Press Release Investor Conf.

Telefonica SA
8 March 2002

PRESS RELEASE




Telefonica explains the group's main strategic lines for the coming four years
in the Second Conference of Investors and Analysts being held in Seville




CESAR ALIERTA ANNOUNCES SIGNING OF AN AGREEMENT IN PRINCIPLE FOR PURCHASE OF 65%
OF PEGASO

Seville, 7 March 2002. Cesar Alierta, chairman and chief executive officer of
Telefonica, has announced the signing of an agreement in principle to purchase
65% of the Mexican mobile telephony operator Pegaso. Telefonica intends to
integrate the newly acquired operator with Telefonica Moviles Mexico, the
company formed from the 20 October acquisition of Motorola's assets in the
country. Specifically, Telefonica Moviles Mexico groups together the operators
in northern Mexico: Bajacel, Movitel, Norcel and Cedetel.


The deal announced by the head of Telefonica makes the company Mexico's second
largest mobile telephony operator and forms part of the group strategy, with
priority attention on selective expansion in Latin America, primarily in Mexico
and Brazil, where recent certification of accomplishment of milestones marks a
decisive step for branching operations outside the State of Sao Paulo.
Nevertheless, and despite a clear strategy of expansion in Latin American and
European markets, the Telefonica group will undertake these investments on a
selective basis pursuant to clear criteria of operating efficiency.


One of the main Telefonica initiatives for the next four years highlighted by
Cesar Alierta seeks to achieve greater commercial segmentation of its customer
base as a means of widening margins and enhancing its offering of services. For
2005 the Company expects to add close to 13 million broadband customers, some 4
million of whom will be ADSL subscribers, along with 8.5 million GPRS and UMTS
users. In addition, he ratified the Company's projection that it will have a
total of 100 million customers by year-end 2004.


The Telefonica group will intensify its efforts as supplier of services,
solutions and applications, while continuing to strengthen connectivity. Toward
this end, amongst other measures Alierta announced the creation of a new
Corporate Content Unit.


Alierta reviewed the main pillars of the Company's strategy at the inauguration
of the Second Conference of Investors and Analysis being held in Seville. This
Second Conference, a followup to the one held in Rio de Janeiro last year, aims
to elucidate to the international financial community the foundations and
strengths underpinning the group's future growth and explain the development
strategy for 2002-2005.






The financial strength of Telefonica continues to be one of the key factors for
the group's development and expansion. The Company's performance with respect to
the rest of the sector in Europe and its demonstrated credibility in capital
markets are based on its geographical and asset diversification and on a
judicious approach to financial policy that facilitates investments in new
opportunities as they arise.


Fernando Abril-Martorell, C.O.O. of the Telefonica group, who will deliver his
talk on the main management challenges facing the group, also gave an
introduction to the different areas in which the conference is organised. The
first day is dedicated to fixed telephony, data and Internet, including the
fixed carriers in Spain and Latin America and the global units focused on
Internet, data services and the recently created international wholesale
services unit. Although they all have specific and differentiated business
models, they also share closely linked aspects whose expansion will reciprocally
strengthen their operations. Development of broadband networks and technologies
will allow the possibilities offered by Internet to be captured and enrich
integrated business services and solutions. On the whole, broadband represents
an enormous growth opportunity for the Telefonica group.


The second session is dedicated to the wireless telephony unit, in relation to
which the C.O.O. underscored that, although its specificity, mobility and global
nature clearly differentiate this business line, it should also be considered as
offering increasingly complex broadband services that represent an excellent
growth opportunity and a major step forward for the Information Society. The
second day's activity also covers the companies dedicated to the advertising and
contents business, as contributors to strengthening the Telefonica group's
competitiveness in broadband services.


The fourth and final area includes call centers or telemarketing and three
concrete examples of horizontal initiatives promoted from the Corporate Centre
and aimed at enhancing efficiency. On the subject of the horizontal initiatives,
the C.O.O. indicated that the ones presented will not be exhaustive, but
representative examples of the possibilities for achieving efficiency gains. The
Conference will present the ATIS project, aimed at homogenising information
systems and platforms; the advanced procurement system SAC (from the acronym for
Sistema Avanzado de Compras), which will maximise the group's purchasing
capacity vis-a-vis all types of supplies, whether of services or equipment; and
the shared services centres (CSCs, for Centros de Servicios Compartidos), which
facilitates achievement of operational excellence in the various companies by
concentrating all support activities.


The Conference will end with a talk by the C.O.O. giving an integrated overview
of the different business lines, highlighting the key management achievements of
the group during 2001 and the challenges that await it in the medium-term
future. Those challenges may be summarised as advancing with an integrated
customer-focused approach based on innovative and quality services, deepening
and carrying out new initiatives to boost efficiency, and selecting and adapting
investment requirements to those initiatives that offer the best growth and
earnings opportunities.


After the presentation on financial matters to be given by chief financial
officer Jose Maria Alvarez-Pallete, chairman Cesar Alierta will close the
conference.

This meeting brings together investors and analysts from all over the world to
give the financial world an opportunity to obtain firsthand information on the
Company's strategies and to maintain a policy of informational transparency and
permanent dialogue with Telefonica. Despite the success of the Rio Conference,
Telefonica has drawn even more participants to this gathering, bringing together
close to 300 investors and accredited analysts. The first conference has
contributed to making Telefonica one of Europe's most transparent companies in
an ongoing effort being waged by the group's various management bodies.




                      This information is provided by RNS
            The company news service from the London Stock Exchange