Stake in Telecom Italia

Telefonica SA
09 May 2007



As provided in article 82 of the Spanish Stock Market Act (Ley del Mercado de
Valores), TELEFONICA, S.A. hereby reports the following



NOTICE



According to the Significant Event filed last April 28th, the Italian-Spanish
consortium, in which TELEFONICA holds a 42.3% of the shares, will have a
23.6% stake in TELECOM ITALIA's capital. This stake shall be held in TELECOM
ITALIA's ordinary capital, that is to say, the capital that confers voting
rights, and shall therefore not include the so-called 'savings shares' (azioni
di risparmio), which do not confer political rights. If these shares were
hypothetically taken into account, TELEFONICA's indirect stake in TELECOM
ITALIA would, in fact, amount to 6.9%.



Exclusively on the basis of the ordinary capital, the only one relevant for
voting purposes and, consequently, for the appointment of Directors,
TELEFONICA's indirect stake in TELECOM ITALIA, as notified in the Significant
Event, would be 10%. Consequently, the number of Directors that TELEFONICA
may appoint on TELECOM ITALIA's Board, according to the agreements reached, is
consistent with its 10% share in the company's Governance.





Madrid, May 8th, 2007.
















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