Notification of establishment of daughter

company Informační linky, a.s.

January 4, 2012

Telefónica Czech Republic, a.s. established a daughter company named Informační linky, a.s. and its formation was confirmed by the registration court as of 1^st January 2012. The daughter company was formed by a contribution of part of enterprise - organizational unit Information and assistance services that provides customers information services on telephone numbers 1180, 1181 and 1188.  By the spin-off all components of the mentioned part of enterprise (including employees) were transferred into the daughter company. Information services will be provided to customers in the same manner and the same quality as yet.

Contacts

TELEFÓNICA, S.A.  as provided in article 82 of the Spanish Stock Market Act (Ley del Mercado de Valores), hereby reports the following

SIGNIFICANT EVENT

                   The Board of  Directors of Telefónica, S.A.  at its meeting held today, has accepted the resignation of the Proprietary Director and Vice-Chairman, Mr. Vitalino Nafría Aznar, (who was a member of the Audit and Control Committee, as well as of other Board Committees). The Board of Directors has unanimously thanked Mr. Vitalino Nafría for his effort, dedication and work as a member of this Board during these 6 years.

                   Likewise, the Board of Directors has agreed, following a favorable report from the Nominating, Compensation and Corporate Governance Committee,  the interim appointment of  Mr. Ignacio Moreno Martínez as new member of the Board of Directors, as Proprietary Director, as well as the appointment of Mr. José María Abril Pérez as Vice-Chairman of the Board.

Madrid, December 14^th, 2011.