Streamlining Social Plan

Telefonica SA
25 June 2003

                           JOAQUIN DE FUENTES BARDAJI

                             General Vice Secretary

                  and Vice Secretary of the Board of Directors

                              TELEFONICA, S.A.




'Telefonica S.A.', as provided in article 82 of the Spanish Stock Market Law
(Ley de Mercado de Valores), hereby gives notice of the following



                               SIGNIFICANT EVENT



The management of Telefonica de Espana, the subsidiary of the Telefonica Group
that is responsible for the fixed telephony business in Spain, has presented
union representatives with a proposal for the negotiation of a Streamlining
Social Plan (Plan de Regulacion de Empleo) that guarantees the necessary
competitiveness of the company.

The aim of this Social Plan based on the principles of voluntarity, universality
and non-discrimination, is to ensure the competitiveness of Telefonica de Espana
in the new telecommunications market environment, which will translate into a
guarantee for the development of the Information Society in Spain.

The proposal put forward would be implemented over the next five years (2003/
2007) and could lead to around 15,000 voluntary redundancies, at no cost to the
Social Security system.

The Social Plan contemplates procedures for the functional and geographical
adaptation of the workforce that remains with the company, together with
training programmes to cover the new professional profiles demanded by the
environment.



                                                         Madrid, June 25th, 2003








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