BellSouth cellular operators

Telefonica SA
10 January 2005


                          NOTICE OF SIGNIFICANT EVENT

In compliance with article 82 of Spanish Securities Market Law 24/1988, and
related provisions, and in order to make it public as the notification of a
Significant Event, Telefonica, S.A. hereby informs that on January 7th, its
subsidiary Telefonica Moviles, S.A., after obtaining the necessary permission
from the respective authorities, has completed the acquisition of BellSouth
Chile.

This acquisition marks the close of the third stage of acquisitions in the
agreement reached between the Telefonica Group and BellSouth, after the
acquisition of 100% of Bellsouth's operators in Ecuador, Panama and Guatemala
last October 14th and the acquisition of Bellsouth's operators in Colombia,
Nicaragua, Uruguay and Venezuela last October 28th. Telefonica Moviles expects
to complete the remaining acquisition (Argentina) during  January.

Telefonica Moviles has acquired the Chilean operator for an enterprise value of
531,8 million dollars, after receiving the regulatory approval from the relevant
authorities in this country.

We attach to this official statement press release announced to the media.


PRESS RELEASE

TELEFONICA MOVILES COMPLETES THE ACQUISITION OF BELLSOUTH CHILE
     
•    As a result of this operation, which has an enterprise value of 532 million 
     dollars, Telefonica Moviles has acquired (for a cumulative enterprise
     value of 4,862 million dollars) nine of the ten mobile telephony operators
     included in the agreement reached by Telefonica Group and BellSouth, which
     included a maximum enterprise value of 5,850 million dollars.

•    'This acquisition marks a new step in the Telefonica Group's commitment to 
     Chile. Our objective is for the union of Telefonica Movil and BellSouth to 
     create a benchmark telecommunications company in Latin America', said 
     Antonio Viana-Baptista, Chairman and CEO of Telefonica Moviles.
     
•    The merger of Telefonica Movil and BellSouth Chile will result in a
     company with approximately 4.7 million customers at the close of 2004. Its
     leadership of the Chilean market and the experience and leadership of 
     Telefonica Moviles, the second largest mobile telephony multinational in 
     the world, will mean that customers will have access to the most advanced 
     international-standard products.


Madrid, 7 January 2005.- Telefonica Moviles, the company in charge of managing
all Telefonica Group's cellular assets, has completed the acquisition of 100% of
BellSouth Chile for an enterprise value of 532 million dollars. The transaction
took place once the necessary permission had been received from the Chilean
authorities.

This transaction forms part of the agreement reached between the Telefonica
Group and BellSouth on last 8 March whereby Telefonica Moviles is to acquire all
BellSouth's cellular assets in Latin America, which comprised some 13.1 million
customers in 10 countries at the end of the third quarter of 2004.

Telefonica Moviles has already completed the acquisition of nine of the ten
operators (in Venezuela, Colombia, Chile, Ecuador, Panama, Peru, Guatemala,
Uruguay and Nicaragua), and expects to complete the only remaining acquisition
(in Argentina) during January once the Argentinean regulatory authorities
finalize the revision of all the issues of the permission requested to complete
such transaction.

'This acquisition makes another step in the Telefonica Group's commitment to
Chile. Our objective is for the union of Telefonica Movil and BellSouth to
create a benchmark telecommunications company in Latin America. To achieve this,
we are combining the renowned prestige and professional skills of these
companies' management with Telefonica Moviles' global leadership in adding the
most innovative mobile telephony solutions to its subsidiaries' offerings', said
Antonio Viana-Baptista, Chairman and CEO of Telefonica Moviles.

The operator acquired

BellSouth Chile ended 2004 with 1.43 million customers. By adding its operations
to those of Telefonica Movil, Telefonica Moviles' current operator in Chile,
Grupo Telefonica Moviles will have around 4.7 million customers at the end of
2004, making it Chilean market leader. As a result, Telefonica Moviles Group is
in an excellent position to capture a significant part of the strong growth
potential of mobile telephony in Chile.

Telefonica Moviles Group assumes management of BellSouth Chile as from today.
The latter company will maintain (as will Telefonica Movil) its brand names and
commercial systems for the time being until their commercial platforms are
integrated into those of the Telefonica Moviles Group.

Oliver Flogel is the CEO of the Telefonica Moviles' operations in Chile.

The current customers of BellSouth Chile and Telefonica Movil will be able to
continue to enjoy their current benefits, telephone number, prices plan and
commercial conditions unchanged.

The union of Telefonica Movil and BellSouth Chile will exploit the best of both
companies, resulting in an operator that will actively collaborate in the
development of the country's mobile communications. In this way, customers will
enjoy the most developed international-standard products, thanks to the
experience and leadership of Telefonica Moviles, the largest mobile telephony
group in Chile and Latin America and the second-largest mobile telephony
multinational in the world.

The global agreement with BellSouth

Under the global agreement reached by Telefonica Group for Telefonica Moviles to
acquire BellSouth's 10 Latin American cellular operators, the transaction values
100% of the companies (firm value) at 5,850 million dollars, to be financed with
Telefonica Moviles' cash flow and debt.

The transaction makes Telefonica Moviles the world's second biggest
multinational cellular player, with close to 72 million managed customers
(figures at the end of the third quarter of 2004) and the largest player in
Latin America, with over 50.6 million managed customers. In addition, it is the
only mobile telephony company operating in all the region's key markets, which
together have over 421 million inhabitants. This leaves the company well
positioned to leverage the strong growth potential of the LatAm market.

Telefonica Moviles

Telefonica Moviles manages all the Telefonica Group's cellular assets in the
world. It is one of the world's largest mobile telephony operators and leader in
the Spanish- and Portuguese-speaking markets. It has operations on three
continents and a managed customer base of over 72 million (at the end of the
third quarter of 2004) including those of BellSouth's Latin American operators,
whose acquisition was agreed in March this year. In 2003 Telefonica Moviles
reported 10,070 million euros of operating revenues (+10.2%), EBITDA of 4,463
million euros (+19.5%) and net profit of 1,608 million euros. Telefonica Moviles
is a founding member of the European mobile operators' alliance, FreeMove.

Telefonica Moviles' shares are traded on the Spanish and New York Stock
Exchanges with the ticker TEM. For more information visit our website:
www.telefonicamoviles.com

Telefonica Group

Telefonica Group is one of the world's leading telecommunications companies.
Telefonica is the leading operator in the Spanish and Portuguese speaking
markets and the fourth biggest operator in the world in terms of market
capitalisation. Its activities are centered mainly on the fixed and mobile
telephony businesses with broadband as the key tool for the development of both
of these. The company has a significant presence in 16 countries and has
operations in approximately 40. Telefonica has a strong presence in Latin
America, where the company operates in eight countries, where its strategy is
clearly growth oriented. Its customer base amounts to more than 115 million
clients worldwide.




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