Subsid's Disposal of Interest

Telefonica SA
18 July 2000


'TELEFONICA, S.A.', in accordance with that stated in article 82 of the Spanish
Stock Market Law and that set forth in the Circular Letter 14/1998 of the
Spanish Securities Commission of December 28th, 1998, hereby announces the
following:

                         SIGNIFICANT EVENT

The shareholders of the Brazilian company 'TBS Participacoes, S.A', one of which
being 'Telefonica Internacional, S.A.' (a wholly-owned 'Telefonica, S.A.'
subsidiary) who holds a 53 percent stake, have signed a memorandum of intent for
the sale of all the shares that make up the aforementioned Brazilian company to
'Brasil Telecom, S.A.' for an initial price of $800 million.

'TBS Participacoes, S.A.' holds 85.19% of the voting shares of the 'Compania
Riograndense de Telecomunicacoes, S.A.' (CRT), and is the fixed telephony
operator for the state of Rio Grande do Sul.  Telefonica is obliged to divest
itself of its indirect participation in this company in compliance with
Brazilian regulations, as this participation is incompatible with Telefonica's
majority stake in the state of Sao Paulo's fixed telephony operator.