Capital Increase, etc.

Telefonica SA
17 July 2000


              TO THE SPANISH NATIONAL SECURITIES MARKET COMMISSION

Jose Maria Mas Millet, acting on behalf of and in the name of TELEFONICA,  S.A.
(the 'Company' or 'TELEFONICA'), in his position as  Secretary General and
Secretary of the Board of the Company, before the Spanish National Securities
Market Commission

                             HEREBY CERTIFIES THAT

I.        The Annual General Shareholders' Meeting of the Company, held on
          April 7th, 2000, resolved to increase the Company's share capital by  
         a nominal amount of up to euros 215,200,000, through the issue of      
        215,200,00 new ordinary shares of a nominal value of
          one (1) euro each, with the total elimination of pre-emptive rights,  
         in order to address the exchange established for the acquisition of    
        the ordinary shares, or the securities that represent these, of the     
       Dutch company Endemol Entertainment Holding N.V. (hereinafter            
      'ENDEMOL') through a public exchange offer, as well as delegating
          in the Board of Directors, which, in turn may delegate in the         
         Standing Committee or any of the Directors, the execution of the       
        capital increase in accordance with article 153.1,a) of the Corporate   
       Law.

II.       The aforementioned capital increase was resolved subject to the Offer 
         being effective.

III.      This document, in accordance with that stated in article 26 of the
          Securities Market Law 24/1988, of July 28th and article 5.2.a) of     
         Royal Decree 291/1992,  of March 27th, regarding Issues and Public     
        Tender Offers,  represents the compulsory  Prior  Announcement of the   
       increase in  share  capital  of  the Company, stating that the           
      principal characteristics of this are the following:

1. The Issuer

The issuer of the shares deriving from the capital increase is TELEFONICA, S.A.,
with its head  offices in Madrid, c/ Gran Via 28 and registered  under  Fiscal
Identification Code (CIF) number A-28015865, in the Madrid Mercantile  Register,
Volume 12534, Sheet 21 and Page M-6164.

The Company forms part of the Telefonica Group in accordance with that stated in
article 4 of the Securities Market Law, with the Company acting as the head of
this group.

2. Type and characteristics of the shares to be issued and the amount of
   the issue

The shares derived from the capital increase are ordinary TELEFONICA shares with
a nominal value of one (1) euro each, of the same series and carrying the same
rights as the remaining TELEFONICA shares currently outstanding, and will
represented by book entries.

The new shares to be issued under the capital increase will be entitled to  the
total amount of the dividends to be distributed from the date of the issuance of
these.

The number of shares to be issued under the capital increase is up to
215,200,000 with a nominal value of up to euros 215,200,000. The shares are to
be issued  with a premium of euros 2.875 for each share issued, to reach a
maximum total of euros 618,700,000. Therefore, the total figure for the Issue
will stand at a maximum of euros 833,900,000.

The Company  will apply for the official listing of these shares  on  the
four  Spanish  stock exchanges, as well as their trading on the  Automated
Quotation  System  and  their listing on the New  York,  London,  Frankfurt,
Paris,  Buenos  Aires,  Lima,  Sao Paulo and  the  other  Brazilian  stock
exchanges,  and  their listing on the Stock Exchange  Automated  Quotation
System (SEAQ International).

3. Subscribers to whom the issue will be offered

The aim of the capital increase, to which this Announcement refers, is
that of addressing the exchange of the ordinary ENDEMOL shares, deriving
from the Offer launched by TELEFONICA on 34,688,690 ordinary ENDEMOL
shares.  Therefore, the holders of ENDEMOL shares that contribute these  to
the Offer launched  by TELEFONICA will be entitled to the TELEFONICA
shares issued as a result of the capital increase.

The exchange ratio has been set at 6.2033 new TELEFONICA shares for every
ordinary ENDEMOL share.

4.  Allotment process

The subscription  and payment of the new TELEFONICA shares  derived  from
the  capital increase will be made by the ENDEMOL shareholders that accept
the Offer launched by TELEFONICA.

Once the newly issued TELEFONICA shares have been subscribed and paid  in
and  the  capital increase has been registered on the Mercantile Register,
the  exchange of TELEFONICA shares will be made with the acceptors of  the
Offer.  The exchange will take place approximately ten (10) weekdays,  to
be  dictated  by the Madrid Stock Exchange, dating from the close  of  the
period for the delivery of the ENDEMOL shares to TELEFONICA.

Bearing in mind that the increase will take place through the exchange  of
ENDEMOL  shares, no payment will be made by the subscribers to the capital
increase.

5. Entities involved in the Issue
        
All those entities, which in the course of their normal activities  form
part of the Spanish Settlement and Clearance Service (SCLV),  will  take
part in the allotment of the shares derived from, this capital increase.

6.  Prospectus of the Issue

TELEFONICA will present the corresponding Abridged  Prospectus  on  the
issue  derived  from  this  capital increase, in  order  for  this  to  be
verified and registered by the Spanish National Securities Commission,  in
accordance with that stated in article 5.2.d) of Royal Decree 291/1992.

It is hereby requested that the Spanish National Securities Commission
accept  this  Prior  Announcement regarding the capital increase,  and,
having  fulfilled the necessary requirements, proceed to register this in
the Commission's corresponding Register.

Madrid, July 14th, 2000

TELEFONICA, S.A.

P.p

Jose Maria Mas Millet

Restrictions

The distribution of the Offer Document and the making of  the  Telefonica
Offer in jurisdictions other than the Netherlands, may be restricted  by
law and therefore persons into whose possession  this  Offer  Document
comes, should inform themselves about and observe any such restrictions.
Any  failure to comply with these restrictions may constitute a  violation
of the securities laws of any jurisdiction.  Neither  Telefonica  nor
ENDEMOL  assume any responsibility for any violation of such  restrictions
by anyone.

United States of America

The Telefonica  Offer is not being made, directly or  indirectly,  in  or
into  the United States, or by use of the United States mails, or  by  any
means  or instrumentality of United States interstate or foreign commerce,
or  any facility of a United States national securities exchange, and  the
Telefonica Offer cannot be accepted  by  any  such use, means or
instrumentality  to or from within the United States. Accordingly,  copies
of the Offer Document and any related materials are not being mailed  or
otherwise  distributed or sent in or into the United States  and  persons
receiving  such  documents (including custodians, nominees  and  trustees)
must not distribute or send them in, into or from the United States  and
doing so will render invalid any related purported  acceptance  of  the
Telefonica Offer.
The Telefonica Shares to be exchanged for ENDEMOL Ordinary Shares
pursuant  to the Telefonica Offer have  not  been, and will not be,
registered under the US Securities Act of 1933, as amended, nor under  the
laws of any state  of the United States and may not be  offered,  sold,
resold or delivered, directly or indirectly, in or into the United States
except pursuant  to an exemption from the registration  requirements  of
such Act.

United Kingdom

The Telefonica Offer is not being made, directly or  indirectly,  in  or
into the United Kingdom. Accordingly copies of this Offer  Document  may
not  be distributed, directly or indirectly, to any person in the  United
Kingdom.
A  prospectus in respect to the Telefonica Shares to be  exchanged  for
ENDEMOL Ordinary Shares pursuant to the Telefonica Offer has not been  and
will  not  be  prepared  pursuant to the UK  Public  Offer  of  Securities
Regulations 1995. Accordingly, the Telefonica Shares may not be  sold  or
offered, directly or indirectly, to any person in the United Kingdom.