Further re Licence Auction

Telefonica SA
21 August 2000


'Telefonica S.A.', in accordance with that stated in article 82 of the Spanish
Stock Market Law and that set forth in the Circular Letter 4/1998 of the Spanish
Securities Commission of December 28th, 1998, hereby announces the following:

 
                         SIGNIFICANT EVENT

In order to clarify the main aspects regarding the UMTS licence in Germany
awarded yesterday, August 17, 2000, to the 3G consortium in which Telefonica
participates, the Company would like to state the following: 

Regarding the main underlying operating parameters included in the business
model of the UMTS project in Germany, the items of most significance are the
following:

1. The amount of the two blocks of frequencies awarded stands at euros 8,409
million.  The return on investment estimated for the project stands at between
22% and 23%.

2. The structure of the consortium breaks down into 57.4% held by Telefonica and
42.6% by Sonera, and the initial intention is to finance the project with an
initial structure of debt/capital 50%/50%.

3. The levels of investment in fixed assets foreseen in the model total euros
6,700 million.  Offers from suppliers have already been made to finance this
amount in its entirety, without using Telefonica guarantees.  It is foreseen
that in the first few months this process will be consolidated.

4. Operations are forecast to be launched by 2002, and the EBITDA break-even
point will be reached by 2006.

5. By the end of the aforementioned period a market share is expected to have
been reached of 13%, represented by 10 million customers.  At the end of this
same period, a 35% EBITDA margin is expected to have been reached, with foreseen
average revenue per customer (ARPU) standing at more than euros 60.



This document contains statements regarding the Company or Management's
intentions, expectations or forecasts at the date appearing on this document,
referring to numerous aspects, among which the customer base and its development
are mentioned, along with the market share, investment, the Company's results
and other items relevant to the Company's Activity and its situation.

The above mentioned intentions, expectations or forecasts are affected by risks
and uncertainties that could mean that the final outcome of this project does
not correspond with that originally foreseen and the Company is therefore not
obliged to adapt these publically should changes in the original strategy or
intentions or unforeseen events should arise which could affect those originally
stated.

Therefore, that stated in this declaration must be borne in mind by all those
persons or entities that may have to take decisions or draw up or publish
opinions regarding the securities issued by the Company.  It is requested that
all these consult the documentation or public information announced or
registered by the Company with those entities responsible for the supervision of
the securities markets, and particularly the prospectus and periodic information
provided to the Spanish Securities Market commission (CMNV) and the annual 20F
report and the 6K information that is filed with the Securities and Exchange
Commission USA.