Telesp Group

Telefonica SA
4 November 1999



              CORPORATE RESTRUCTURING OF TELESP GROUP'S COMPANIES
          
The Telesp Group's companies in Brazil yesterday officially requested before
Anatel (Agenda Nacional de Telecomunicacoes), the country's   telecommunications
regulator, the authorization to carry out a corporate and   operating
restructuring which consists of the merger of the companies that make up the
Group, Telesp Participacoes S.A.(TelespPar), Telecomunicacoes de, Sao Paulo S.A.
(Telesp), Companhia  Telefonica  da Borda do Campo S.A. (CTBC) and SPT
Participacoes S.A. (SPT).  Following this restructuring the Group's companies
will form part of TelespPar which will be named Telecomunicacoes de Sao Paulo
S.A. - Telesp - and will be responsible for the operating of fixed telephony
services under the concessions currently held by the different Telesp Group
companies.

Subject to the granting of the aforementioned authorization, these companies
will present the merger operations for approval, firstly by their corresponding
Boards of Directors and subsequently by their General Shareholders' Meetings.
This restructuring intends for CTBC to be taken over by Telesp, followed by  the
takeover of Telesp, by Telespar and, finally, SPT will be taken over  by
TelespPar which will provide all the telecommunications services previously
provided by the aforementioned companies.

TelespPar's shares and its respective ADRs (American Depositary Receipts) will
continue to be traded on the same markets that they have been traded on to date.

The management teams of TelespPar, Telesp, CTBC and SPT believe that this
restructuring will create value for the stake holding companies due to the
possibility of (1) rationalizing the management of their operating assets
particularly in the cases of Telesp and CTBC;(2) the gaining of synergies due 
to the elimination of administrative duplicity; (3)  the  incorporation of a new
company with a greater degree of stock market capitalization; and (4) improved
cash flow, as a result of the takeover of SPT by TelespPar, owing to the effect
of the fiscal credits that are expected to result from the amortization of the
goodwill paid in the privatization of TelespPar.

It should be underlined that SPT is a company that has been incorporated created
in order to hold a controlling participation in TelesPar and to permit the
carrying out of the aforementioned restructuring without any transfer to the
resulting company, TelespPar, of the end-investors' financial obligations. 
SPT's assets include the goodwill derived from the investment made in the
privatizazion of TelespPar. This restructuring has been drawn up in such a way
that it will have no adverse effect on TelespPar's profit and loss accounts due
to the amortization of the goodwill.

In accordance with that stated in its by-laws, TelespPar has hired a
prestigious financial entity as its independent experts to carry out the 
economic financial of the restructuring whose results confirm the equal 
treatment applied to the participating companies.

This restructuring will in no way change the current situation of the control of
the Telesp Group through TelespPar.

It is foreseen that General Shareholders' Meetings will be held this month to
decide on the aforementioned restructuring.