Dividend Declaration

Telefonica SA
03 October 2003


'TELEFONICA, S.A.', in accordance with that stated in article 82 of the
Spanish Stock Market Law (Ley del Mercado de Valores) hereby informs of the
following:


                        SIGNIFICANT EVENT


     Pursuant to the resolution adopted by the shareholders of 'Telefonica,
S.A.' at their Annual General Meeting of April 11th, 2003, we hereby inform all
shareholders that the Company will proceed to make the second of the two
payments approved at the said General Meeting as an extraordinary cash
distribution of additional paid-in capital.


     Consequently, on October 15th, 2003 'Telefonica, S.A.' will pay to all duly
entitled outstanding Company shares the amount of twelve euro cents (0.12 euros)
per share.


     This payment shall be executed on the aforesaid date by Banco Bilbao
Vizcaya Argentaria, S.A. through the participating entities ('entidades
participantes') affiliated to the Spanish Management Company of Securities
Registration, Clearing and Settlement Systems (Sociedad de Gestion de los
Sistemas de Registro, Compensacion y Liquidacion de Valores).


     It is hereby placed on record that the shares entitled to participate in
this extraordinary cash distribution of additional paid-in capital are all
shares of the Company issued and outstanding, except for own shares held as
treasury stock by 'Telefonica, S.A.'.


                                                       Madrid, October 3th, 2003


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