Agreement in principle

Telefonica SA
7 March 2002






                               SIGNIFICANT EVENT


Telefonica Moviles, S.A., subsidiary of Telefonica. S.A., has reached an
agreement in principle with all the shareholders of the Mexican company PEGASO
TELECOMUNICACIONES, S.A. de C.V. to acquire approximately 65% of its share
capital.

Said agreement sets out the framework within which the Parties will negotiate
the definitive contracts for the transaction. After the negotiations and, if
applicable, signature of these contracts, the final execution of the
transaction, which will include the integration of PEGASO with the other
TELEFONICA MOVILES' operators in northern Mexico, will be subject to obtaining
the required approvals from the Mexican authorities.




Madrid, March 7th, 2002



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