Agreement with Brazilian Co.

Telefonica SA
16 January 2003

                               SIGNIFICANT EVENT

We hereby inform that Brasilcel N.V., having Telefonica Moviles, S.A. ,
subsidiary of the Telefonica Group, and PT Moveis respectively 50% of its share
capital, and holding company of the shares of the cellular subsidiaries that
both companies have in Brazil, has entered into an agreement (through its
subsidiary Telesp Celular Participacoes) with the Brazilian company Fixcel, for
the acquisition of the 61.10% of the ordinary shares with voting rights of the
Brazilian cellular company Tele Centro Oeste Celular Participacoes (TCO), which
represents 20.37% of the total Capital of TCO.

The price agreed for the purchase has been established in 1,408 millions Reais
(approximately 404 millions euros). This price is subject to adjustments in
accordance with the due diligence to be initiated at TCO in an early date. This
adjusted price will serve as a basis for the price of the Tender Offer mentioned
in the next paragraph.


The operation is structured in three different stages. First of all Brasilcel
N.V., through its subsidiary Telesp Celular Participacoes, will acquire to
Fixcel the 61.10% of the voting ordinary shares of TCO. Once this acquisition is
executed, pending on the approval of the Brazilian Regulatory authorities, a
Tender offer for the acquisition of ordinary shares from non-controlling
shareholders of TCO will be made, under the current Brazilian legislation of
Capital Markets.

After the Acquisition and the Tender Offer are completed, an exchange offer of
shares will be carried out. This exchange will confer to this Company the
opportunity of controlling the 100% of the share Capital of TCO. The exchange
ratio to be offered will be 1.27 preferred shares issued by TCP for each share
of TCO. This ratio will be adjusted by the results of the aforementioned due
diligence to be concluded at TCO and its controlled companies. With the exchange
of shares, Brasilcel N.V. expects to reduce its direct or indirect participation
in the share capital of Telesp Celular Participacoes in an amount of
approximately 51% of its total capital.


This Acquisition is part of the Agreement signed between Telefonica Moviles,
S.A. and Portugal Telecom SGPS, S.A., by virtue of which both companies
transferred all their assets in the Brazilian cellular market to a Joint
Venture, in order to develop their cellular business in Brazil.

                                                      Madrid, January 16th, 2003


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