AGM calling

Telefonica SA
12 May 2006


TELEFONICA S.A., as provided in article 82 of the Spanish Securities Market
Act (Ley del Mercado de Valores), hereby reports the following


                                SIGNIFICANT EVENT

The Board of Directors of TELEFONICA, S.A., at its meeting held on May 12nd,
2006, has unanimously resolved to call the Annual Shareholders' Meeting to be
held in Madrid, on June 20th and 21st, 2006 at first and second call
respectively. Based on experience in previous years, the aforementioned Meeting
is expected to be held at second call.

The Agenda of the Annual General Shareholders's Meeting, that has been approved
in the aforesaid Board's meeting, is the following:


                                     AGENDA
     
I.   Examination and approval, if deemed appropriate, of the Individual Annual 
     Accounts, of the Consolidated Financial Statements (Consolidated Annual
     Accounts) and of the Management Report of both Telefonica, S.A and its
     Consolidated Group of Companies, as well as of the proposed application of
     results of Telefonica, S.A. and of the management of the Board of Directors
     thereof, all with respect to Fiscal Year 2005.
           
II.  Examination and approval, if deemed appropriate, of the Merger Plan of 
     Telefonica, S.A. and Telefonica Moviles, S.A. and approval, as the Merger
     Balance Sheet, of the Balance Sheet of Telefonica, S.A. as of December 31, 
     2005.  Approval of the merger of Telefonica, S.A. and Telefonica Moviles, 
     S.A. through the absorption of the latter by the former, with the 
     termination of Telefonica Moviles, S.A. and the transfer en bloc and as a 
     whole of all of its assets to Telefonica, S.A., with the provision that the 
     exchange of shares will be carried out by means of the delivery of treasury 
     shares of Telefonica, S.A., all of the foregoing in compliance with the 
     provisions of the Merger Plan. Application to the merger of the special tax 
     regime set forth in Chapter VIII of Title VII of the Restated Text of the 
     Corporate Income Tax Law . Establishment of the procedure to facilitate the 
     exchange.  Delegation of powers.
          
III. Re-election, ratification, and appointment, as applicable, of Directors:
               
     III.1     Re-election of Mr. Carlos Colomer Casellas.
     III.2     Re-election of Mr. Isidro Faine Casas.
     III.3     Re-election of Mr. Alfonso Ferrari Herrero.
     III.4     Re-election of Mr. Luis Lada Diaz.
     III.5     Re-election of Mr. Antonio Massanell Lavilla.
     III.6     Ratification of the interim appointment of Mr. David Arculus.
     III.7     Ratification of the interim appointment of Mr. Peter Erskine.
     III.8     Ratification of the interim appointment of Mr. Julio Linares 
               Lopez.
     III.9     Ratification of the interim appointment of Mr. Vitalino
               Manuel Nafria Aznar.
     
IV.  Approval, if appropriate, of a long-term incentive plan consisting of the 
     delivery of shares of and which is linked to changes in the listing price 
     of shares of Telefonica, S.A.
          
V.   Authorization to acquire the Company's own shares, directly or through
     Companies within the Group.
          
VI.  Authorization to the Board of Directors to increase the share capital under 
     the terms and conditions of Section 153.1.b) of the Business Corporations
     Law, with a delegation of the power to exclude preemptive rights pursuant, 
     in this latter case, to the provisions of Section 159.2 of the Business
     Corporations Law.
          
VII. Delegation of powers to formalize, interpret, remedy and carry out the
     resolutions adopted by the shareholders at the General Shareholders' 
     Meeting.

Likewise, it is hereby stated that it is foreseen to make public the official
announcement of the calling of the Annual General Shareholders Meeting in the
Official Gazette of the Mercantile Registry ('Boletin Oficial del Registro
Mercantil') and in at least a daily newspaper of Madrid, on May 16th, 2006. As
from the publication date of this notice of the meeting, the relevant documents
will be available to the shareholders, debenture holders and holders of special
right other than shares, as well as to the employee representatives at the
Company's registered office, and sent to the regulatory bodies and stock
exchanges of the different markets where Telefonica's shares are quoted.
Additionally, these documents will be accessible on-line via the Company's
website: www.telefonica.es.

The full text of the official announcement of the calling of the Annual General
Shareholders' Meeting is enclosed to this notice.


Madrid, May 12th, 2006


                              TELEFONICA, S.A.

                        Annual General Shareholders' Meeting


     By decision of the Board of Directors of TELEFONICA,
S.A., the shareholders are hereby called to the Annual General Shareholders'
Meeting, to be held in Madrid, at the premises of IFEMA (Feria de Madrid), Campo
de las Naciones, Parque Ferial Juan Carlos I, Pabellon 10, at 10:00 p.m. on June
20, 2006 on first call and, if the legally required quorum is not reached and
therefore the Meeting cannot be held on first call, at 12:00 p.m. on June 21,
2006 on second call at the same place, in order to discuss and adopt resolutions
regarding the matters included on the following


                                   AGENDA

     
I.   Examination and approval, if deemed appropriate, of the Individual Annual 
     Accounts, of the Consolidated Financial Statements (Consolidated Annual
     Accounts) and of the Management Report of both Telefonica, S.A and its
     Consolidated Group of Companies, as well as of the proposed application of
     results of Telefonica, S.A. and of the management of the Board of Directors
     thereof, all with respect to Fiscal Year 2005.
          
II.  Examination and approval, if deemed appropriate, of the Merger Plan of 
     Telefonica, S.A. and Telefonica Moviles, S.A. and approval, as the Merger
     Balance Sheet, of the Balance Sheet of Telefonica, S.A. as of December 31, 
     2005.   Approval of the merger of Telefonica, S.A. and Telefonica Moviles, 
     S.A. through the absorption of the latter by the former, with the 
     termination of Telefonica Moviles, S.A. and the transfer en bloc and as a 
     whole of all of its assets to Telefonica, S.A., with the provision that the 
     exchange of shares will be carried out by means of the delivery of treasury 
     shares of Telefonica, S.A., all of the foregoing in compliance with the 
     provisions of the Merger Plan. Application to the merger of the special tax 
     regime set forth in Chapter VIII of Title VII of the Restated Text of the 
     Corporate Income Tax Law . Establishment of the procedure to facilitate the 
     exchange.  Delegation of powers.
          
III. Re-election, ratification, and appointment, as applicable, of Directors:

     III.1     Re-election of Mr. Carlos Colomer Casellas.
     III.2     Re-election of Mr. Isidro Faine Casas.
     III.3     Re-election of Mr. Alfonso Ferrari Herrero.
     III.4     Re-election of Mr. Luis Lada Diaz.
     III.5     Re-election of Mr. Antonio Massanell Lavilla.
     III.6     Ratification of the interim appointment of Mr. David Arculus.
     III.7     Ratification of the interim appointment of Mr. Peter Erskine.
     III.8     Ratification of the interim appointment of Mr. Julio
               Linares Lopez.
     III.9     Ratification of the interim appointment of Mr. Vitalino
               Manuel Nafria Aznar.
                    
IV.  Approval, if appropriate, of a long-term incentive plan consisting of the 
     delivery of shares of and which is linked to changes in the listing price of
     shares of Telefonica, S.A.
          
V.   Authorization to acquire the Company's own shares, directly or through 
     Companies within the Group.
          
VI.  Authorization to the Board of Directors to increase the share capital under 
     the terms and conditions of Section 153.1.b) of the Business Corporations
     Law, with a delegation of the power to exclude preemptive rights pursuant, 
     in this latter case, to the provisions of Section 159.2 of the Business
     Corporations Law.
          
VII. Delegation of powers to formalize, interpret, remedy and carry out the 
     resolutions adopted by the shareholders at the General Shareholders'
     Meeting.



            SUPPLEMENT TO THE CALL TO GENERAL SHAREHOLDERS' MEETING


     Pursuant to the provisions of Section 97.3 of the
Business Corporations Law, shareholders representing at least five percent of
the share capital may request the publication of a supplement of this call to
the General Shareholders' Meeting, including one or more items in the Agenda.
This right must be exercised by means of verifiable notice (which will include
the corresponding documents evidencing shareholder status) that must be received
at the Company's registered office (Gran Via, numero 28, planta 9(a), Madrid,
codigo postal 28013, to the attention of the General Secretary & Secretary of
the Board of Directors) within five days of the publication of this call to
Meeting.


  PARTICIPATION OF A PUBLIC NOTARY IN THE ANNUAL GENERAL SHAREHOLDERS' MEETING


     The Board of Directors has resolved to request the
presence of a Public Notary to draw up the minutes of the Meeting, pursuant to
Section 114 of the Business Corporations Law in connection with Sections 101 and
103 of the Regulations of the Commercial Registry.



                          RIGHT TO RECEIVE INFORMATION


     In connection with Items I and VI on the Agenda, and
pursuant to Sections 212, 144, 159 and related provisions of the Business
Corporations Law, it is stated for the record that shareholders have the right
to examine and obtain at the Company's registered office, or to request the
Company to send them, immediately and free of charge, a copy of the following
documents:

-    Individual Annual Accounts, Consolidated Financial Statements (Consolidated 
     Annual Accounts) and Management Reports of Telefonica, S.A. and of its 
     Consolidated Group of Companies, the corresponding audit reports, and the
     proposed application of results.

-    Proposed authorization to the Board of Directors to increase the share 
     capital as set forth in Item VI on the Agenda, together with the
     mandatory Directors' Report.

     In connection with Item II on the Agenda, and pursuant
to Section 238 and related provisions of the Business Corporations Law, it is
stated for the record that the shareholders,  debenture holders, and holders of
special rights other than shares have the right to examine and obtain at the
Company's registered office, or to request the Company to send them, immediately
and free of charge, the full text of the following documents:

-    The Merger Plan.

-    The report of the Independent Expert regarding the Merger Plan.

-    The reports of the Directors of each of the companies
     participating in the merger regarding the Merger Plan.

-    The Annual Accounts and the Management Report for the last three fiscal 
     years of each company participating in the merger, with the corresponding 
     Auditor's reports.

-    The Merger Balance Sheet of each company participating in the merger, 
     accompanied by the verification report issued by the Auditor (in both 
     cases, such Balance Sheet is the annual Balance Sheet as of December 31, 
     2005 to be approved by the shareholders at the respective General 
     Shareholders' Meetings).

-    The current By-Laws of each company participating in the merger. No 
     amendments will be made to the by-laws os Telefonica, S.A. as a
     result of the merger.

-    A list of names, surnames, age, nationality and address of the Directors of 
     each of the companies participating in the merger, the date on which they 
     took office, the same information on the persons, if any, to be
     proposed as Directors as a result of the merger.


     The above-mentioned documents will be available for inspection by the 
workers' representatives at the Company's registered office.
     
-    In addition, the text of the proposed resolutions relating to all other 
     items on the Agenda is made available to the shareholders at the registered 
     office, as well as a brief description of the professional profile of each 
     of the Directors whose position is subject to re-election, ratification or 
     appointment under Item III on the Agenda.

     All of the documents set forth above will be available
electronically on the Company's website (www.telefonica.es).

     Furthermore, it is stated for the record that, pursuant
to the provisions of paragraph 4 of the first provision of Order ECO/3722/2003,
the Company's Annual Corporate Governance Report for fiscal year 2005, approved
by the Company's Board of Directors at its April 26, 2006 meeting, is available
to the shareholders and may be accessed electronically on the Company's website
(www.telefonica.es).

     Pursuant to Section 112.1 of the Business Corporations
Law, the shareholders may, until the seventh day prior to the date on which the
General Shareholders' Meeting is scheduled to be held by completing the form
posted on the Company's website for such purpose, or by postal correspondence
sent to the Company's registered office (Gran Via, numero 28, planta 3(a),
Madrid, codigo postal 28013, to the attention of the Servicio de Atencion al
Accionista (Shareholder Service)), request such information or clarifications as
they deem necessary, or ask such questions as they deem appropriate, regarding
the matters included on the Agenda or about the information available to the
public that has been provided by Telefonica, S.A. to the National Securities
Market Commission since May 31, 2005, i.e., the date on which the last General
Shareholders' Meeting was held.



                      Statements Regarding the Merger Plan


     In compliance with the provisions of Section 240.2 of
the Business Corporations Law, below is the minimum legally required information
regarding the Merger Plan.



1.   Identification of the Entities Participating in the Merger.

1.1  Telefonica, S.A. (Acquiring Company).

Telefonica, S.A.: domiciled in Madrid, Gran Via 28, incorporated for an
indefinite period of time under a notarial instrument executed before the Madrid
Notary Mr. Alejandro Rosello Pastor on April 19, 1924 under number 141 of his
book of notarial records. Telefonica, S.A. adapted its by-laws to the Business
Corporations Law currently in force under a notarial instrument executed before
the Madrid Notary Mr. Miguel Mestanza Fraguero on July 10, 1990.

Telefonica, S.A. is registered with the Commercial Registry of Madrid in Volume
12.534, Folio 21, Section 8, Page M-6164.

The Tax ID Code of Telefonica, S.A. is A-28015865.

1.2  Telefonica Moviles, S.A. (Acquired Company).

Telefonica Moviles, S.A.: domiciled in Madrid, Goya 24, incorporated for an
indefinite period of time under a notarial instrument executed before the Madrid
Notary Mr. Jose Antonio Escartin on February 14, 2000 under number 582 of his
book of notarial records.

Telefonica Moviles, S.A. is registered with the Commercial Registry of Madrid in
Volume 14.837, Folio 155, Section 8, Page M-246786.

The Tax ID Code of Telefonica Moviles, S.A. is A-82573759.

2.      Merger Exchange Ratio.

The exchange ratio for the shares of the entities participating in the merger,
which has been determined on the basis of the actual value of the assets of
Telefonica, S.A. and Telefonica Moviles, S.A., will be as follows, without any
additional cash compensation:

Four (4) shares of Telefonica, S.A., each having a par value of one (€1) Euro,
for every five (5) shares of Telefonica Moviles, S.A., each having a par value
of fifty (€0,50) Euro cents.

In determining the exchange ratio, account has been taken of the dividends that
both companies plan to distribute and to which reference is made to in section 8
of the Merger Plan and in section 4 of this call to Meeting.

3.      Share Exchange Procedure.

The procedure for exchanging the shares of Telefonica Moviles, S.A. for shares
of Telefonica, S.A. will be as follows:



(a)               Once the merger is approved by the shareholders acting at the
General Shareholders' Meetings of both companies, the equivalent documents
mentioned in Sections 26.1 d), 41.1 c) and related provisions of Royal Decree
1310/2005 of November 4 are filed with the National Securities Market Commission
(hereinafter, the 'CNMV') and the merger instrument is registered with the
Commercial Registry of Madrid, the exchange of shares of Telefonica Moviles,
S.A. for shares of Telefonica, S.A. will proceed.

(b)               The exchange will commence on the date specified in the
notices to be published in one of the more widely circulated newspapers in
Madrid, in the Listing Bulletins of the Spanish Stock Exchanges and, if
applicable, in the Official Bulletin of the Commercial Registry.  For such
purpose, a financial institution will be appointed to act as Agent and will be
named in the above-mentioned notices.

(c)               The exchange of the shares of Telefonica Moviles, S.A. for
shares of Telefonica, S.A. will be made through the entities participating in
the Sociedad de Gestion de los Sistemas de Registro, Compensacion y Liquidacion
de Valores S.A.  (Securities Registration, Clearing and Liquidation Systems
Management Company) (Iberclear) that are depositaries thereof, in accordance
with the procedures established for the book-entry system, pursuant to the
provisions of Royal Decree 116/1992 of February 14 and applying such provisions
of Section 59 of the Business Corporations Law as may be applicable.

(d)               Shareholders holding shares that represent a fraction of the
number of shares of Telefonica Moviles, S.A. designated as the exchange ratio
may purchase or transfer shares in order to exchange them in accordance with
such exchange ratio.  Notwithstanding the foregoing, the companies participating
in the merger may implement mechanisms designed to make such exchange easier for
shareholders of Telefonica Moviles, S.A. who hold a number of shares that,
according to the agreed exchange ratio, does not entitle them to receive a whole
number of shares of Telefonica, S.A., including the appointment of an Odd-Lot
Agent.

(e)               As a result of the merger, the shares of Telefonica Moviles,
S.A. will be cancelled.

Pursuant to the mandatory provisions of Section 249 of the Business Corporations
Law and related provisions, the shares of Telefonica Moviles, S.A. which are
held as treasury shares or are in possession of Telefonica, S.A. will not be
exchanged for shares of Telefonica, S.A.

4.      Date as from which the New Shares Delivered in Exchange Carry the Right
to Participate in the Profits of the Company and Specific Characteristics of
such Right.





January 1, 2006 is set as the date as from which the shares delivered in
exchange will entitle the holders thereof to participate in the earnings of
Telefonica, S.A.  For this reason, the existing shares of Telefonica, S.A. of
the same class and series as the other shares of Telefonica, S.A. currently
outstanding used to effect the exchange will entitle the holders thereof, as
from the date of delivery, to participate in the earnings of the company posted
as from January 1, 2006, on the same terms as the other outstanding shares.

The shares, if any, issued by Telefonica, S.A. under the capital increase
referred to in Item II on the Agenda for the General Shareholders' Meeting will
entitle the holders thereof to participate in the profits of Telefonica, S.A.
posted as from January 1, 2006.

In distributions made after the merger instrument is registered with the
Commercial Registry, all the shares of Telefonica, S.A., including those
delivered in order to carry out the exchange, will participate with the same
rights in proportion to the par value of each share.

It is stated for the record that, in accordance with the provisions of the
Merger Plan, Telefonica, S.A. has made or, as the case may be, plans to make the
following dividend distributions:

(i)                 Payment of a gross interim dividend of 0.25 Euro per share,
based on the earnings for the fiscal year ended December 31, 2005, which was
paid on May 12, 2006.  Such dividend does not benefit shareholders of Telefonica
Moviles, S.A. who become shareholders of Telefonica, S.A. as a result of the
merger.

(ii)                The Board of Directors of Telefonica, S.A. intends to
distribute, during fiscal year 2006, an additional gross dividend of 0.25 Euro
per share, to which end the required corporate resolutions will be adopted.  In
any event, such dividend will be paid after the merger is registered with the
Commercial Registry of Madrid.  Such dividend will benefit both the shareholders
of Telefonica, S.A. and the shareholders of Telefonica Moviles, S.A. who become
shareholders of Telefonica, S.A. as a result of the merger.

For its part, in accordance with the provisions of the Merger Plan, Telefonica
Moviles, S.A. plans to make the following dividend distributions:

(i)                 Previously-announced dividend:

Payment of a gross dividend of 0.205 Euro per share to be charged to the
unappropriated retained earnings for fiscal year 2005 and to unrestricted
reserves, following approval by its shareholders at the Annual General
Shareholders' Meeting.  It is expected that this dividend will be paid on July
21, 2006 and, in any event, prior to the registration of the merger of
Telefonica, S.A. and Telefonica Moviles, S.A. with the Commercial Registry; it
will only benefit the shareholders of Telefonica Moviles, S.A.





(ii)                Dividends proposed by the Board of Directors of Telefonica
Moviles, S.A. for approval by the shareholders acting at the General
Shareholders' Meeting:

•            Payment of a gross dividend of 0.085 Euro per share to be charged
to the reserve for the issuance premium and other unrestricted reserves,
following approval by its shareholders at the Annual General Shareholders'
Meeting.

•            Payment of a gross interim dividend of 0.35 Euro per share to be
charged to the profits posted between January 1 and March 28, 2006, following
approval by its shareholders at the Annual General Shareholders' Meeting.

The two proposals mentioned above are contingent upon approval of the planned
merger by the shareholders acting at the General Shareholders' Meeting of both
companies.  If these proposals are approved by the shareholders at the Annual
General Shareholders' Meeting of Telefonica Moviles, S.A. and if the condition
described above is met, payment of the dividends to which the proposals refer
(in the aggregate gross amount of 0.435 Euro per Telefonica Moviles, S.A. share)
will be made on July 21, 2006. Accordingly, this distribution will only benefit
the shareholders of Telefonica Moviles, S.A.

5.    Date of Accounting Effects of the Merger.

January 1, 2006 is set as the date as from which all transactions of Telefonica
Moviles, S.A. will, for accounting purposes, deemed to have been made on behalf
of Telefonica, S.A.

6.      Special Rights.

There are no special shares or special rights in Telefonica Moviles, S.A. other
than the shares.  However, it is noted for the record that, as set forth in
sections 5 and 10 of the Merger Plan, the stock option plan of Telefonica
Moviles, S.A. (the MOS Plan) expired on January 3, 2006 and is currently in
liquidation, which will be concluded prior to the registration of the merger.
Notwithstanding the foregoing, Telefonica, S.A. will succeed Telefonica Moviles,
S.A. as the entity responsible for any possible pending liability stemming from
the above-mentioned liquidation.

The shares of Telefonica, S.A. that are delivered to the shareholders of
Telefonica Moviles, S.A. by virtue of the merger will not grant any special
rights to the holders thereof.

7.      Benefits attributed to the Directors and to the Independent Expert.

No benefits of any kind will be attributed to the Directors of either of the
entities participating in the merger or to the Independent Expert that has
participated in the merger process.







               RIGHT TO ATTEND THE MEETING IN PERSON OR BY PROXY



                        The right to attend the General Shareholders' Meeting
hereby called applies to shareholders that hold at least 300 shares registered
in their name in the corresponding book-entry registry five days in advance of
the date on which the Meeting is to be held and who provide evidence thereof by
means of the appropriate attendance card or by producing a certificate issued by
any of the depositaries participating in the Sociedad de Gestion de los Sistemas
de Registro, Compensacion y Liquidacion de Valores (Securities Registration,
Clearing and Liquidation Systems Management Company) (IBERCLEAR) or by any other
means allowed under applicable Law.



                        Any shareholder having the right to attend the General
Shareholders' Meeting may be represented thereat by another person, who need not
be a shareholder.  A proxy may be granted by using the proxy-granting form
printed on the attendance card or by any other means allowed by Law.  The
documents containing proxies for the General Shareholders' Meeting must set
forth the instructions regarding the manner of voting, provided that, where no
express instructions are given, the representative will vote in favor of the
proposed resolutions submitted by the Board of Directors regarding the matters
on the Agenda, and in accordance with the shareholder's own criteria in
connection with any other matter that, not being included in the Agenda and thus
being unknown at the time the proxy is granted, might be put to the vote at the
Meeting.  If the proxy-granting form does not set forth a specific person to
whom the shareholder grants the proxy, such proxy will be deemed granted in
favor of the Chairman of the Board of Directors of the Company or of such other
person as may replace him as Chairman of the General Shareholders' Meeting.  In
the event that, in accordance with the foregoing, the representative is involved
in a conflict of interest upon voting on any of the proposals, whether or not
included in the Agenda, which are put to the vote at the General Shareholders'
Meeting, the proxy will be deemed granted to the General Secretary of the
Company in his capacity as a shareholder having the right to attend.





                        Shareholders who do not hold the minimum number of
shares required to attend may grant a written proxy in respect thereof in favor
of another shareholder having the right to attend, or come together with other
shareholders that are in the same situation such that they reach the required
number of shares and grant a written proxy to one of such shareholders.





HOLDING OF THE MEETING ON SECOND CALL

                        Shareholders are advised that, based on experience from
previous years, the General Shareholders' Meeting is expected to be held on
second call, at 12:00 p.m. on June 21, 2006, at the place indicated above.





          FOR ANY ADDITIONAL INFORMATION, SHAREHOLDERS MAY CONTACT
TELEFONICA'S SHAREHOLDER SERVICE BY CALLING TOLL-FREE AT 900 111 004, FROM 9:
00 A.M. TO 7:00 P.M., MONDAY THROUGH FRIDAY.



                              Madrid, May 12, 2006

General Secretary & Secretary of the Board




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