3rd Investors Conference

Telefonica SA
09 October 2003

PRESS RELEASE




09/10/03




Telefonica Executive Chairman & C.E.O. outlines main lines of Company
medium-term strategy to 400 investors and analysts




CESAR ALIERTA: 'THE TRANSFORMATION OF THE BUSINESS MODEL AND PROXIMITY TO
CUSTOMERS WILL DRIVE GROWTH AND IMPROVEMENT IN TELEFONICA'S MARGINS'


  • The Group is enriching its commercial policy and focusing its objectives
    on boosting cash flow and shareholder compensation.


  • The keys to growth will be leadership of the broadband market-which will
    have 6 million connections in Spain in 2006-broadening the wireless business
    and realising the potential for development in Latin America.


Madrid, 9 October 2003.- Telefonica Executive Chairman & C.E.O. ,Cesar Alierta,
today explained in the opening of the 3rd Investors Conference that the Group's
strategy for the coming years will turn on moving the Company toward a more
customer-centred commercial focus based on a more efficient and flexible
business model. In line with this strategic rethink, Alierta said that in 2006
some 41% of the Telefonica de Espana workforce and 38% of employees in Latin
America will be dedicated to commercial and marketing tasks. In this connection,
the estimates call for commercial staff in Telefonica de Espana to increase 25%
by 2007. To reach this objective, Telefonica is working on innovation and
development of commercial practices to assure product quality and customer
satisfaction.


Close to 400 members of the international financial community have been brought
together in Madrid for the 3rd Investors Conference. Alierta, along with other
senior officers, will spend today and tomorrow explaining the Company's plans
and strategy for 2003-2006. In his opening address, the Telefonica Executive
Chairman & C.E.O. advocated a more flexible structural model, emphasising an
organisation more tightly focused on key businesses to allow the Group to trim
assets and costs.


The commercial focus and flexibility objective announced by Cesar Alierta is
aimed to boost cash flow and improve the return on investments as the path to
driving further growth. The three growth targets are broadband, mobile telephony
and fixed telephony in Latin America:


  • Alierta explained that the company will continue working to lead the
    broadband market and has estimated that Spain will have 6 million broadband
    connections by 2006. The company wants to broaden its offering of broadband
    services, creating alternatives for all customer types and making this a
    consumer product, generating solutions developed in-house or in alliances
    with other players.


  • Growth in mobile telephony will shift from the voice to the data business
    over the medium term. In addition, Alierta foretold a significant expansion
    of the Brazilian and Mexican customer bases.


  • As for its fixed telephony business in Latin America, Telefonica will
    pursue 'its enormous potential market', in the words of Cesar Alierta, with
    efforts based on product innovation and customer segmentation aimed at
    reaching new strata of the population.


Furthermore, to stimulate this growth (broadband, mobile telephony and Latin
American market), commercial teams will be unveiling new products tailored for
the diverse segments and will organise their dealings with customers through a
more personalised attention in each of those segments. These efforts include
differentiation of solutions according to the needs of the customers, whether
individuals, households, small businesses, large companies or government
agencies.


Solid financial position


Cesar Alierta called the analysts' attention to the solid financial position
attained by Telefonica in the last year, which has allowed it to design 'the
most explicit long-term shareholder compensation policy of the large operators
in the sector in Europe'. As he pointed out in his talk, the strong cash flow
and stability of its credit rating place Grupo Telefonica at an advantage with
respect to its peers amongst the large European telecoms. This healthy
foundation, combined with the measures to prune its asset base last year and the
Company's strong position in its key markets, give Telefonica the financial and
operating flexibility to pursue new growth opportunities.


Telefonica, according to Cesar Alierta, offers investors a unique combination of
short-term results, attractive risk profile and medium-term growth potential.


After Cesar Alierta's opening comments, today's session will be completed with
talks by Julio Linares, Executive Chairman of Telefonica de Espana, Jose Ma.
Alvarez-Pallete, Executive Chairman of Telefonica Latinoamerica and Eduardo
Caride, Executive Chairman of Telefonica Empresas. The scheduled speakers for
tomorrow, Friday, are Antonio Viana-Baptista, Executive Chairman of Telefonica
Moviles and Santiago Fernandez-Valbuena, Chief Financial Officer for Grupo
Telefonica. Cesar Alierta will close the Conference.




The presentations are available at the Company website:

http://www.telefonica.com/ir







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