Agreement

Telefonica SA
7 July 2000

TELEFONICA, BBVA, AND REPSOL YPF CREATE SPAIN'S LARGEST INTERNET COMMERCE
COMPANY

*     The agreement permits the partners to lead the technological change in    
     the purchase processes and electronic B2B markets in Spain.

*     The partners will contribute a purchase capacity of more than a billion
      pesetas a year.

*     Telefonica and BBVA will provide the technological and financial          
     solutions for e-commerce adapted to the needs of each country.

*     The platform foresees the incorporation of local partners in Latin
      America

Telefonica, BBVA, Iberia and Repsol YPF have joined forces to incorporate a
company aimed at the development of an Internet purchase portal (e-procurement)
that will facilitate the acquisition processes of the four companies'
non-productive products and services.

The new company, in which each partner will have the same participation
structure and rights, is the first of its kind in Spain and intends to be open
to the entrance of local partners in its share capital, in the countries where
it operates, these being willing to buy and sell using this platform.

The non-productive products and services purchased by companies through
Internet, today make up between 20 and 25 percent of a company's overall
purchase volume, therefore providing the new company with a global purchase
capacity of over one billion pesetas per annum.

The main advantages offered to purchasers and sellers will be:

*     To drastically cut costs in the company's administrative processes.

*     Price cuts.

*     The optimising of buying and selling processes, eliminating               
     inefficiencies and providing greater transparency.

*     The opening up of new markets and supplier commercialisation channels.

*     Cuts in inventory costs.

*     The elimination of existing intermediary inefficiencies in certain 
      distribution channels.

This agreement comes within the strategic agreement signed between Telefonica
and BBVA, which now gains an even stronger foothold in this market with the
incorporation of Repsol YPF and Iberia.  This horizontal platform  aims to
become Spain's leader and will also be backed by an online system of payment as
well as a financial platform to be developed by BBVA and Telefonica who will
offer services such as the credit certifying of purchasers and sellers, the
presentation of electronic invoices, and the form of payment chosen by the
parties in each transaction.

Despite the fact that this agreement initially covers the development of this
new business in Spain, similar agreements are currently underway with Latin
American countries, in order to create a regional platform that will maximise
scale economies at the same time as offering greater and improved opportunities
for buyers and sellers.  The incorporation of these companies in this type of
market currently means savings of between 10 and 20 percent in the supplying of
the products purchased.

The aforementioned regional platform will be managed by both Telefonica and
BBVA, that intend to adapt the e-commerce platform to the needs of each country,
therefore facilitating the development of payment platforms, the logistics, and
other value added services needed to perform this type of online transactions.