Exchange Ratio

Telefonica SA
19 May 2000



                           COMMUNICATION

TELEFONICA, S.A, and TERRA NETWORKS, S.A., (the 'Company'), in compliance with
Article 82 of  Law  24/1998, of 28 July, of the Securities Market, and with
Circular Letter 14/1998, of 28 December 1998, of the National Commission for the
Securities Market, hereby communicates for the purpose of its incorporation to
the public registry of the National Commission for the Securities Market  the
following:

                           RELEVANT FACT

The exchange ratio for the exchange of shares between Terra and Lycos is defined
by the division between 97.55 USD and the average quotation price of the shares
of Terra in the Madrid continuous market (Mercado Continuo) during ten trading
days preceding the ten days preceding the closing date (this one  excluded),
expressed in US dollars.  Closing date shall be understood as the  date to be
defined, once the conditions and the prior and required authorisations for this
transaction are fulfilled, when the exchange of shares takes place.

The exchange ratio would be of 1.72 based on a quotation price of Terra's shares
of US$ 56.72.

Without prejudice to the above, should the average quotation price of Terra's
shares set forth above be equal to or higher than US$ 68.06, the exchange  ratio
would be a fixed ratio of 1.433; should the quotation price be equal to or below
US$ 45.37, the exchange ratio would be a fixed ratio of 2.150.

Those fractions of shares that cannot be converted, in accordance with the
exchange ratio set forth above, will be paid in cash.

As in other occasions, Telefonica, S.A. and Terra Networks, S.A. may be
contacted by the National Commission for the Securities Market to request any
additional information that may be required in relation to the agreement between
Lycos  and Terra.

Madrid, May 18, 2000