Audit and Control Committee

Telefonica SA
28 April 2003

INFORMATION ON THE CREATION OF TELEFONICA'S AUDIT AND CONTROL COMMITTEE

Pursuant to a letter of the Spanish National Securities Market Commission
requesting that we submit certain information on the creation of Audit
Committees (Financial System Reform Act), and after the annual general meeting
of Telefonica, S.A. shareholders held this past 11 April 2003, we hereby inform
on the following points:

 1. Date of creation and body that approved creation of the committee.

    The Telefonica, S.A. Audit and Control Committee, as a consultative or
    control committee of the Board of Directors, was set up by decision of the
    Company Board of Directors at the Board meeting of 29 January 1997,
    simultaneous with the approval of the first Board of Directors Regulations,
    which provided for the existence of the Committee together with others such
    as, for example, the Nominations and Compensation Committee.

    Later on, at its meeting of 22 July 1998, the Board of Directors approved
    new Board Regulations, which replaced the 1997 Regulations and are still in
    force. These Regulations regulate the composition and functions of the Audit
    and Control Committee in article 24, as described further below.

    Lastly, pursuant to the obligations established by Act 44/2002 of 22
    November 2002 on Financial System Reform Measures (Ley de Medidas de Reforma
    del Sistema Financiero) in its additional provision eighteen, the Board of
    Directors submitted to the approval of the shareholders in their annual
    general meeting of 11 April 2003 the introduction in the company By-Laws of
    a new article 31 bis, conferring By-Laws status on this Committee and
    regulating its composition and minimum powers in accordance with the new
    legal requirements. The general meeting of shareholders approved this
    modification of the articles with a sufficient majority of the voting
    capital.

 2. Functions attributed to the committees and their regulation.

In accordance with the above, at the date of this letter, the regulation of the
composition and functions of the Telefonica Audit and Control Committee, as a
consultative or control committee of the Board of Directors, is set out in the
new article 31 bis introduced in the Company By-Laws which provides as follows:

Article 31 bis - Audit and Control Committee

 1. An Audit and Control Committee shall be set up within the Board of Directors,
    comprising at least three and a maximum of five Directors appointed by the
    Board of Directors. All members of that Committee must be non-executive
    Directors.


 2. The Chairman of the Audit and Control Committee shall be appointed by the
    Committee itself from amongst its members, must be replaced every four
    years, and may be re-elected on expiry of one year from ceasing to hold
    office.

 3. The Audit and Control Committee shall have at least the following powers and
    duties:


 i. through its Chairman, to report to the Annual General Shareholders' Meeting
    on any matters within the competence of the Committee raised by shareholders
    at the Meeting.


ii. to propose to the Board of Directors for submission to the General
    Shareholders' Meeting appointment of the Auditor referred to in article 204
    of the Spanish Law of Corporations (Ley de Sociedades Anonimas) and, where
    applicable, the terms on which the Auditor is engaged, extent of the
    Auditor's instructions and revocation or renewal of the Auditor's
    appointment.


iii. to supervise internal auditing staff;


iv. to be acquainted with the financial reporting and internal monitoring
    systems procedures; and


 v. to liaise with the Auditor to receive information on any matters which could
    jeopardise the Auditor's independence, and any other matters in connection
    with the process of carrying out the auditing of accounts, and to receive
    information and exchange with the Auditor the notifications referred to in
    legislation on the auditing of accounts and in technical auditing rules.

 4. The Committee shall meet at least once a quarter and whenever appropriate,
    subject to notice of the meeting given by the Chairman, at its own
    initiative or in response to a request by two of its members or of the
    Management Committee.

 5. The Audit and Control Committee shall be quorate when at least one half of
    its members, present or represented, are in attendance, and shall pass its
    resolutions by a majority of those present. In the case of an equality of
    votes, the Chairman shall have a casting vote.

 6. The Board of Directors may issue implementing provisions and supplement the
    foregoing rules in its Rules, in accordance with its By-laws and the law.

According to the provisions of the By-laws, this regulation is developed and
complemented by the provisions of the Board of Directors Regulations, which
facilitates maintenance of the detailed regulation contained in the aforesaid
normative text and, at the same time, provides the margin of flexibility needed
for easier adaptation of those detailed rules to the circumstances of each
moment. Thus, the Board of Directors Regulations provide that this Committee's
pre-eminent functions is to serve as support for the Board of Directors in its
oversight functions and, specifically, assigns it the following basic
responsibilities:


 1. To propose the appointment of the accounts auditor, the terms of the
    auditor's engagement, scope of its professional mandate and, as applicable,
    the revocation or renewal of that mandate;

 2. To review the accounts of the Company, monitor compliance with the legal
    requirements and proper application of generally accepted accounting
    principles, and to inform on the proposed modification of accounting
    principles and policies suggested by the management;

 3. To serve as liaison between the Board of Directors and the auditor, evaluate
    the results of each audit and the responses of the management to the
    auditor's recommendations and mediate and arbitrate in the event of
    disagreement between the Board and the auditor in relation to the accounting
    principles and policies applicable to the preparation of the financial
    statements;

 4. To check the appropriateness and integrity of the internal control systems
    followed in preparing the individual and consolidated accounts;

 5. To supervise compliance with the audit contract, procuring that the opinion
    on the annual accounts and principal content of the audit report are written
    in clear and precise terms.

 6. To review the periodic financial reports and prospectuses which the Company
    must provide to the markets and to market regulatory bodies; and

 7. To safeguard compliance with the Internal Code of Conduct in Securities
    Markets and, in general, with the rules of governance of the Company and
    make the necessary proposals for their improvement. In particular, the Audit
    and Control Committee is responsible for receiving information and, where
    applicable, issuing reports on disciplinary measures for Company officers.

 3. Composition

Lastly, the Audit and Control Committee is composed, as at the date of this
letter, by the following directors, all of whom are outside or non-executive
directors:


Chairman:      Mr. Antonio Massanell Lavilla (Shareholding Company 
                                              Representative Board Members)

Directors:     Mr. Maximino Carpio Garcia (Independent)

               Mr. Jose Antonio Fernandez Rivero (Shareholding Company
                                                  Representative Board Members)

               Mr. Gonzalo Hinojosa Fernandez de Angulo (Independent)



                                                       Madrid, April 28th , 2003


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