Interim dividend

Telefonica SA
26 September 2007



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 2007 net income, of a
fixed gross amount of 0.35 euros for each outstanding share with the right to
receive dividends of the Company.


              The payment of this dividend shall be executed on November 14th,
2007 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.


              Likewise, it is the Board's intention to propose to the next
Annual General Shareholders' Meeting, to be held in 2008, the payment of a final
dividend of 0.40 euros per share, so that the total shareholder remuneration for
fiscal year 2007 will amount to 0.75 euros.


Madrid, September 26th, 2007




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