Sale of stake in Endemol

Telefonica SA
14 May 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





After analyzing various offers received, TELEFONICA, S.A. ('TELEFONICA')
has entered into an agreement for the sale of its 99.7% stake in ENDEMOL
INVESTMENT HOLDING BV ('ENDEMOL HOLDING') to a newly incorporated vehicle.
ENDEMOL HOLDING is a holding company that indirectly owns 75% of ENDEMOL NV, a
global leader in television and other audiovisual entertainment that creates
premium content for the world's leading broadcasters.



The newly incorporated vehicle is jointly and equally owned by (i) MEDIACINCO
CARTERA SL, a newly incorporated entity owned by MEDIASET SpA and its quoted
subsidiary GESTEVISION TELECINCO, S.A., (ii) CYRTE FUND II B.V. and (iii) GS
CAPITAL PARTNERS VI FUND, LP (together the 'Consortium').



The total consideration for the sale of ENDEMOL HOLDING amounts to €2,629
million for 75% of ENDEMOL NV valued at €25 per share cum dividend and including
the additional assets and liabilities within ENDEMOL HOLDING and its
subsidiaries. This price implies a premium on ENDEMOL's latest closing price and
represents a capital gain close to €1,400 million for TELEFONICA



As part of the agreement, the Consortium has committed to launch an
unconditional public offer for the remaining 25% of ENDEMOL NV at a price at
least equal to €25 per share cum dividend, as soon as practicable after closing
of this transaction.



The agreement is subject to obtaining of the relevant regulatory authorisations.







Madrid, May 14th, 2007




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