Acquisition

Telefonica SA
2 August 2000



Telefonica and Terra move ahead with acquisition of Lycos
      
Madrid, 1st August 2000 - Telefonica and Terra continue to carry out the
necessary procedures to finalize the acquisition of Lycos by Terra.

The capital increase (2.2 billion Euros) contemplated in the acquisition
agreements is expected to be concluded in mid-September.  Telefonica reiterates
its commitment to fully subscribe this capital increase if any shares are not
purchased by the rest of the stockholders.

Telefonica and Terra estimate that the closing of the transaction, which will
occur after the Annual General Meeting of Lycos, could take place during the
month of October.

The closing of the transaction, including the procedures which are yet to be
concluded, are subject to the approval of the appropriate authorities.  It is
hoped that they will be obtained within the time frame indicated.

These materials contain certain forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995, including,
but not limited to: the timing of the Terra Networks, S.A. ('Terra Networks')
rights offering and the Terra Networks and Lycos, Inc. ('Lycos') merger. 
Forward-looking statements may also be identified by words such as 'believes',
'expects', 'anticipates', 'projects', 'intends', 'should', 'seeks', 'estimates',
'future' or similar expressions.  The forward-looking statements included in
these materials are based on current expectations.  However, some of the actions
described above may be delayed or may not occur due to various factors, such as
delay in our receipt of, or our failure to receive, necessary shareholder and
regulatory approvals, many of which are beyond the control of Terra Networks.

WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS THAT TERRA NETWORKS AND LYCOS HAVE FILED AND WILL FILE WITH THE SEC
BECAUSE THEY CONTAIN IMPORTANT INFORMATION

Investors will be able to obtain copies of the registration statements and other
documents from the SEC's Public Reference Room at 450 Fifth Street, N.W.
Washington, D.C. 20549, Telephone [phone], Fax [phone], E-mail
[e-mail].  In addition, documents (excluding any exhibits) filed with
the SEC by Terra Networks will be available free of charge from Terra Networks.
READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION REGARDING
THE SHARE EXCHANGE.

This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such jurisdiction.