Agreement Signed

Telefonica SA
1 August 2000

                        A SIGNIFICANT EVENT

Telefonica, S.A., in accordance with that stated in article 82 of the Spanish
Stock Market Law and that set forth in the Circular Letter 14/1998 of the
Spanish Securities Commission of December 28th, 1998, hereby announces the
following:

In compliance with the divestiture obligation imposed by the Brazilian regulator
(ANATEL), Telefonica, holding 56.6%, and the remaining TBS Participacoes S.A.
shareholders have today signed the buying and selling agreement by which Brasil
Telecom will acquire all the TBS Participacoes, S.A. shares, this being the
holding company that controls the Companhia Riograndense de Telecommunicacoes,
CRT.

The aforementioned operation will amount to $US 800 thousand million and payment
will be made on August 4th, 2000, once authorization has been granted by ANATEL.

'Telefonica, S.A.' is, as always, at the entire disposal of the Spanish
Securities Commission should any further information be required.

                                               Madrid, July 31st, 2000