Stmnt re General Shrhldrs Mtg

Telefonica SA
5 October 2001


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

                            SIGNIFICANT EVENT

'Telefonica, S.A' has been notified of the existence of a legal procedure to 
impugn the resolutions undertaken by the General Shareholders' Meeting of this 
same company of June 15th, 2001.

The aforementioned procedure derived from the legal action taken by Javier Sotos
Garcia, the holder of 312 Telefonica, S.A. shares, who also impugned the 
resolutions undertaken by the Extraordinary General Shareholders' Meeting of 
February 4th, 2000.

As a result of the aforementioned legal action, Javier Sotos Garcia intends to 
achieve that the resolutions undertaken by the General Shareholders' Meeting be 
declared legally null and void. These points are numbered as follows on the 
Agenda:
point I (the approval of the Annual Accounts for fiscal year 2000 and the 
management realized by the Board of Directors throughout that same year); 
point X (the capital increase carried out in order to acquire the shares of 
several Mexican cellular operators pertaining to Motorola) and 
point XII (the capital increase to cover the options program on Telefonica 
shares for Endemol employees).

The aforementioned impugnment is based on the presumed violation of the right to
information of the impugning shareholder and the presumed violation of the legal
regime of the exclusion of the pre-emptive right on capital increases.

'Telefonica, S.A.' is wholly convinced that the outcome of the aforementioned 
legal action will be highly satisfactory in its interest.

Finally, it is underlined that this legal action in no way whatsoever implies 
the postponement of the execution of the resolutions approved by the General 
Shareholders' Meeting which are the object of this impugnment.

Madrid, October 5, 2001