2. Investor Conference March 2001, Rio de Janeiro. 1 This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telefónica undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefónica´s business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company´s Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission. Safe Harbour

3. Investor Conference March 2001, Rio de Janeiro. 2 Telefónica´s Financial Profile and Prospects

4. Investor Conference March 2001, Rio de Janeiro. 3 Telefónica’s financial profile: Y2k Ebitda: Profitability, growth and diversification A milestone year in terms of assets growth Strong balance sheet Stable Financial strategy and timely execution

5. Investor Conference March 2001, Rio de Janeiro. 4 Steady growth record EuroMill.19992000YoYGrowth TURNOVER22,95728,48524% EBITDA10,88511,9199.5% NET INCOME1,8052,50538.8% E.P.S. (Euros)0.570.6718.5%

6. Investor Conference March 2001, Rio de Janeiro. 5 Data / Media / Internet 4% Cellular 26% Wireline (LATAM) 34% Wireline (Spain) 36% EBITDA: Growth + diversification Revenue 2000: 28,485 Millions Euro Wireline (LATAM) 44% Wireline (Spain) 36% Cellular 20% EBITDA 2000: 11,919 Millions Euro

7. Investor Conference March 2001, Rio de Janeiro. 6 2000E EBITDA (Euro Bn) 3.3 9.7 10.5 11.9 12.6 13.8 Deutsche Telekom Telecom Italia TelefónicaFrance Telecom BTKPN EBITDA: SIZE

8. Investor Conference March 2001, Rio de Janeiro. 7 2.5 1.3 1.8 199819992000 11.9 10.9 9.3 199819992000 28.4 22.9 17.5 199819992000 RevenuesEBITDANet Income Strong historical growth (Euro Bn)

9. Investor Conference March 2001, Rio de Janeiro. 8 A milestone year: Asset growth... 62,211 45,571 19992000 Consolidated Net Assets (Euro Mill.) YoY growth: + 36.5%

10. Investor Conference March 2001, Rio de Janeiro. 9 … while preserving a strong balance sheet Net Debt20,47226,951 Minority Interest10,614 9,330 Shareholders’ Equity14,48525,930 Total Capital Employed45,57162,211 Net Debt / Total Capital Employed44.9%43.3% Net Debt / EBITDA (x) 1.9 2.3 EBITDA / Net financial expenses (x) 6.1 6.4 19992000

11. Investor Conference March 2001, Rio de Janeiro. 10 With a clear financial strategy and timely execution Equity funding Full access to LATAM’s cash flows Optimising WACC and credit rating Financial flexibility Enhancing stability of a growing cash flow Efficiency and transparency in capital allocation

12. Investor Conference March 2001, Rio de Janeiro. 11 Equity funding: now and before... 2000 Equity issues Bn Eur Verónica21 Endemol 5 New equity Mobile IPO 3.3 TPI 3% sale 0.1 Motorola Assets2 Total Equity31.4 New equity: 82% of attributable UMTS licenses costs Verónica: EPS accretive by 29.7% (*) (*) Before extraordinary income; after extraordinary income EPS accretive by 15.3%

13. Investor Conference March 2001, Rio de Janeiro. 12 Rating stability 09/9912/9903/0006/0009/0012/0002/01 AA+ FT BT AA FT KPN AA- FT DT A+ TELEFONICA FT BT A VODAFONE BT VODAFONE A- KPN FT DT VODAFONE BBB+ KPN

14. Investor Conference March 2001, Rio de Janeiro. 13 7 5.5 19992000 (*) … Enhancing financial flexibility Average debt maturity (years) (*) Average life global bond: 12.5 years / Amortisation of short term debt

15. Investor Conference March 2001, Rio de Janeiro. 14 … and diversifying risk USD 41.7% EURO 37.6% Other 1.6% LATAM 19.1% By currency (*) Domestic bonds 30.8% Loans 43.1% Euro Medium Term Notes + Commercial Paper 5.3% Global bonds 20.8% By instrument (*) (*) Net Debt breakdown (31/12/00)

16. Investor Conference March 2001, Rio de Janeiro. 15 Financial Profile above European peers Net Debt/Market Cap 20/02/01 Net Debt/ EBITDA Source: analyst estimates 2.3 4.65 5.18 4.36 DTFTBTTEF 35.10% 77.00% 71.00% 69.60% DTFTBTTEF

17. Investor Conference March 2001, Rio de Janeiro. 16 Cash - flows accretion Verónica: 3.6 billion Euro additional cash - flow Avoiding intrinsic subordination Internal loans (*): – TEM : 4.9 Billion Euro – TISA : 585 M USD – T. Media : 945 M USD Enhanced financial flexibility (*) Market prices

18. Investor Conference March 2001, Rio de Janeiro. 17 11% 5.4% 20.5% Stand-alone LATAM countriesTelefónica's LATAM portfolioTelefónica's LATAM + SPAIN portfolio Improving cash - flow quality US$ EBITDA Average Standard Deviation

19. Investor Conference March 2001, Rio de Janeiro. 18 Services Corporation Business lines CompaniesThird parties Looking for more efficiency Services Expected NPV of USD 850 millions Shared Services Centers Services

20. Investor Conference March 2001, Rio de Janeiro. 19 Improving capital allocation WIRELINEYELLOW PAGES WIRELESSCALL CENTERSDATAINTERNET ESPAÑA USA MÉJICO CHILE BRASIL PERÚ ARGENTINA WIRELINE YELLOW PAGES WIRELESS CALL CENTERS DATA INTERNET 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% WACC

21. Investor Conference March 2001, Rio de Janeiro. 20 What’s next Solid and well diversified revenue growth Solid and well diversified revenue growth Reinforcing capital discipline: Capex / Operating Revenue Reinforcing capital discipline: Capex / Operating Revenue Improving asset turnover: Revenue / Capital employed Improving asset turnover: Revenue / Capital employed Well balanced and growing EBITDA margin: EBITDA / Revenue Well balanced and growing EBITDA margin: EBITDA / Revenue Enhancing Free cash flow margins Enhancing Free cash flow margins

22. Investor Conference March 2001, Rio de Janeiro. 21 Solid and well diversified revenue growth 13%-15% 24.00% 2000CAGR 00/04 Wireline (Spain) 22% Wireline LATAM 20% Data / Media / Internet 21% Cellular 37% Revenue Breakdown 2004 Revenue growth

23. Investor Conference March 2001, Rio de Janeiro. 22 Reinforcing Capital discipline 31% 21%-23% 2000 (*)Average 2001 - 2004 (*) 2000 : UMTS Licenses / Op. Revenue = 41% (Capex / Op. Revenue)

24. Investor Conference March 2001, Rio de Janeiro. 23 0.50-0.55 0.46 2000Average 2001 - 2004 Improving Asset turnover (*) (*) Asset turnover: Revenue / Capital employed

25. Investor Conference March 2001, Rio de Janeiro. 24 Well balanced and growing EBITDA 41.8% 38%-41% 2000Average 2001 - 2004 Wireline (LATAM) 28.5% Data / Media / Internet 24.5% Wireline (Spain) 26.7% Cellular 20.3% EBITDA breakdown 2004 EBITDA / Operating Revenue

26. Investor Conference March 2001, Rio de Janeiro. 25 Enhancing Free Cash Flow margins 8%-12% 2.8% 2000Average 2001-2004 % Free Cash Flow / Operating Revenue

27. Investor Conference March 2001, Rio de Janeiro. 26 Messages Proven management execution capability Accountability and transparency Diversification and growth Capital allocation discipline A value creating group with a focused strategy Unique position to take advantage of the market environment

28. Investor Conference March 2001, Rio de Janeiro. 27