New Organisational Structure

Telefonica SA
26 July 2006

PRESS RELEASE



Creates three Divisions, in charge of all fixed and mobile assets in Spain, rest
of Europe and Latin America, respectively



TELEFONICA IS IMPLEMENTING A REGIONAL AND INTEGRATED MANAGEMENT MODEL TO
PURSUE ITS CUSTOMER-ORIENTED APPROACH AND TAKE FULL ADVANTAGE OF SCALE


  • Chairman Cesar Alierta has acted on the announcements made during the
    Investors' Conference and General Shareholders' Meeting in regard to
    affording the Company a more flexible and dynamic structure to strengthen
    its leadership and increase its competitive advantage in the sector.


Madrid, 26 July 2006.- The Board of Directors of Telefonica S.A., in an ordinary
meeting today, has approved plans to adapt the Company's management structure to
a new regional and integrated management model,  as outlined by the Chairman at
the last Investors' Conference and at the recent General Shareholders' Meeting.

Both events served as a backdrop for the presentation of the new Telefonica, a
stronger and more flexible company which, in the wake of the changes in recent
years and consolidation of its acquisitions in Latin America and Europe, is now
in a privileged position to strengthen its leadership and take advantage of the
opportunities in the sector and its competitive edge over rivals.

From this position of strength, as evidenced by excellent financial and business
results, its significant presence in Europe and leadership in Spain and Latin
America, the Company is now implementing a new management model aimed at
securing further growth in revenues and profitability, taking full advantage of
scale and diversity and managing the convergence process between fixed and
mobile telephony based on an integrated business view that is clearly geared to
customers.

The new organisational model is pivotal upon the strengthening of the
Coordination, Business Development and Synergies Division, headed by Julio
Linares, and a regional integrated business division to underpin customer
relations. The various markets in which Telefonica operates now each have their
own pace of growth and degrees of competition. Accordingly, after the return of
Telefonica Moviles to Telefonica, the Company's Chairman has decided to
implement an integral market approach and designate sole managers for both the
fixed and mobile businesses, to define strategies in line with regional
conditions and to pursue further growth in revenues and profitability in each
geographical area.

The purpose of Coordination, Business Development and Synergies Division which
is, in charge of Strategy, Budget and Control, Commercial, Infrastructure and IT
Systems, Real Estate, Logistics, Purchases and Human Resources, is to ensure the
integrated operation of Telefonica as a single company, very much geared to
customers.

This view has led to the creation of three Regional Business Units: Telefonica
Spain, Telefonica Europe and Telefonica Latin America) in charge of the
integrated business, i.e. both fixed and mobile assets. The Divisions will be
managed as follows:

Antonio Viana-Baptista has been appointed General Manager of Telefonica Espana
and will spearhead both fixed and mobile telephony businesses in Spain. The CEOs
of Telefonica de Espana (Guillermo Ansaldo) and Telefonica Moviles Espana (Belen
Amatriain) will report to him.

Jose Maria Alvarez-Pallete has been appointed General Manager of Telefonica
Latinoamerica and he will spearhead all of Telefonica Internacional's current
businesses and all mobile operations pertaining to Telefonica in Latin America,
which will remain under the operating management of COO Luis Miguel Gilperez.

Peter Erskine, appointed General Manager of Telefonica O2 Europa, will continue
to head the Rest of Europe Division, including O2's operations in the UK,
Germany and Ireland, as well as the assets in the Czech Republic .

The Coordination, Business Development and Synergies Division, as well as all
three Regional Divisions and the Finance and Corporate Development Division,
which is headed by Santiago Fernandez Valbuena, will report to the Company's
Chairman and its Managers will sit alongside the Chairman on Telefonica's
Executive Committee.

For corporate support operations, the Board has approved the creation of the
Technical Secretariat for the Chairman's Office to be headed by Luis Abril. This
new Technical Secretariat will take charge of the areas of Corporate
Communications and Institutional Relations as well as Fundacion Telefonica, and
will report to the Chairman. The Legal and Board Secretariat, headed by Ramiro
Sanchez de Lerin,  will be in charge of Legal Services, also reporting to the
Chairman, and the same applies to the General Internal Auditing Division, under
Calixto Rios.

Lastly, the hitherto Chairman of Telefonica de Espana, Luis Lada, will realign
his contractual position with the Company, from executive level to strategic
consultancy to the Chairman and Executive Committee. Lada, an expert in the
field who knows the market inside out, as well as being a member of Spain's
Royal Academy of Engineering,  will remain on the Supervisory Board of
Telefonica O2 Czech Republic and he will also join the Board of Telefonica
Internacional and the Advisory Board of Telefonica R&D. In this new relationship
with the Company, Lada will continue to contribute his expertise and put forward
his criteria in matters of strategy, convergence, integration and global market
trends.

The chart with the new Telefonica's organisational structure is available on the
Company's website (www.telefonica.es)


Para mas informacion / For further information

Direccion de Comunicacion Corporativa                     Tel:  [phone]

Press Office                                              Fax:  [phone]

Gran Via, 28 - 3(a) Planta                         e-mail:  [e-mail]

28013 - MADRID                             http://www.telefonica.es/saladeprensa



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