Stake increase in PT

Telefonica SA
29 April 2004

                            ANTONIO J. ALONSO UREBA

                          Director, General Secretary

                    and Secretary to the Board of Directors

                               TELEFONICA, S.A.






Telefonica S.A., as provided in article 82 of the Spanish Stock Market Act (Ley
del Mercado de Valores), hereby



                                    NOTIFIES




That pursuant to the applicable regulations, Telefonica, S.A. has today notified
the Portuguese 'Comissao do Mercado de Valores Mobiliarios' of the increase
in its holding in the share capital of the telecommunications company Portugal
Telecom SGPS, S.A.


Subsequent to the acquisition, Telefonica, S.A. directly holds 89,132,630 shares
of Portugal Telecom SGPS, S.A., representing 7.106 % of its share capital. In
addition, it should be noted that Telefonica, S.A. holds an indirect stake
representing 1.062% of the Portugal Telecom, SGPS, S.A. share capital through
the following Grupo Telefonica companies:


      Subsidiary          Grupo Telefonica %     PT shares    % of PT capital 
                               ownership in                                   
                                subsidiary                                    

  Allianca Atlantica                93.76%       5,329,500            0.424%          
  Holding B.V.                                                                

  Telecomunicacoes de Sao           87.49%       7,994,250            0.637%          
  Paulo, S.A.-TELESP                                       



Madrid, April 29th , 2004





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