UMTS Bidding Process

Telefonica SA
24 January 2001

'TELEFONICA, S.A' and 'TELEFONICA MOVILES S.A' hereby announce to the National
Spanish Securities Commission (CNMV) the following

                         SIGNIFICANT EVENT

Telefonica Moviles S.A. and Suez Lyonnaise des Eaux have decided not to take
part in the UMTS bidding process in France.

Neither of these two companies consider that the price of the licenses reflect
the market's current situation, given that the most recently awarded UMTS
licenses in Europe (Austria, Italy and Switzerland) has shown a clear downward
price trend, coinciding with the revaluation by investors of the mobile sector.

Telefonica Moviles S.A. and Suez Lyonnaise des Eaux intend to jointly continue
researching development opportunities in the communications sector in France.

In witness thereof, it is requested to the Spanish Securities and Exchange
Commission (Comision Nacional del Mercado de Valores) that, acknowledging this
document, admits it in Madrid, January 24, 2001.

D.Diego Lozano Romeral              D.Antonio Hornedo Muguiro
Non-director Vicesecretary          Non-director Vicesecretary
of the Board of Telefonica S.A      of the Board of Telefonica Moviles S.A