Notarial Deed Signed

Telefonica SA
21 February 2001

                              SIGNIFICANT EVENT

TELEFONICA, S.A., in accordance with that stated in article 82 of the Spanish
Stock Market Law hereby informs of the following:

The notarial deed for the formalizing and execution of the increase in share
capital of  'Telefonica, S.A.' in the nominal amount of Euros  31,504,244  has
today, February 20th, 2001, been signed. This increase will take place through
the issue  of  the same number of ordinary shares of the same class and  series 
and carrying  the  same  rights as those Company shares already outstanding, 
with an issue premium of four euros per share. These new shares have been
subscribed and totally  paid-in,  through  cash payments, by Banco  Bilbao 
Vizcaya  Argentaria (BBVA) and Caja de Ahorros y Pensiones de Barcelona (La
Caixa), Each of  these two  companies  has taken half of the shares, acting as
the agent  bank  for  the stock options plan 'TIES' for the Telefonica Group's
employees, in order to cover the option given to these within the aforementioned
plan.

As  a consequence of the execution of the capital increase, as authorized by the
Annual  General Shareholders' Meeting of April 7th, 2000, the share  capital  of
'Telefonica, S.A' now stands at Euros 4,460,152,265, divided in an equal  number
of  shares of the same series and of a nominal value of one euro each, which are
totally paid-in.

The  above  mentioned deed will be immediately presented for its registering  on
the  Madrid  Mercantile  Register, and, once  this  has  been  registered,  the
application  for the listing of the new shares will be presented  to  the  stock
exchanges where the Company's shares are already traded.

Madrid, February 20th, 2001