Result of Meeting

Telefonica SA
21 December 2001


                      PRIOR COMMUNICATION

Joaquin de Fuentes Bardaji, holder of identity card no. 50,407.969 - L, acting 
on behalf of TELEFONICA, S.A. (hereinafter the 'Company' or 'Telefonica') in his
capacity as Vice-Secretary of the Board of Directors, hereby declares before the
Spanish National Securities Commission;

I.   That the Company's General Ordinary Shareholders' Meeting held on June     
     15th, 2001 resolved to carry out two successive capital increases to be    
     charged to freely disposable reserves, in an amount equivalent to 2% of the
     share capital of the Company subscribed and paid-in each, through the      
     issue of new shares that will be freely allocated to the shareholders at a 
     ratio of one new share for every fifty old shares held.

     The General Ordinary Shareholders' Meeting also resolved to delegate to the
     Board of Directors the power (which in turn may be sub- delegated in whole 
     or in part to its Standing Committee and/or in any of the Director with    
     delegated powers) to set the dates on which the aforementioned capital     
     increases may be executed and to specify the conditions for the capital    
     increases that have not been provided for in the Meeting.

II.  That, under said authorization, and considering the convenience to execute 
     the first of these capital increases, the Board of Directors, at its       
     meeting held on December 19th, 2001, resolved to execute the resolution    
     referred to in the previous paragraph and set the amount for the capital   
     increase at Euros 93,438,317, through the issue of 93,438,317 ordinary     
     shares, of the same series and carrying the same rights as those currently 
    outstanding, of a nominal value of one (1) euro each and represented by     
    book entries

III. That, by means of this document, and by virtue of that stated in article 26
     of the Stock Market Law 24/1988 of July 28 (modified by Law 37/1998 of     
     November 16), and articles 5.2.a), 8.1 and 9 of Royal Decree 291/1992 of   
     March 27, regarding Issues and Public Sale Offers of Securities (modified  
     by Royal Decree 2590/1998, December 7), the mandatory Prior Communication  
     regarding the increase in the Company's share capital is presented, and the
     main characteristics of this are stated below:

1.   Issuer

     The issuer of the shares derived from the aforementioned capital increase  
     is TELEFONICA S.A., with its registered head office in Madrid, Gran Via 28 
     and C.I.F. A-28/015865, registered in the Madrid Mercantile Register,      
     volume 12,534 of the book of Companies, sheet 21, page M-6164, registering 
     1359.

2.   Nature and characteristics of the securities to be issued and the amount of
     the issue 

     The securities issued in the capital increase are ordinary Telefonica      
     shares, with a nominal value of one Euro each, of the same series, and with
     the same rights as those Telefonica shares currently outstanding and       
     represented by book entries.

     The new shares issued by virtue of this capital increase will entitle      
     holders to receive the entire amount of the dividends distributed from the 
     issue date, including, therefore, those to be charged to fiscal 2001.
 
     The capital increase will be entirely charged to the Company's freely
     disposable reserves, in the ratio of one (1) new share for every fifty (50)
     Company shares currently outstanding, and this increase will be based on   
     the balance duly audited by the Company's auditors for the year ended      
     December 31, 2000.

     The number of shares derived from the capital increase (93,438,317 shares) 
     will be equal to 2% of the Company's subscribed and paid-in capital stock  
     at the time of the adoption hereof, as established in the Shareholders     
     Meeting's resolution referred to in Point I. The shares will be issued at  
     par, that is with an issue price of one (1) euro per share.

     The Company will apply for the listing of these shares on the four Spanish 
     Stock Exchanges and in the Spanish Automated Quotation System (Mercado     
     Continuo), as well as their listing on the foreign securities exchanges    
     where the Company's outstanding shares are already listed and their        
     inclusion in the Stock Exchange Automated Quotation System (SEAQ           
     International), subject to the regulations governing said stock markets.

3.   Group of subscribers to whom the issue will be offered

     All those Company shareholders who, at the end of the working day previous 
     to the beginning of the free allocation period referred to below, were     
     registered as such, will be entitled to receive one (1) new share for every
     fifty (50) old ones held. The free allocation rights will be transferable  
     during this period under the same conditions as the shares from which they 
     derive.

     For the purposes of that stated in the previous paragraph, every natural or
     legal person, who, at the end of the aforementioned day, is registered as a
     holder of the Company's shares at the registries of the member-entities of 
     the Spanish Settlement and Clearance Service (SCLV) will be considered a   
     Telefonica shareholder.

4.   Allocation procedure
 
     The free allocation rights may be exercised during a fifteen-day period    
     which will begin on the working day subsequent to the publication of the   
     announcement of the capital Mercantile Register.

     As the share capital increase is charged to reserves, no disbursement will 
     need to be made by the holders of free allocation rights.

5.   Entities participating in the issue

     All the member-entities of the SCLV, in the course of their normal         
     activity, will participate in the allocation of the shares from this       
     capital increase.

6.   The Issue's Prospectus

     Telefonica shall present the corresponding abridged Prospectus on the Issue
     corresponding to this capital increase, in order for this to be verified   
     and registered by the Spanish National Securities Commission, in accordance
     with that stated in article 5.2.d) of Royal Decree 291/1992.

In witness thereof,

IT IS REQUESTED that the Spanish National Securities Commission (Comision 
Nacional del Mercado de Valores) on acknowledging the filing of this Prior 
Communication relative to the capital increase on reserves, admits it and, after
having completed the required formalities, proceeds to register it in the 
appropriate Registry.

Madrid, December 20, 2001
TELEFONICA, S.A, 
p.p.

Mr. Joaquin de Fuentes Bardaji 
Vice-Secretary of the Board of Directors