Result of Subsid Equity Issue

Telefonica SA
19 September 2000



TERRA NETWORKS, S.A. ('TERRA'), a Telefonica's subsidiary, in accordance with
that stated in article 82 of the Spanish Stock Market Law 24/1988 of July 28th,
and that set forth in the Circular Letter 14/1998 of the Spanish Securities
Commission ('CNMV') of December 28th, 1998, hereby announces the following:

The capital increase with pre-emptive rights, approved by the Annual
Shareholders' Meeting of TERRA of June 8th, 2000, consisting of the 
issuance of 35,483,871 shares of a nominal value of 2 euros each and an issue
premium of 60 euros per share, that is, an issue price of 62 euros per share,
has been totally subscribed.

A breakdown of the final allotment of the shares is outlined below:

-   Telefonica, S.A. has subscribed a total of 35,380,101 shares as a result
    of having exercised the pre-emptive rights on the TERRA shares it holds,
    and due to its additional subscription commitment in accordance with that
    stated in the announcement of this capital increase published in the BORME
    of August 28th, 2000.

-   Other investors have subscribed a total of 103,770 shares.


Once the total amount for the new shares has been paid in within the periods set
forth in the Abridged Prospectus, registered with the CNMV on August 24th, 2000,
the corresponding deed will be drawn up and registered on the Mercantile
Register, the new shares will be recorded with the Spanish Securities Clearance
and Settlement Service, S.A. and the listing of these shares will be applied for
on the Spanish stock exchanges and the US Nasdaq market.

Madrid, September 18th,2000