Merger Talks Terminated

Telefonica SA
5 May 2000

'TELEFONICA, S.A.', in accordance with that stated in Article 82 of the Stock
Market Law and that set forth in Circular 14/1998 of the Spanish National
Securities Market Commission, hereby communicates the following:

                              RELEVANT FACT

Telefonica and KPN have decided today by mutual accord to end the conversations
to merge their respective businesses, as they consider that suitable
circumstances do not exist to allow them to successfully complete the operation.