May 9th and 14th, 2002 and
January 29th, 2003, Telefonica S.A. hereby reports the following


                            SIGNIFICANT EVENT


The shareholders of DTS, Distribuidora de Television Digital S.A. (VIA DIGITAL),
including Telefonica de Contenidos S.A.U. (a 100%-owned subsidiary of Telefonica
S.A.), today approved the resolution to conduct a capital increase for the
company for a maximum amount of 1.052 billion euro.


The objective of this capital increase is to provide VIA DIGITAL with the
necessary funds to implement its plan to reduce debts to shareholders and
financial institutions.


The capital increase approved today shall involve cash payments at face value,
with a preferential subscription period of one month plus a subsequent
subscription period open to other shareholders or third parties of three
business days, express provision for the possibility of incomplete subscription.


Reiterating the information stated in previous reports (Significant Event
reported by this Company on January 29th, 2003), as a result of this capital
increase VIA DIGITAL will have debt of no more than 425 million euro on the date
of its share exchange with Sogecable S.A.

                                                       Madrid, April 10th, 2003

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