Interim dividend

Telefonica SA
27 September 2006

Telefonica S.A., as provided in article 82 of the Spanish Stock Market Act (Ley
del Mercado de Valores), hereby reports the following


                               SIGNIFICANT EVENT


The Board of Directors of TELEFONICA, S.A., at its meeting held today, has
approved to distribute an interim dividend from 2006 net income, of a fix gross
amount of Euro 0.30 for each outstanding share with the right to receive
dividends of the Company.

The payment of this dividend shall be executed on November 10th, 2006 through
the participating entities in Iberclear (Sociedad de Gestion de los Sistemas de
Registro, Compensacion y Liquidacion de Valores, S.A.), the Spanish entity in
charge of registration, clearing and settlement of securities. Tax withholding
shall be made on gross amounts as required by applicable legislation.


Madrid, September 27th, 2006



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