Closing of TEF-TEM merger

Telefonica SA
28 July 2006

Further to the Significant Event released on July 24th 2006, TELEFONICA, S.A.
and TELEFONICA MOVILES, S.A., as provided in article 82 of the Spanish
Stock Market Act (Ley del Mercado de Valores), hereby report the following


                              SIGNIFICANT EVENT


1.-  Last day of trading for TELEFONICA MOVILES shares and ADSs.

As indicated by the Significant Event registered on July 24th 2006, it is
expected that the Deed of the Merger by Absorption of TELEFONICA MOVILES,
S.A. ('TELEFONICA MOVILES') by TELEFONICA, S.A. ('TELEFONICA') will
be recorded with the Commercial Registry of Madrid tomorrow, July 29th, 2006,
and accordingly today, Friday, July 28 th, 2006, will be the last day of trading
for shares of TELEFONICA MOVILES on the Spanish stock exchanges and of
TELEFONICA MOVILES American depositary shares ('TELEFONICA MOVILES
ADSs') on the New York Stock Exchange.

2.-  Expected exchange date for TELEFONICA MOVILES shares and ADSs.

In accordance with the above, it is expected that on Monday, July 31, 2006,
holders of TELEFONICA MOVILES shares that are beneficiaries of the
exchange will receive the TELEFONICA shares delivered in the exchange, after
the execution by IBERCLEAR of the settlements that are customary in these types
of transactions. Furthermore, it is also expected that beginning on Monday, July
31, 2006, holders of TELEFONICA MOVILES ADSs that are beneficiaries of the
exchange will receive the TELEFONICA American depositary shares 
('TELEFONICA ADSs') delivered in the exchange.

3.-  Acquisition Price of the odd-lots in TELEFONICA MOVILES shares or ADSs.

According to the procedure agreed by TELEFONICA and TELEFONICA MOVILES
in order to facilitate the exchange by TELEFONICA MOVILES shareholders who
hold of a number of TELEFONICA MOVILES shares that is not a multiple of
five (5), we hereby inform that the acquisition price of the odd-lots,
determined based on the arithmetic mean of the average weighted trading prices
of TELEFONICA MOVILES shares on the Automated Quotation System (Sistema de
Interconexion Bursatil) (Continuous Market) for the last three trading sessions
for TELEFONICA MOVILES stock (July 26th, 27h and 28th, 2006), as stated in
the resolution passed by the respective General Shareholders' Meetings, is 10.54
euros per share.

Regarding the exchange of TELEFONICA MOVILES ADSs, fractional entitlements
to TELEFONICA ADSs will be aggregated and the corresponding TELEFONICA
ADSs will be sold on the New York Stock Exchange as promptly as practicable
following July 31, 2006. The net cash proceeds of the sale of such TELEFONICA
ADSs will be delivered to the surrendering holders of TELEFONICA MOVILES
ADSs promptly following such sale, except in the case of TELEFONICA
MOVILES ADSs represented by American depositary receipts ('ADRs'), in which
case Holders of ADRs will need to surrender such ADRs prior to receipt of
TELEFONICA ADSs and delivery of the net cash proceeds of the sale of
TELEFONICA ADSs fractional entitlements (subject to all applicable
escheatment laws in the United States).


Madrid, July 28th 2006


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