Share Capital Increase

Telefonica SA
15 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 1,123,072 has
today, February 14th, 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 the employees of the different
Telefonica Group companies that have decided to participate in the Group's stock
options plan 'Programa TIES'.

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 4,428,648,021, divided in an equal 
number of shares of the same series and of a nominal value of one euro each,
which is 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
exchange where the Company's shares are already traded.

                            Madrid, February 14th, 2001