shareholders'remuneration

Telefonica SA
26 May 2006



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


Telefonica has announced at its Fifth Investor Conference being held in Valencia
that it has set as a strategic target for the year 2009 to double both earnings
per share and dividend per share from the 0.91 euros and 0.50 euros reported for
2005.

Moreover, the Chairman of  Telefonica will submit to the Board of Directors a
proposal to pay an interim dividend of 0.30 euros per share from 2006 profits,
to be paid in November 2006. This payment will be followed by an additional 0.30
euros per share to be paid in the first semester of 2007.

Finally, and until the end of 2007, the Company has decided to set a limit of
1.5 billion euros and a commitment not to issue new shares to execute net new
acquisitions over those already announced. Shares to be acquired to complete the
current buyback program will be cancelled.





Madrid, May 26th, 2006




                      This information is provided by RNS
            The company news service from the London Stock Exchange