Bonds Exchange Offer

Telefonica SA
23 May 2002




                           JOAQUIN DE FUENTES BARDAJI

                            General Vice- Secretary

                 and Vice - Secretary of the Board of Directors

                              TELEFONICA, S.A.





'TELEFONICA, S.A.', in accordance with that stated in article 82 of the
Spanish Stock Market Law hereby informs of the following:


                                  SIGNIFICANT EVENT



The Board of Directors of its subsidiary ' Telefonica de Argentina, S.A.', at
its meeting held on May 20th, 2002 and in order to adapt the structure of its
share capital to the impact of the macroeconomic situation in Argentina,
approved the launching of an Exchange Offer by which the current holders of
Third Class Negotiable Bonds, that form part of this Company's Global Programme,
will be offered the exchange of these for Fourth Class Negotiable Bonds, that
will be a new issue within the aforementioned Programme. These Fourth Class
Negotiable Bonds will be issued for a maximum total figure of $US 100,000,000.











                                                         Madrid, May 22nd , 2002




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