FORM 6-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TTSoGd03BWV9kHiNKR5OJTvVTnBv+xCov73Li/sGeucsdTq4yAjZnZUz1nzPHdAW AwNq5kQnjrel8mB1irXUDQ== 0000950123-09-019930.txt : 20090702 0000950123-09-019930.hdr.sgml : 20090702 20090702133435 ACCESSION NUMBER: 0000950123-09-019930 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 29 CONFORMED PERIOD OF REPORT: 20090702 FILED AS OF DATE: 20090702 DATE AS OF CHANGE: 20090702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEFONICA S A CENTRAL INDEX KEY: 0000814052 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 000000000 STATE OF INCORPORATION: U3 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09531 FILM NUMBER: 09926116 BUSINESS ADDRESS: STREET 1: GRAN VIA 28 CITY: 28013 MADRID STATE: U3 ZIP: 00000 BUSINESS PHONE: 00 34 91 584 0640 MAIL ADDRESS: STREET 1: GRAN VIA 28 CITY: 28013 MADRID STATE: U3 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TELEPHONE COMPANY OF SPAIN DATE OF NAME CHANGE: 19880708 6-K 1 u07160e6vk.htm FORM 6-K FORM 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of July, 2009

Commission File Number: 001-09531

TELEFÓNICA, S.A.

(Exact name of registrant as specified in its charter)

Distrito C Ronda de la Comunicación , s/n
28050 Madrid, Spain
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o No þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o No þ

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

TABLE OF CONTENTS


Exhibit Index
SIGNATURE
EX-1.1
EX-4.2
EX-4.3
EX-4.6
EX-99.1

Telefónica, S.A.

This Form 6-K is incorporated by reference into the registration statement of Telefónica, S.A. and Telefónica Emisiones, S.A.U. filed with the Securities and Exchange Commission on May 8, 2009 (File No. 333-159062). Telefónica, S.A. is filing the documents set forth in the attached Exhibit Index.

Exhibit Index


Item

1.1		Underwriting Agreement, dated June 22, 2009

4.2		Form of First Supplemental Indenture for the Fixed Rate Senior Notes Due 2015 among Telefónica Emisiones, S.A.U., as Issuer, Telefónica, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee and Paying Agent

4.3		Form of Second Supplemental Indenture for the Fixed Rate Senior Notes Due 2019 among Telefónica Emisiones, S.A.U., as Issuer, Telefónica, S.A., as Guarantor, and The Bank of New York Mellon, as Trustee and Paying Agent

4.4		Form of Security Certificate representing the Fixed Rate Senior Notes Due 2015 (included in Exhibit 4.2)

4.5		Form of Security Certificate representing the Fixed Rate Senior Notes Due 2019 (included in Exhibit 4.3)

4.6		Form of Guarantee of Telefónica, S.A.

99.1		Form of Letter of Appointment, among Telefónica Emisiones, S.A.U., as Issuer, Telefónica, S.A., as Guarantor and Acupay System LLC, as Tax Certification Agent (pursuant to and amending the Tax Certification Agency Agreement among Telefónica Emisiones, S.A.U., as Issuer, Telefónica, S.A., as Guarantor, Acupay System LLC, as Tax Certification Agent and The Bank of New York Mellon (as successor to JP Morgan Chase Bank, N.A.), as Paying Agent and Calculation Agent, dated as of June 20, 2006 (incorporated by reference to Exhibit 99.1 of Telefónica, S.A.’s Form 6-K filed on June 20, 2006))

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	TELEFÓNICA, S.A.
Date: July 2, 2009	By:	/s/ Santiago Fernández Valbuena
		Name:	Santiago Fernández Valbuena
		Title:	Chief Financial Officer

EX-1.1 2 u07160exv1w1.htm EX-1.1 EX-1.1

EXHIBIT 1.1

TELEFÓNICA EMISIONES, S.A.U.
(a company with limited liability organized under
the laws of The Kingdom of Spain)

4.949% Fixed Rate Notes due January 15, 2015

5.877% Fixed Rate Notes due July 15, 2019

unconditionally and irrevocably guaranteed
by
TELEFÓNICA, S.A.

UNDERWRITING AGREEMENT

June 22, 2009

Telefónica Emisiones, S.A.U.
Telefónica, S.A.
Distrito C, Ronda de la Comunicación, s/n
28050 Madrid

Ladies and Gentlemen:

Telefónica Emisiones, S.A.U., a sociedad anónima unipersonal incorporated under the laws of The Kingdom of Spain (the “Company”), proposes to issue and sell to the underwriters (the “Underwriters”) named in Schedule I to this underwriting agreement (the “Agreement”), for whom Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated are acting as representatives (the “Representatives”), $1,250,000,000 aggregate principal amount of 4.949% Fixed Rate Notes due January 15, 2015 (the “4.949% Fixed Rate Notes”) and $1,000,000,000 aggregate principal amount of 5.877% Fixed Rate Notes due July 15, 2019 (the “5.877% Fixed Rate Notes” and, together with the 4.949% Fixed Rate Notes, the “Designated Securities”) on and subject to the terms and conditions of, and utilizing terms as defined in, the Underwriting Agreement Standard Provisions (Debt Securities) dated as of June 22, 2009 (the “Standard Provisions”), which are attached hereto, and the terms and conditions described below under the heading “Additional Terms”. All of the provisions of the Standard Provisions are incorporated herein by reference.

The Designated Securities are to be issued pursuant to a public deed of issuance to be executed on or around June 24, 2009, an indenture dated May 8, 2009, as supplemented by a supplemental fixed rate note indenture to be dated as of or around July 6, 2009, pursuant to which the 4.949% Fixed Rate Notes will be issued and a supplemental fixed rate note indenture to be dated as of or around July 6, 2009, pursuant to which the 5.877% Fixed Rate Notes will be issued (the indenture and the supplemental indentures, collectively the “Indenture”) among the Company, Telefónica, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Guarantor”), and The Bank of New York Mellon (the “Trustee”). Payment of principal and interest on the Designated Securities will be fully and

unconditionally guaranteed by the Guarantor pursuant to the terms of a guarantee to be dated as of the Closing Date (the “Guarantee”).

ADDITIONAL TERMS

For purposes of this Underwriting Agreement, “Disclosure Package” means the most recent Preliminary Prospectus, any Issuer Free Writing Prospectus issued at or prior to the Applicable Time, and the final term sheets prepared pursuant to Section 5(a) of the Standard Provisions and attached as Schedule III hereto (the “Term Sheets”). “Applicable Time” means 4.15 p.m. New York City time on June 22, 2009.

1. Additional Representations and Warranties.

The Company and the Guarantor, jointly and severally, represent and warrant to, and agree with, each Underwriter, as of the Applicable Time, and as of the Closing Date, with respect to the Designated Securities as follows (which additional representations and warranties supersede the representation and warranty in Section 1(p) of the Standard Provisions):

(a) The consolidated historical financial statements of the Guarantor as of December 31, 2007 and 2008 and for the three years ended December 31, 2008, together with the related schedules and notes (the “Telefónica Financial Statements”), included or incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus have been prepared in accordance with international financial reporting standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”), which do not differ from IFRS as adopted by the European Union (“IFRS-EU”), applied in accordance with applicable law throughout the periods specified, and present fairly in all material respects the financial position of the Guarantor and its consolidated subsidiaries, at the dates indicated and the income statement, shareholders’ equity and cash flows of the Guarantor and its consolidated subsidiaries for the periods specified. The Guarantor’s consolidated financial information for the year ended December 31, 2004 included in its annual consolidated financial statements was restated in accordance with IFRS as issued by the IASB. The selected financial data and the summary financial information included or incorporated by reference in the Registration Statement, the Disclosure Package, and the Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the Telefónica Financial Statements included or incorporated by reference in the Registration Statement, the Disclosure Package, and the Prospectus as of the dates and for the periods indicated therein.

(b) The interim unaudited condensed consolidated financial report of the Guarantor and its consolidated subsidiaries as of March 31, 2009 and for the three-month periods ended March 31, 2009 and 2008 (the “Interim IFRS Selected Financial Information”) has been prepared in accordance with IFRS as issued by the IASB, which do not differ from IFRS-EU in each case applied in accordance with applicable law throughout the periods specified, and present fairly in all material respects the financial position of the Guarantor and its consolidated subsidiaries, considered as one enterprise, at

the dates indicated and the income statement data and shareholders’ equity of the Guarantor and its consolidated subsidiaries for the periods specified. The explanations required for this interim selected financial information are included in the presentation of the Guarantor’s quarterly results included in the Form 6-K filed by the Guarantor with the SEC on June 17, 2009 and incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus. Applicable IFRS as issued by the IASB and as applied by the Guarantor in its unaudited selected consolidated financial information as of March 31, 2009 and for the three-month periods ended March 31, 2009 and 2008, do not differ from IFRS-EU. The selected financial data and the summary financial information included or incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with the Interim IFRS Selected Financial Information included or incorporated by reference in the Registration Statement, Disclosure Package and the Prospectus as of the dates and for the periods indicated therein.

2. Additional Conditions to Underwriters’ Obligations.

The obligations of the several Underwriters to purchase and pay for the Designated Securities they have severally agreed to purchase hereunder on the Closing Date are subject (i) to the accuracy in all material respects of the representations and warranties of the Company and the Guarantor contained herein as of the date of this Agreement and the Closing Date, (ii) to the accuracy in all material respects of the statements of the Company and the Guarantor made in any certificates pursuant to the provisions hereof delivered prior to or concurrently with such purchase, and (iii) to the performance by the Company and the Guarantor of their obligations hereunder, and to the following further conditions (which further conditions in clauses (b) — (j) below supersede the conditions in Section 6(d) — (f) of the Standard Provisions):

(a) The Underwriters and Dewey & LeBoeuf LLP, special United States counsel to the Underwriters, have completed their respective diligence investigations in accordance with procedures customary for a transaction such as the offering of the Designated Securities pursuant to the terms and conditions of this Agreement.

(b) At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing Date, of the General Counsel to the Guarantor, substantially in the form set forth in Exhibit A.

(c) At the Closing Date, the Underwriters shall have received a signed opinion and 10b-5 letter, dated as of the Closing Date, of Davis Polk & Wardwell LLP, United States counsel for the Company and the Guarantor, substantially in the form set forth in Exhibit B and Exhibit C, respectively.

(d) At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing Date, of Uría Menéndez, Spanish counsel to the Company and Guarantor, substantially in the form set forth in Exhibit D.

(e) At the Closing Date, the Underwriters shall have received a signed opinion, dated as of the Closing Date, of Dewey & LeBoeuf LLP, United States counsel for the Underwriters, as to such matters as the Underwriters may reasonably request.

(f) At the Applicable Time, the Underwriters shall have received from Ernst & Young, S.L. a letter addressed to the Underwriters and dated the date on which the Term Sheets are dated, in form and substance satisfactory to the Underwriters (i) confirming that they are independent registered public accountants of the Guarantor within the meaning of the Securities Act and (ii) stating, as of the date thereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Disclosure Package and the Prospectus, as of a date not more than five business days prior to the date thereof), the conclusions and findings of such firm with respect to the financial statements and financial information contained in the Disclosure Package and the Prospectus of the type ordinarily included in accountants’ “comfort letters” to underwriters.

(g) At the Closing Date, the Underwriters shall have received from Ernst & Young, S.L., a letter dated as of the Closing Date, to the effect that it reaffirms the statements made in the letter furnished pursuant to (f) above, except that the specified date referred to in such letter shall be a date not more than five business days prior to the Closing Date.

(h) At the Closing Date, Davis Polk & Wardwell LLP, Uría Menéndez and Dewey & LeBoeuf LLP shall have been furnished with all such documents, certificates, resolutions and opinions as each may reasonably request for the purpose of enabling them to pass upon the issuance and sale of the Designated Securities as contemplated in this Agreement and the matters referred to in the opinions required by Sections 2(b), (c) and (d) above, and in order to evidence the performance of any of the covenants of the Company and the Guarantor, or the fulfillment of any of the conditions herein contained.

(i) At the Applicable Time, the Company and the Guarantor shall have approved and delivered to the Underwriters the Term Sheets in form and substance satisfactory to the Underwriters.

DEBT SECURITIES

1. Fixed Rate Notes

Indenture: Indenture dated as of May 8, 2009 among the Company, the Guarantor and the Trustee; 4.949% Fixed Rate Note Supplemental Indenture and 5.877% Fixed Rate Note Supplemental Indenture each to be dated on or around July 6, 2009 among the Company, the Guarantor and the Trustee.

Tranches: 2 tranches

Title: 4.949% Fixed Rate Notes due January 15, 2015 and 5.877% Fixed Rate Notes due July 15, 2019.

Ranking: Senior Notes

Aggregate Principal Amount: $1,250,000,000 for the 4.949% Fixed Rate Notes and $1,000,000,000 for the 5.877% Fixed Rate Notes.

Interest Rate: 4.949% for the 4.949% Fixed Rate Notes and 5.877% for the 5.877% Fixed Rate Notes.

Maturity Date: January 15, 2015 for the 4.949% Fixed Rate Notes, and July 15, 2019 for the 5.877% Fixed Rate Notes.

Interest Payment Dates: Semi-annually on each January 15 and July 15, commencing on January 15, 2010 and on the applicable maturity date for the 4.949% Fixed Rate Notes and semi-annually on each January 15 and July 15, commencing on January 15, 2010 and on the applicable maturity date for the 5.877% Fixed Rate Notes.

Regular Record Dates: The tenth New York Business Day immediately preceding the related interest payment date.

Listing Requirements: Listing of Notes on New York Stock Exchange.

Public offering price: 100% of the principal amount, plus accrued interest, if any, from July 6, 2009 for the 4.949% Fixed Rate Notes and 100% of the principal amount, plus accrued interest, if any, from July 6, 2009 for the 5.877% Fixed Rate Notes.

Purchase Price by Underwriters: 99.65% of the principal amount for the 4.949% Fixed Rate Notes and 99.60% of the principal amount for the 5.877% Fixed Rate Notes.

Currency of Denomination: United States Dollars

Currency of Payment: United States Dollars

Form and Denomination: One or more global notes deposited with The Depository Trust Company; denominations of a minimum of $1,000 and integral multiples of $1,000 thereafter.

Redemption: (1) Optional redemption if Notes not listed 45 days prior to first Interest Payment Date and (2) optional redemption for taxation reasons.

Sinking Fund: None

Method of Payment: Fedwire — Same day funds

Expense reimbursement to the Company: US$1,125,000

Other Terms: Additional terms are set forth in Term Sheets attached as Schedule III hereto.

Representatives: Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated

THE REPRESENTATIVES

Name and Addresses of the Representatives:

Citigroup Global Markets Inc.
388 Greenwich St
New York, NY 10013

Deutsche Bank Securities Inc.
60 Wall Street, 2nd Floor
New York, NY 10005

Goldman, Sachs & Co.
85 Broad Street
20th Floor
New York, NY 10004

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036

The Closing will take place at 12:00 noon London time, on July 6, 2009 at the London office of Dewey & LeBoeuf, No. 1 Minster Court, Mincing Lane, London EC3R 7YL (the “Scheduled Closing Date”).

Please signify your acceptance by signing the enclosed response to us in the space provided and returning it to us.


Very truly yours, CITIGROUP GLOBAL MARKETS INC.
By:	/s/ Brian Bednarski
	Name:	Brian Bednarski
	Title:	Managing Director

DEUTSCHE BANK SECURITIES INC.
By:	/s/ Peter H. Burger
	Name:	Peter H. Burger
	Title:	Director/Debt Syndicate

and
By:	/s/ Jacob Gearhart
	Name:	Jacob Gearhart
	Title:	Director/Debt Syndicate

GOLDMAN, SACHS & CO.
By:	/s/ Goldman, Sachs & Co.
	Name:	Goldman, Sachs & Co.
	Title:

MORGAN STANLEY & CO. INCORPORATED
By:	/s/ Yurij Slyz
	Name:	Yurij Slyz
	Title:	Vice President

as Representatives for themselves and the other underwriters named in Schedule I attached hereto


The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first written above. TELEFÓNICA EMISIONES, S.A.U.
By:	/s/ Miguel Escrig Meliá
	Name:	Miguel Escrig Meliá
	Title:	Director

TELEFÓNICA, S.A.
By:	/s/ Eduardo Álvarez Gómez
	Name:	Eduardo Álvarez Gómez
	Title:	Director

SCHEDULE I


	Principal		Principal
	Amount of		Amount of
	4.949% Fixed Rate		5.877% Fixed Rate
Underwriters	Notes		Notes
	(in USD)
Citigroup Global Markets Inc.		281,250,000		225,000,000
Deutsche Bank Securities Inc.		281,250,000		225,000,000
Goldman, Sachs & Co.		281,250,000		225,000,000
Morgan Stanley & Co. Incorporated		281,250,000		225,000,000
BNP PARIBAS Securities Corp.		31,250,000		25,000,000
Calyon Credit Agricole CIB		31,250,000		25,000,000
Credit Suisse Securities (USA) LLC		31,250,000		25,000,000
Mitsubishi UFJ Securities (USA), Inc.		31,250,000		25,000,000

TOTAL		1,250,000,000		1,000,000,000

I-1

SCHEDULE II

Issuer Free Writing Prospectus: The only free writing prospectuses are identified below and attached to Schedule III.


Number		Date
1. The Term Sheet for 4.949% Fixed Rate Notes attached to Schedule III		June 22, 2009
2. The Term Sheet for 5.877% Fixed Rate Notes attached to Schedule III		June 22, 2009
3. The Telefónica Investor presentation		June 22, 2009

II-1

SCHEDULE III

Issuer Free Writing Prospectuses

Exhibit 1 to Schedule III

Filed Pursuant to Rule 433
Registration Statement No. 333-159062

June 22, 2009

FINAL TERM SHEET
TELEFÓNICA EMISIONES, S.A.U.
4.949% FIXED RATE SENIOR NOTES TERMS AND CONDITIONS

This Free Writing Prospectus relates only to the securities described below and should only be read together with the Preliminary Prospectus Supplement dated June 22, 2009 and the Prospectus dated May 8, 2009 relating to these securities.


Issuer:		Telefónica Emisiones, S.A.U.
Guarantor:		Telefónica, S.A.
Expected Ratings:		Baa1/A-/A- (Moody’s/S&P/Fitch)
Principal Amount:		$1,250,000,000
Security Type:		Senior Notes
Form of Issuance:		SEC Registered
Issue Price:		100% of principal amount
Settlement Date:		July 6, 2009 (T+9)
Maturity Date:		January 15, 2015
CUSIP/ISIN:		87938W AJ2/US87938WAJ27
Coupon:		4.949%
Benchmark Treasury:		2.250% due May 5, 2014
Spread to Benchmark:		225 basis points (2.25%)
Treasury Strike:		97-30 2.699%
Re-offer Yield:		4.949%
Interest Payment Dates:		January 15 and July 15 of each year, commencing on January 15, 2010 (long first coupon)
First Interest Payment Date:		January 15, 2010
Day Count Convention/Business Day Convention:		30/360; Following, Unadjusted, Madrid, London, New York
Redemption Provisions:
Tax call:		Optional redemption for taxation reasons, on January 15, 2010 and each Interest Payment Date thereafter at 100% of principal and accrued interest
Make-whole call:		Optional redemption, at any time, at the greater of (x) 100% of principal and accrued interest and (y) sum of the present values of the remaining payments of principal and interest discounted at a discount rate of Treasury plus 35 basis points

III-1


Listing call:		Optional redemption, if Notes are not listed on an OECD exchange 45 days prior to first Interest Payment Date at 100% of principal and accrued interest
Taxation:		Exemption from Spanish withholding tax applies subject to compliance with Beneficial Owner identification procedures and satisfaction of all other conditions for exemption from applicable Spanish withholding taxes
Denominations:		Minimum of $1,000 with increments of $1,000 thereafter.
Minimum Initial Purchase Amount:		$75,000
Listing:		New York Stock Exchange
Underwriters:		Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated
Other underwriters:		BNP PARIBAS Securities Corp., Calyon Credit Agricole CIB, Credit Suisse Securities (USA) LLC and Mitsubishi UFJ Securities (USA), Inc.

Any ratings obtained will reflect only the views of the respective rating agency, and should not be considered a recommendation to buy, sell or hold the Notes. The ratings assigned by the rating agencies are subject to revision or withdrawal at any time by such rating agencies in their sole discretion. Each rating should be evaluated independently of any other rating.

The issuer has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for this offering. Before you invest, you should read the prospectus for this offering in that registration statement, and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by searching the SEC online database (EDGAR^®) at www.sec.gov. Alternatively, you may obtain a copy of the prospectus from Citigroup Global Markets Inc. by calling 1-877-858-5407, Deutsche Bank Securities Inc. by calling 1-800-503-4611, Goldman, Sachs & Co. by calling 1-866-471-2526 and Morgan Stanley & Co. Incorporated by calling 1-866-718-1649.

III-2

Exhibit 2 to Schedule III

Filed Pursuant to Rule 433
Registration Statement No. 333-159062

June 22, 2009

FINAL TERM SHEET
TELEFÓNICA EMISIONES, S.A.U.
5.877% FIXED RATE SENIOR NOTES TERMS AND CONDITIONS


Issuer:		Telefónica Emisiones, S.A.U.
Guarantor:		Telefónica, S.A.
Expected Ratings:		Baa1/A-/A- (Moody’s/S&P/Fitch)
Principal Amount:		$1,000,000,000
Security Type:		Senior Notes
Form of Issuance:		SEC Registered
Issue Price:		100% of principal amount
Settlement Date:		July 6, 2009 (T+9)
Maturity Date:		July 15, 2019
CUSIP/ISIN:		87938W AH6/US87938WAH60
Coupon:		5.877%
Benchmark Treasury:		3.125% due May 15, 2019
Spread to Benchmark:		220 basis points (2.20%)
Treasury Strike:		95-14+ 3.677%
Re-offer Yield:		5.877%
Interest Payment Dates:		January 15 and July 15 of each year, commencing on January 15, 2010 (long first coupon)
First Interest Payment Date:		January 15, 2010
Day Count Convention/Business Day Convention:		30/360; Following, Unadjusted, Madrid, London, New York
Redemption Provisions:
Tax call:		Optional redemption for taxation reasons, on January 15, 2010 and each Interest Payment Date thereafter at 100% of principal and accrued interest
Make-whole call:		Optional redemption, at any time, at the greater of (x) 100% of principal and accrued interest and (y) sum of the present values of the remaining payments of principal and interest discounted at a discount rate of Treasury plus 35 basis points
Listing call:		Optional redemption, if Notes are not listed on an OECD exchange 45 days prior to first Interest Payment Date at 100% of principal and accrued interest

III-3


Taxation:		Exemption from Spanish withholding tax applies subject to compliance with Beneficial Owner identification procedures and satisfaction of all other conditions for exemption from applicable Spanish withholding taxes
Denominations:		Minimum of $1,000 with increments of $1,000 thereafter.
Minimum Initial Purchase Amount:		$75,000
Listing:		New York Stock Exchange
Underwriters:		Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated
Other underwriters:		BNP PARIBAS Securities Corp., Calyon Credit Agricole CIB, Credit Suisse Securities (USA) LLC and Mitsubishi UFJ Securities (USA), Inc.

III-4

Exhibit 3 to Schedule III

Telefónica Investor Presentation

Filed pursuant to Rule 433

Registration Statement No. 333-159062

Dated June 22, 2009

Telefonica US $ bond issue June 2009 June 22, 2009

III-5

Disclaimer (1) Please be aware that the information in this presentation is not complete and may be subject to changes. This presentation and the accompanying preliminary prospectus supplement and prospectus are not an offer to sell nor do they seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. This presentation contains statements that constitute forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the safe harbour provisions of the Private Securities Litigation reform Act of 1995. These statements appear in a number of places in this presentation and include financial projections, estimates and their underlying assumptions, statements regarding plans, objectives and expectations, such as 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 activity and situation relating to the Telefónica Group. The forward-looking statements in this presentation can be identified, in some instances, by the use of words such as “expects”, “anticipates”, “intends”, “believes”, “guidance”, “aims”, “expectations”, “on track”, “in progress” and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions. Although Telefónica believes that these statements are based on reasonable assumptions, such forward-looking statements are not, by their nature, guarantees of future performance and involve numerous risks and uncertainties, and other important factors that could include causal actual developments or results to differ materially from those expressed in our forward-looking statements. Analysts and investors 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, acquisition strategy and planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult Telefónica ´s Annual Report as well as periodic filings filed with the relevant Securities Market Regulators, and in particular with the Spanish Securities Market Regulators. TELEFONICA S.A. 2

Disclaimer (2) The risks and uncertainties involved in our businesses that could affect the matters referred to in such forward-looking statements include but are not limited to: 9 Changes in general economic, business or political conditions in the domestic or international markets (particularly in Latin America) in which the Telefónica Group operates or has material investments that may affect demand for its services; 9 Changes in currency exchange rates, interest rates or in credit risk in the Telefónica Group treasury investments or in its financial transactions; 9 Existing or worsening conditions in the international financial markets; 9 The actions of existing and potential competitors in each of the Telefónica Group markets; 9 The impact of current, pending or future legislation and regulation in countries where the Telefónica Group operates; 9 The potential effects of technological changes; 9 The impact of limitations in spectrum capacity; 9 The outcome of pending litigation. Some of these and other important factors that could cause such differences are discussed in more detail in Telefónica S.A.’s Annual Report for the year ended December 31 2008 filed on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”) on April 30, 2009, under “Item 3—Key Information—Risk Factors”, “Item 4—Information on the Company”, “Item 5—Operating and Financial Review and Prospects” and “Item 11—Quantitative and Qualitative Disclosures About Market Risk”.
This presentation may contain non-GAAP financial measures. Reconciliations of such non-GAAP measures to the closest GAAP measures are contained in Telefónica S.A.’s Annual Report on Form 20-F for the year ended December 31, 2008 and Telefónica S.A.’s interim consolidated financial information included on Form 6-K for the first quarter of 2009 filed with the SEC on June 17, 2009. TELEFONICA S.A. 3

Index 1 Telefónica ´s highlights 2 Business growth 3 Financial position 4 Proposed issue 5 Conclusion TELEFONICA S.A. 4

1 Telefónica a reference in the industry .... Market Cap Clients 3# Mill. USD 5# Mar. 09 Millions As of end of may’09 1. China Mobile 201,295 China Mobile 1. 477.2 2. AT&T146,261VOD 2.307.2 3. Telefonica 101,106 China Telecom 3. 283.6 4. Vodafone 98,355 China Unicom 4. 279.5 5. Verizon83,115TEF 5. 261.4 8. France Telecom 63,684 DT 7. 215.2 10. Deutsche Telekom 49,939 FT 8. 183.5 Source: Bloomberg Source: Company data Fiscal Year 2008(*) Mill. USD 14,769 ^{Net Income} 3# 11,702 10,103 5,846 5,415 4,929 2,946 1,974 1. China 2. AT&T 3. TEF 4. Verizon 5. FT 7. VOD 12. TI 20. DT Mobile Source: Bloomberg (*) Vodafone 9months, Mar.08 – Dec.08 TELEFONICA S.A. 5

1 ... with global reach and multiservice operator ... Customer share #1 or #2 position in most markets where we operate market position (Mar-09) WIRELESS X WIRELINE X 1 4 2 1 2 2 3 1 1 3 3 2 2 1 2 2 2 1 1 2 1 1 1 1 1 1 2 93% of revenues generated in markets where we hold #1 or #2 position Note: Most relevant minority financial stakes are China Netcom (5%), Portugal Telecom (10%) and Telecom Italia (10%) TELEFONICA S.A. 6

1 ... characterized by a strategically diversified asset portfolio, execution skills and integrated management model Telefónica is a ... €23bn OIBDA €58bn Revenue €15bn OpCF company... (39,6% margin) ... with more than 250m clients across the Globe ... Telefónica Group Accesses Millions Europe: 261.4 198.2 Y-o-y growth 46.7m 42.4 +11.9% +15.4% Spain: 12.8 2.3 -2.4% Latam: 47.2m +17.5% +24.8% 159m Total Mobile BB fixed Pay TV Fixed ...benefiting from the value of being diversified Q1 09 Revenue Q1 09 OIBDA Others & eliminations T. Europe 1% T. España T. Europe T. España 24% 16% 36% 45% 39% 39% T. Latam T. Latam TELEFONICA S.A. 7

Index 1 Telefónica ´s highlights 2 Business growth 3 Financial position 4 Proposed issue 5 Conclusion TELEFONICA S.A. 8

GROUP FINANCIALS 2 Solid Q1 09 Group performance leveraging diversified portfolio ... € in millions Jan-Mar Change Change organic⁽¹⁾2009 Q1 09/Q1 08 Q1 09/Q1 08 Revenues 13,703 -1.4% +2.8% Operating Income before D&A 5,354 -0.4% +2.5% (OIBDA) OIBDA Margin 39.1% +0.4 p.p. -0.1 p.p. Operating Income 3,190 +2.9% +3.9% (OI) 84% of OpCF Net income 1,690+9.8% stemming from Investment OpCF (OIBDA-CapEx)4,154+2.4% +4.5% Grade countries 9 Negative impacts in nominal growth rates due to FX, deducting: Revenues: -4.7 p.p. OIBDA: -3.3 p.p. OI: - -1.3 p.p. (1) Organic growth: Assumes constant exchange rates and includes the consolidation of Telemig in January-March 2008 for comparison purposes because Telemig was first included in the Telefónica Group’s consolidation perimeter in April 2008 . TELEFONICA S.A. 9

2 ...outperforming our main European peer group in size and operationally Q1 2009 Business Clients and OIBDA margin figures # 1/2 Mkt. Cap # 1 # 1 2 # 1# 1# € in millions Revenues In millions Clients % Margin OIBDA 15.902 261 39,1% 13.703 189 33,9% 12.685 184 31,1% 1 # 1# 2 3 € in millions OIBDA € in millions Market Cap¹ 5.354 71.610 4.942 45.105 4.300 35.370 Source: Companies’ 2009 Q1 Results (Press Release) Growth figures Q1 2009 vs. Q1 2008 1. As of May 29th closing TELEFONICA S.A. 10

2 T.España: Successfully managing OpEx and CapEx to improve OpCF WIRELINE WIRELESS Revenues & 0.3% Q1 09 Q1 09 Q1 09 9Focus on OpCF across OpCF Q1 09 -0.1% businesses without (comparable ⁽¹⁾ -3.0% jeopardizing revenue share y-o-y change) -7.3% leadership Service Revenues OpCF OpCF Revenues 9 Limiting top line pressure with 47.9% 47.4% efficiency gains and CapEx 43.4% 44.6% OIBDA and discipline - -0.4p.p. OIBDA margin Q1 09 Q1 09 +1.2p.p. Sustaining solid margins: flat in (comparable ⁽¹⁾ Q1 08 Q1 09 Q1 08 Q1 09 wireline, while expanding in - -3.8% y-o-y change) wireless - -6.9% OIBDA OIBDA / Revenues OIBDA OIBDA / Revenues CapEx adapted to current trading environment T.ESPAÑA - -2.1p.p. CapEx and 9.0% T. España OpCF: €2,068m; 6.9% CapEx over Q1 09 +0.2%⁽¹⁾y-o-y revenues; Q1 08 Q1 09 (comparable⁽¹⁾) -28.0% CapEx CapEx / Revenues (1) Excludes impact on revenues (Wireline: € 75.3 m) and OIBDA (Wireline: € 45.6 m; Wireless: € - -23.9 m) of Universal Service Obligation in Q1 09, as well as bad debt recovery in Q1 08 (Wireline: € 17 m; Wireless: € 8 m) and Real Estate capital gains (Wireline: € 0.4 m Q1 09 and € 67 m Q1 08). TELEFONICA S.A. 11

2 T.Latam: sustained strong results combining growth & enhanced efficiency +8.7% 3.8 p.p 0.1 p.p Revenue 9Healthy customer growth across growth +4.8% 0.8 p.p 1.8 p.p businesses: total accesses up 12.6%⁽⁴⁾y-(Q1 09 y-o-y 2.2 p.p o-y driven by mobile (+15.8%⁽⁴⁾) and BB change) (+18.6%) € terms Organic ⁽¹⁾Arg. Brazil PeruVen. Others⁽²⁾ 9Strong y-o-y organic revenue growth +13.9% 6.8 p.p 0.5 p.p driven by robust mobile and Internet & OIBDA +10.9% TV revenue growth growth 1.2 p.p 9OIBDA margin expansion supported by 2.4 p.p (Q1 09 y-o-y 3.0 p.p mobile business leveraging scale change) economies and lower commercial € terms Organic ⁽¹⁾Arg. Mex. Peru Ven. Others⁽³⁾ activity 9Significant OIBDA margin expansion +1.7p.p. 1,606 across every mobile operation: +5.6 OIBDA & 38.5% OpCF p.p. in Argentina, +9.8 p.p. in Mexico, +0.3p.p. CapEx over (OIBDA- +14.3% +8.3 p.p. in Peru 8.8% Revenues CapEx; € in millions) (Q1 09) 9Solid OpCF despite strong investments TotalTotal Q1 09 in growth platforms Organic y-o-y growth ⁽¹⁾ OIBDA / Revenues CapEx / Revenues Organic y-o-y growth ⁽¹⁾ (1) Organic growth: Assumes constant exchange rates and includes the consolidation of Telemig in January-March 2008 for comparison purposes because Telemig was first included in the Telefónica Group’s consolidation perimeter in April 2008 .
(2) Includes Central America, Colombia, México, Ecuador, Chile, Uruguay and Others. (3) Includes Brazil, Central America, Colombia, Ecuador, Chile, Uruguay and Others. (4) Includes Telemig from April 2008. TELEFONICA S.A. 12

2 T. Europe: Delivering on cash flow generation through a more rebalanced portfolio while maintaining momentum 9 Solid Q1 09 performance across markets in an increasingly tough trading environment +9.0% y-o-y increase in total customer base. Increasing value through product innovation and customer Revenues & OIBDA insight: flat rates, SIM-only, Mobile BB and retention activity: (Q1 09 vs. Q1 08) Exceptional performance in mobile contract: 82% of new total accesses added in Q1 09. REVENUES OIBDA +7.0% Solid mobile BB adoption, leading to a +28.5% y-o-y growth in non P2P-SMS data revenue ⁽¹⁾. +4.0% Continued optimizing behaviour of customers using bundles, less prepay and roaming activity. 9Ongoing efficiency programmes and improved - -3.2% customer retention to deliver strong OpCF - -6.6% OIBDA margin up 0.9 p.p. year-on year to reported 27.2%. € terms ^Constant € terms Constant currency currency More streamlined commercial approach, mainly through direct channels. Improved profitability of fixed BB on increased scale. Keeping flexibility on CapEx commitments. TELEFONICA S.A. 13

Index 1Telefónica ´s highlights 2Business growth 3Financial position 4Proposed issue 5Conclusion TELEFONICA S.A. 14

3 Leverage below 2x,... Net Financial Debt/OIBDA⁽¹⁾ € in billions 2.7 -15% - -16% 2.3 1.9 1.9 Dec. 06 Dec. 07 Dec. 08 Mar 09 Net Financial Debt /OIBDA Net Financial Debt /OIBDA, within leverage target range Outlook upgrade to positive by Moody’s (Baa1/positive) in Q1 09, following rating upgrades in Q4 08 by the other rating agencies (Fitch and Standard&Poors, A-/stable, JCR A/stable). Leverage ratio continues below 2x (Net Financial Debt/OIBDA⁽¹⁾). We have further reduce our net financial debt since March 2009 . (1) Calculated based on Q1 09 OIBDA figure annualized excluding results on the sale of fixed assets Source: Company data TELEFONICA S.A. 15

3 compatible with robust shareholders return, ... Growing path in DPS 1.15 1.0 (in euros) Current DY⁽⁴⁾: DIVIDENDS 0.75 7.6% 2007¹ 2008² 2009³ + SHARE Tactical Share Buybacks BUYBACKS 150 million shares bought in 2008 & Q1 09 Earning per Share Free Cash Flow (in €)per Share (in €) +12.9% +56.9% 0.37 0.28 0.33 0.18 Q1 08 Q1 09 Q1 08 Q1 09 (1) Paid in H2 07 (0.35€) and 0.4€ paid in H1 08.
(2) Fiscal year 2008, paid in H2 08 (0.5€) and paid in H1 09 (0.5€). (3) BoD approved the proposal to increase the dividend corresponding to the 2009 fiscal year. It is the Company ´s intention to maintain its current practice to pay its dividend in two annual installments. (4) Based on Telefónica stock price as of May 29th 2009. TELEFONICA S.A. 16

3 ... and M&A M&A to foster growth 9Brazil — Interested in acquiring remaining 50% of VIVO 9China — Interested in reaching up to 10% of China Unicom 9Germany – looking at Hansenet TELEFONICA S.A. 17

3 Debt profile smoothed with previous transactions Mar-09 Net Financial Debt Maturity € in billions € in billions 9.1 Mar-09 7.8 6.1 5.8 >50% long-term 2010 2011 2008 Unused Free Cash credit Flow lines Mar09 Almost €8bn refinancing YTD09 (50-50 bond-loans) reducing by almost 40% maturities in 2009-2011. Average debt life above 6 years, longer than the time expected to be needed for full repayment TELEFONICA S.A. 18

Index 1 Telefónica ´s highlights 2 Business growth 3 Financial position 4 Proposed issue 5 Conclusion TELEFONICA S.A. 19

3 4 Proposed issue 9 Issuer: Telefónica Emisiones, S.A.U. 9 Guarantor: Telefónica, S.A. 9 Rating: A- sta (S&P’s and Fitch) Baa1 pos (Moody’s) 9 Issue price: Par 9 Security type: Senior Unsecured Notes 9 Form of issuance: US Shelf Program, expected NYSE listed
9 Tranches: Long 5y Fixed (2015) & 10y (2019) TELEFONICA S.A. 20

Index 1Telefónica ´s highlights 2Business growth 3Financial position 4Proposed issue 5Conclusion TELEFONICA S.A. 21

5 Conclusions 9 Combining business growth and efficiency Close to 3% revenue and OIBDA organic growth⁽¹⁾in Q1 2009 Leveraging our scale and diversification Largest European telco by market cap 9 Robust financial position coupled with strong cash flow generation Net financial debt below 2 times OIBDA. Balanced policy, with significant shareholder remuneration and room for M&A. Year to date, we have issued close to €4bn the in capital markets. 9 Prudent approach to Credit Markets as regular issuer (1) Organic growth: Assumes constant exchange rates and includes the consolidation of Telemig in January-March 2008 for comparison purposes because Telemig was first included in the Telefónica Group’s consolidation perimeter in April 2008 . TELEFONICA S.A. 22

SCHEDULE IV

July 6, 2009

Telefónica, S.A.
Telefónica Emisiones, S.A.U.

c/o		Telefónica, S.A. Distrito C, Ronda de la Comunicación, s/n 28050 Madrid Kingdom of Spain

Re:		Preliminary Prospectus Supplement dated June 22, 2009, Term Sheets dated June 22, 2009 (the Preliminary Prospectus Supplement and the Term Sheets, together the “Disclosure Package”) and Prospectus Supplement dated June 22, 2009, of Telefónica, S.A. (the “Prospectus Supplement”)

Ladies and Gentlemen:

This will confirm that the following information appearing in the above-mentioned Disclosure Package and Prospectus Supplement relating to the 4.949% Fixed Rate Notes due 2015 and the 5.877% Fixed Rate Notes due 2019 issued by Telefónica Emisiones, S.A.U. and unconditionally and irrevocably guaranteed by Telefónica, S.A., has been furnished by the Underwriters for use therein:

The names of the Underwriters appearing on the cover page and in the “Underwriting” section of the Preliminary Prospectus Supplement and the Prospectus Supplement and the names of the Underwriters appearing in the Term Sheets.

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	Very truly yours, CITIGROUP GLOBAL MARKETS INC.
	By:
		Name:
		Title:

	DEUTSCHE BANK SECURITIES INC.
	By:
		Name:
		Title:

	and
	By:
		Name:
		Title:

	GOLDMAN, SACHS & CO.
	By:
		Name:
		Title:

	MORGAN STANLEY & CO. INCORPORATED
	By:
		Name:
		Title:

IV-2

EXHIBIT A

FORM OF OPINION OF GENERAL COUNSEL OF TELEFÓNICA

[•], 2009

Citigroup Global Markets Inc.
388 Greenwich Street
4th Floor
New York, NY 10013

Deutsche Bank Securities Inc.
60 Wall Street, 2nd Floor
New York, NY 10005

Goldman, Sachs & Co.
85 Broad Street
20th Floor
New York, NY 10004

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036

as Representatives
of the underwriters listed in Schedule I to the Underwriting Agreement

Re: Telefónica, S.A. 2009 SEC-Registered Debt Offering

Ladies and Gentlemen,

I am Ramiro Sánchez de Lerín García-Ovies, General Counsel of Telefónica, S.A., a stock corporation (sociedad anónima) organized under the laws of the Kingdom of Spain (the “Guarantor”), and in that capacity I am familiar with the legal affairs of the Guarantor and its subsidiaries. This opinion is delivered to you in connection with the issuance by Telefónica Emisiones, S.A.U. (the “Company”), a stock corporation with a single shareholder (sociedad anónima unipersonal) organized under the laws of the Kingdom of Spain and a wholly-owned subsidiary of the Guarantor, of $1,250,000,000 aggregate principal amount of its 4.949% Fixed Rate Notes due January 15, 2015 (the “4.949% Fixed Rate Notes”) and $1,000,000,000 aggregate principal amount of its 5.877% Fixed Rate Notes due July 15, 2019 (the “5.877% Fixed Rate Notes” and, together with the 4.949% Fixed Rate Notes, the “Notes”). The Notes will be unconditionally guaranteed pursuant to the guarantee (the “Guarantee”) as to payment of principal, interest and premiums, if any, by the Guarantor. Pursuant to the Underwriting Agreement dated June 22, 2009 (the “Underwriting Agreement”) between you, the Guarantor and the Company, you have agreed to purchase or procure purchasers for the Notes to be issued pursuant to the Indenture between the Company, the Guarantor and The Bank of New York Mellon, as Trustee, dated May 8, 2009, as supplemented by a supplemental fixed rate note

A-1

indenture dated as of July 6, 2009, pursuant to which the 4.949% Fixed Rate Notes will be issued and a supplemental fixed rate note indenture dated as of July 6, 2009, pursuant to which the 5.877% Fixed Rate Notes will be issued (the indenture and the supplemental indentures, collectively the “Indentures”). This opinion is delivered to you pursuant to Section 2(b) of the Underwriting Agreement. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Underwriting Agreement.

In rendering the opinions expressed herein, I, or members of my staff upon whom I am relying, have examined originals or copies, certified or otherwise identified to my or their satisfaction, of such documents, corporate records and other instruments as I or they have deemed necessary or appropriate, including the following:

(i) the Underwriting Agreement;

(ii) the registration statement registered with the U.S. Securities and Exchange Commission (the “SEC”) dated May 8, 2009 with file number 333-159062 and the documents incorporated by reference therein (the “Registration Statement”);

(iii) the Prospectus dated May 8, 2009 relating to the offering of debt securities of the Company included in the Registration Statement and the documents incorporated by reference therein (the “Prospectus”);

(iv) the Preliminary Prospectus Supplement registered with the SEC dated June 22, 2009 relating to the offering of the Notes and the documents incorporated by reference therein (the “Preliminary Prospectus Supplement”);

(v) final term sheets dated June 22, 2009 (collectively the “Final Term Sheet” and together with the Prospectus, the Preliminary Prospectus Supplement and the Prospectus Supplement, the “Disclosure Package”);

(vi) the final Prospectus Supplement registered with the SEC dated June 22, 2009 relating to the offering of the Notes and the documents incorporated by reference therein (the “Prospectus Supplement”);

(vii) the Guarantee;

(viii) the Indentures;

(ix) the global notes dated [•], 2009 relating to the Notes (the “Global Notes”);

(x) a copy of the public deed of issuance of the Notes (escritura de emisión) executed on [•], 2009, before the Notary Public of Madrid Mr. [•] (the “Public Deed of Issuance”);

(xi) A copy of the announcement related to the issuance of the Notes published in the Official Bulletin of the Mercantile Registry (Boletín Oficial del Registro Mercantil) on [•], 2009.

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(xii) a copy of the Estatutos of the Guarantor;

(xiii) a copy of the Estatutos of the Company;

(xiv) a copy of the certificate of the minutes of the meeting of the Board of Directors of the Guarantor held on March 25, 2009 in relation to the issue of the Notes and the Guarantees;

(xv) a copy of a certificate of the resolutions adopted by the Guarantor as sole shareholder of the Company on May 4, 2009, in relation to the issue of the Notes; and

(xvi) the Tax Certification Agency Agreement dated as of June 20, 2006 among the Company, the Guarantor, The Bank of New York Mellon and Acupay System LLC, as amended by the Letter of Appointment dated [•], 2009 between the Company, the Guarantor and Acupay System LLC (the “Acupay Agreement”).

The Underwriting Agreement, the Guarantees, the Acupay Agreement and the Indentures are hereinafter collectively referred to as the “Documents”.

The opinions set forth in this letter are based upon the following assumptions:

(i) the genuineness of all signatures, stamps and seals, the conformity to the originals of all documents supplied to us as certified photostatic or faxed copies and the authenticity of the originals of such documents;

(ii) that the Disclosure Package has been filed with the SEC, and the Documents and the Global Notes have been duly executed and delivered on behalf of each the of other parties thereto (other than the Guarantor and the Company), in the respective forms examined by us;

(iii) the due authorization, execution and delivery of the Documents and the Global Notes by each of the parties thereto (other than the Guarantor and the Company) and that the performance thereof is within the capacity and powers of each of the parties thereto (other than the Guarantor and the Company);

(iv) the absence of any other arrangements between any of the parties to the Underwriting Agreement which modify or supersede any of the terms of the Underwriting Agreement; and

(v) that the terms and conditions of the Notes, the Guarantees, the Indentures, the Acupay Agreement and the Underwriting Agreement, constitute legal, valid and binding obligations under the law of the State of New York by which they are expressed to be governed.

Based on the foregoing, and such examination of law as I have deemed necessary, I am of the opinion that:

(i) Each of the Company and the Guarantor has been duly incorporated and is validly existing as a limited liability corporation (sociedad anónima) under the

A-3

laws of the Kingdom of Spain with corporate power and all requisite authority under such laws to own, lease and operate its respective properties and conduct its respective businesses as described in the Disclosure Package.

(ii) The Underwriting Agreement and the Indentures have been duly authorized, executed and delivered by the Guarantor and the Company.

(iii) The Guarantor owns directly or indirectly all of the outstanding ordinary shares of the Company.

(iv) No filing or registration of the Disclosure Package or any other prospectus or circular is necessary under Spanish law in connection with the issuance, sale or delivery of the Notes and the Guarantees.

(v) Insofar as matters of Spanish law are concerned, the Disclosure Package has been duly authorized by and on behalf of the Company and the Guarantor.

(vi) The statements made in the Guarantor’s Annual Report on Form 20-F for the year ended December 31, 2008, which is incorporated by reference in the Registration Statement, under the captions “Information on the Company — B. Business Overview”, “Directors, Senior Management and Employees — B. Compensation”, “Directors, Senior Management and Employees — C. Board Practices”, “Financial Information — Legal Proceedings”, “The Offering and Listing — C. Markets”, “Additional Information — B. Memorandum and Articles of Association”, “Additional Information — C. Material Contracts”, “Additional Information — D. Exchange Controls” and “Additional Information — E. Taxation” and the statements made in the Preliminary Prospectus Supplement and the Prospectus Supplement under the caption “Taxation—Spanish Tax Considerations”, to the extent that they relate to matters of Spanish law or taxation, are true and accurate and there are no facts the omission of which from such statements would make the same misleading in any material respect.

(vii) Other than as set forth in the Registration Statement and the Disclosure Package, there are no actions, suits or governmental proceedings pending to which the Company, the Guarantor or any subsidiary of the Guarantor is a party or of which any asset of the Company, the Guarantor, or any subsidiary of the Guarantor is the subject which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or to impair the ability of the Company or the Guarantor to consummate the transactions contemplated hereby; and, to the best of my knowledge, no such actions, suits or proceedings are threatened or contemplated by any court or governmental, regulatory or stock exchange authority or any other party having jurisdiction over the (i) Company, (ii) the Guarantor or (iii) Telefónica de España, S.A., Telefónica Internacional, S.A., Telefónica O2 Europe plc (collectively, the “Material Subsidiaries” and each, a “Material Subsidiary”) or any of their respective assets, which could reasonably be expected to have a Material Adverse Effect.

(viii) None of the Company, the Guarantor or any of the Material Subsidiaries is in violation of its articles of association or other governing documents

A-4

or, to my knowledge, in default in the performance or observance of any obligation contained in any agreement or instrument to which it is a party or by which it or any of its assets are subject, which violation or default would have a Material Adverse Effect on the business or financial condition of the Guarantor, the Company or any of the Material Subsidiaries or impair the Guarantor’s ability to consummate the transactions contemplated in the Underwriting Agreement.

(ix) Neither the sale of the Notes by the Company, the execution by the Guarantor and the Company of the Documents nor the consummation of any of the other transactions contemplated in the Documents and the Notes will conflict with, result in a breach of, or constitute a default under the by-laws of the Company, the Guarantor or any Material Subsidiary or the terms of any indenture or other agreement or instrument known to such counsel to which the Company, the Guarantor or any Material Subsidiary is a party or is bound, or any order or regulation known to such counsel to be applicable to the Company, the Guarantor or any Material Subsidiary of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company, the Guarantor or any Material Subsidiary (except for such conflicts, breaches or defaults that would not have a Material Adverse Effect on the financial condition, earnings or business affairs of the Guarantor and its subsidiaries, considered as one enterprise).

(x) The Company, the Guarantor and each of the Material Subsidiaries have all licenses, franchises, permits, authorizations, approvals, and orders from all governmental authorities, that are necessary to own or lease their properties and conduct their respective businesses and that are material to the Guarantor and its subsidiaries, taken as a whole (except for such licenses, franchises, permits, subsidiaries, orders and approvals the failure to obtain which will not have a Material Adverse Effect on the business or financial condition of the Guarantor and its subsidiaries, taken as a whole).

(xi) The statements in the Registration Statements and the Disclosure Package relating to the ranking and the status of the Notes and the Guarantees, to the extent that they relate to matters of Spanish law, are true and accurate and there are no facts the omission of which from such statements would make the same misleading in any material respect.

I am admitted to practice in the Kingdom of Spain only, and I express no opinion as to the laws of any other jurisdiction. This letter is furnished by me as General Counsel for the Guarantor and is solely for your benefit and may not be disclosed to or relied upon by anyone else without my written consent in each instance.

Very truly yours,

Ramiro Sánchez de Lerín García-Ovies

A-5

EXHIBIT B

FORM OF OPINION OF DAVIS POLK & WARDWELL LLP

June [•], 2009

[Names of Lead and Co-Lead Managers]

[Name and address of Lead Manager]

as Representatives
of the underwriters listed in Schedule I to the Underwriting Agreement

Ladies and Gentlemen:

We have acted as special United States counsel for Telefónica Emisiones, S.A.U., a sociedad anónima unipersonal organized under the laws of the Kingdom of Spain (the “Company”), and Telefónica, S.A., a sociedad anónima organized under the laws of the Kingdom of Spain, as guarantor (the “Guarantor”), in connection with the Underwriting Agreement dated June [•], 2009 (the “Underwriting Agreement”) with you and the other several underwriters named in Schedule I thereto (collectively, the “Underwriters”) under which you and such other Underwriters have severally agreed to purchase from the Company $[•] aggregate principal amount of the Company’s [•]% fixed rate notes due [•] (the “[•] Fixed Rate Notes”) and $[•] aggregate principal amount of the Company’s [•]% fixed rate notes due [•] (the “[•] Fixed Rate Notes” and, together with the [•] Fixed Rate Notes, the “Notes”) guaranteed by the Guarantor (the “Guarantees” and, together with the Notes, the “Securities”). The Securities are to be issued pursuant to the provisions of the Indenture dated as of May 8, 2009 (the “Base Indenture”) among the Company, the Guarantor and The Bank of New York Mellon, as trustee (the “Trustee”), as supplemented by a supplemental fixed rate note indenture dated as of [•], 2009, pursuant to which the [•] Fixed Rate Notes will be issued and a supplemental fixed rate note indenture dated as of [•], 2009, pursuant to which the [•] Fixed Rate Notes will be issued (the Base Indenture and the supplemental indentures, collectively, the “Indenture”).

We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary or advisable for the purpose of rendering this opinion.

We have also participated in the preparation of the registration statement of the Company and the Guarantor on Form F-3 (File No. 333-159062) (including the documents incorporated by reference therein (the “Incorporated Documents”)) filed with the Securities and Exchange Commission (the “Commission”) pursuant to the provisions of the Securities Act of 1933, as amended (the “Act”), relating to the

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registration of securities (the “Shelf Securities”) to be issued from time to time by the Company and the Guarantor, and have participated in the preparation of the preliminary prospectus supplement dated June [•], 2009 (the “Preliminary Prospectus Supplement”) relating to the Securities, the free writing prospectuses, each dated [•], 2009, identified as Numbers [•] on Schedule II to the Underwriting Agreement and attached to Schedule III to the Underwriting Agreement and the prospectus supplement dated June [•], 2009, relating to the Securities (the “Prospectus Supplement”). The registration statement became effective under the Act and the Base Indenture qualified under the Trust Indenture Act of 1939, as amended, upon the filing of the registration statement with the Commission on May 8, 2009 pursuant to Rule 462(e). The registration statement at the date of the Underwriting Agreement, including the Incorporated Documents and the information deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430B under the Act, is hereinafter referred to as the “Registration Statement”, and the related prospectus (including the Incorporated Documents) dated May 8, 2009 relating to the Shelf Securities is hereinafter referred to as the “Basic Prospectus”. The Basic Prospectus, as supplemented by the Prospectus Supplement, in the form first used to confirm sales of the Securities (or in the form first made available by the Company to the Underwriters to meet requests of purchasers of the Securities under Rule 173 under the Act), is hereinafter referred to as the “Prospectus”.

We have assumed the conformity of the documents filed with the Commission via the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”), except for required EDGAR formatting changes, to physical copies of the documents submitted for our examination.

Capitalized terms used but not otherwise defined herein are used as defined in the Underwriting Agreement.

Based upon the foregoing, we are of the opinion that:

(1) Assuming that the Underwriting Agreement has been duly authorized, executed and delivered by the Company and the Guarantor insofar as Spanish law is concerned, the Underwriting Agreement has been duly executed and delivered by the Company and the Guarantor.

(2) Assuming that the Indenture has been duly authorized, executed and delivered by the Company and the Guarantor insofar as Spanish law is concerned, the Indenture has been duly executed and delivered by the Company and the Guarantor, and the Indenture is a valid and binding agreement of the Company and the Guarantor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability.

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(3) Assuming that the Notes have been duly authorized, executed and delivered by the Company insofar as Spanish law is concerned, the Notes, when the Notes are authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement, will be valid and binding obligations of the Company enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability, and will be entitled to the benefits of the Indenture pursuant to which such Notes are to be issued.

(4) Assuming the due authorization, execution and delivery of the Notes by the Company insofar as Spanish law is concerned and the due authorization, execution and delivery of the Guarantee endorsed on each Note by the Guarantor insofar as Spanish law is concerned, the Guarantees, when the Notes (and the Guarantees endorsed thereon) are executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement, will be valid and binding obligations of the Guarantor, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability.

(5) Assuming that the tax certification agency agreement dated as of June 20, 2006, among the Company, the Guarantor, the Trustee (as successor to JPMorgan Chase Bank, N.A.) and Acupay System LLC, as amended by the letter of appointment dated [•], 2009, among the Company, the Guarantor and Acupay System LLC (the “Tax Certification Agency Agreement”) has been duly authorized, executed and delivered by the Company and the Guarantor insofar as Spanish law is concerned, the Tax Certification Agency Agreement is a valid and binding agreement of the Company and the Guarantor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability.

(6) Assuming that the Underwriting Agreement and the Base Indenture have been duly authorized, executed and delivered by the Company and the Guarantor insofar as Spanish law is concerned, under the laws of the State of New York relating to personal jurisdiction, each of the Company and the Guarantor has, pursuant to Section 14 of the Standard Provisions attached and incorporated into the Underwriting Agreement (the “Standard Provisions”) and Section 1.15 of the Base Indenture, validly and irrevocably submitted to the extent permitted by law to the exclusive personal jurisdiction of any state or United States federal court located in the Borough of Manhattan, the City of New York, New York (each a “New York Court”) in any action based on or arising under the Notes, the Indenture and the Underwriting Agreement or the transactions contemplated by the Underwriting Agreement, has validly and irrevocably waived to the extent permitted by law any objection to the

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venue of a proceeding in any such New York Court, and has validly and irrevocably appointed CT Corporation System as its authorized agent for the purpose described in Section 14 of the Standard Provisions and Section 1.15 of the Indenture; and service of process effected on such agent in the manner set forth in Section 14 of the Standard Provisions and Section 1.15 of the Indenture will be effective to confer valid personal jurisdiction on the Company and the Guarantor.

(7) Neither the Company nor the Guarantor is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Prospectus will be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(8) The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Underwriting Agreement, the Indenture and the Securities (collectively, the “Documents”) and the execution and delivery by the Guarantor, and the performance by the Guarantor of its obligations under, the Documents will not contravene any provision of the laws of the State of New York or any federal law of the United States of America that in our experience is normally applicable to general business corporations in relation to transactions of the type contemplated thereby, provided that we express no opinion as to [federal] or state securities laws.

(9) No consent, approval, authorization, or order of, or qualification with, any governmental body or agency under the laws of the State of New York or any federal law of the United States of America that in our experience is normally applicable to general business corporations in relation to transactions of the type contemplated by the Documents is required for the execution, delivery and performance by the Company or the Guarantor of its obligations under the Documents, except such as may be required under [federal] or state securities or Blue Sky laws as to which we express no opinion.

We have considered the statements included in the Prospectus under the caption “Description of the Notes and the Guarantees” insofar as they summarize provisions of the Notes and the Guarantees and the Indenture. In our opinion, such statements fairly summarize these provisions in all material respects. The statements included in the Prospectus under the caption “Taxation-Certain U.S. Federal Income Tax Considerations,” insofar as they purport to describe provisions of U.S. federal income tax laws or legal conclusions with respect thereto, fairly and accurately summarize the matters referred to therein in all material respects.

In rendering the opinions in paragraphs (1), (2), (3), (4) and (5) above, we have assumed that each party to the Documents and the Tax Certification Agency Agreement has been duly incorporated and is validly existing under the laws of the jurisdiction of its organization. In addition, we have assumed that (i) the execution, delivery and performance by each party thereto of the Documents and the Tax

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Certification Agency Agreement (a) are within its corporate powers, (b) do not contravene, or constitute a default under, the certificate of incorporation or bylaws or other constitutive documents of such party, (c) require no action by or in respect of, or filing with, any governmental body, agency or official and (d) do not contravene, or constitute a default under, any provision of applicable law or regulation or any judgment, injunction, order or decree or any agreement or other instrument binding upon such party, provided that we make no such assumption to the extent that we have specifically opined as to such matters with respect to the Company and the Guarantor, and (ii) each Document (other than the Underwriting Agreement) is a valid, binding and enforceable agreement of each party thereto (other than as expressly covered above in respect of the Company and the Guarantor).

We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States, except that we express no opinion as to any law, rule or regulation that is applicable to the Company and the Guarantor, the Documents, the Tax Certification Agency Agreement, or such transactions solely because such law, rule or regulation is part of a regulatory regime applicable to any party to the Documents or the Tax Certification Agency Agreement or any of its affiliates due to the specific assets or business of such party or such affiliate. With respect to all matters of Spanish law, you have received, and we understand that you are relying upon, the opinions of Uría Menéndez and Enrique Medina Malo, each delivered pursuant to the Underwriting Agreement.

This opinion is rendered solely to you and the other several Underwriters in connection with the Underwriting Agreement. This opinion may not be relied upon by you for any other purpose or relied upon by any other person (including any person acquiring Securities from the several Underwriters) or furnished to any other person without our prior written consent.

Very truly yours,

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EXHIBIT C

FORM OF NEGATIVE ASSURANCE LETTER OF DAVIS POLK & WARDWELL LLP

June [•], 2009

[Names of Lead and Co-Lead Managers]
[Name and address of Lead Manager]

as Representatives

of the underwriters listed in Schedule I to the Underwriting Agreement

Ladies and Gentlemen:

We have acted as special United States counsel for Telefónica Emisiones, S.A.U., a sociedad anónima unipersonal organized under the laws of the Kingdom of Spain (the “Company”), and Telefónica, S.A., a sociedad anónima organized under the laws of the Kingdom of Spain, as guarantor (the “Guarantor”), in connection with the Underwriting Agreement dated June [•], 2009 (the “Underwriting Agreement”) with you and the other several underwriters named in Schedule I thereto under which you and such other Underwriters have severally agreed to purchase from the Company $[•] aggregate principal amount of the Company’s [•]% fixed rate notes due [•] (the “[•] Fixed Rate Notes”) and $[•] aggregate principal amount of the Company’s [•]% fixed rate notes due [•] (the “[•] Fixed Rate Notes” and, together with the [•] Fixed Rate Notes, the “Notes”) guaranteed by the Guarantor (the “Guarantee” and, together with the Notes, the “Securities”). The Securities are to be issued pursuant to the provisions of the Indenture dated as of May 8, 2009 (the “Base Indenture”) among the Company, the Guarantor and The Bank of New York Mellon, as trustee, as supplemented by a supplemental fixed rate note indenture dated as of [•], 2009, pursuant to which the [•] Fixed Rate Notes will be issued and a supplemental fixed rate note indenture dated as of [•], 2009, pursuant to which the [•] Fixed Rate Notes will be issued.

We have participated in the preparation of the registration statement of the Company and the Guarantor on Form F-3 (File No. 333-159062) (including the documents incorporated by reference therein (the “Incorporated Documents”)) filed with the Securities and Exchange Commission (the “Commission”) pursuant to the provisions of the Securities Act of 1933, as amended (the “Act”), relating to the registration of securities (the “Shelf Securities”) to be issued from time to time by the Company and the Guarantor, and have participated in the preparation of the preliminary prospectus supplement dated June [•], 2009 (the “Preliminary Prospectus Supplement”) relating to the Securities, the free writing prospectuses, each dated [•], 2009, identified as Numbers [•] on Schedule II to the Underwriting Agreement and attached to Schedule III to the Underwriting Agreement and the prospectus supplement dated June [•], 2009, relating to the Securities (the “Prospectus Supplement”). The registration statement became effective under the

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Act and the Base Indenture qualified under the Trust Indenture Act of 1939, as amended, upon the filing of the registration statement with the Commission on May 8, 2009 pursuant to Rule 462(e). The registration statement at the date of the Underwriting Agreement, including the Incorporated Documents and the information deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430B under the Act, is hereinafter referred to as the “Registration Statement”, and the related prospectus (including the Incorporated Documents) dated May 8, 2009 relating to the Shelf Securities is hereinafter referred to as the “Basic Prospectus”. The Basic Prospectus, as supplemented by the Preliminary Prospectus Supplement, together with the free writing prospectuses identified as Numbers [•] on Schedule II to the Underwriting Agreement and attached to Schedule III to the Underwriting Agreement for the Securities are hereinafter called the “Disclosure Package”. The Basic Prospectus, as supplemented by the Prospectus Supplement, in the form first used to confirm sales of the Securities (or in the form first made available by the Company to the Underwriters to meet requests of purchasers of the Securities under Rule 173 under the Act), is hereinafter referred to as the “Prospectus”.

The primary purpose of our professional engagement was not to establish or confirm factual matters or financial, accounting or quantitative information. Furthermore, many determinations involved in the preparation of the Registration Statement, the Disclosure Package and the Prospectus are of a wholly or partially non-legal character or relate to legal matters outside the scope of our opinion separately delivered to you today in respect of certain matters under the laws of the State of New York and the federal laws of the United States of America. As a result, we are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Disclosure Package and the Prospectus, and we have not ourselves checked the accuracy, completeness or fairness of, or otherwise verified, the information furnished in such documents (except to the extent expressly set forth in our opinion letter separately delivered to you today as to statements included in the Prospectus under the captions “Description of the Notes and the Guarantee” and “Taxation—Certain U.S. Federal Income Tax Considerations”). However, in the course of our acting as counsel to the Company and the Guarantorin connection with the preparation of the Registration Statement, the Disclosure Package and the Prospectus, we have generally reviewed and discussed with your representatives and your counsel and with certain officers and employees of, Spanish counsel for, and independent public accountants for, the Company and the Guarantor the information furnished, whether or not subject to our check and verification. We have also reviewed and relied upon certain corporate records and documents, letters from counsel and accountants and oral and written statements of officers and other representatives of the Company and the Guarantor and others as to the existence and consequence of certain factual and other matters.

On the basis of the information gained in the course of the performance of the services rendered above, but without independent check or verification except as stated above:

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	(i)		the Registration Statement and the Prospectus appear on their face to be appropriately responsive in all material respects to the requirements of the Act and the applicable rules and regulations of the Commission thereunder; and

	(ii)		nothing has come to our attention that causes us to believe that, insofar as relevant to the offering of the Securities:

	(a)		on the date of the [Underwriting Agreement], the Registration Statement contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading,

	(b)		at • [insert time], the Disclosure Package contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or

	(c)		the Prospectus as of the date of the [Underwriting Agreement] or as of the date hereof contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

In providing this letter to you and the other several Underwriters, we have not been called to pass upon, and we express no view regarding, the financial statements or financial schedules or other financial or accounting data included in the Registration Statement, the Disclosure Package or the Prospectus, or those parts of the Registration Statement that constitute the Form T-1. In addition, we express no view as to the conveyance of the Disclosure Package or the information contained therein to investors.

This letter is delivered solely to you and the other several Underwriters in connection with the Underwriting Agreement. This letter may not be relied upon by you for any other purpose or relied upon by any other person (including any person acquiring Securities from the several Underwriters) or furnished to any other person without our prior written consent.

Very truly yours,

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EXHIBIT D

FORM OF OPINION OF URÍA MENENDEZ

Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013

Deutsche Bank Securities Inc.
60 Wall Street, 2nd Floor
New York, NY 10005

Goldman, Sachs & Co.
85 Broad Street, 20th Floor
New York, NY 10004

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036

as representatives
for the underwriters listed in Schedule 1 hereof,

Madrid, [•], 2009

Ladies and Gentlemen,

TELEFÓNICA EMISIONES, S.A.U.
US$1,250,000,000 4.949% Fixed Rate Senior Notes due 2015
US$1,000,000,000 5.877% Fixed Rate Senior Notes due 2019
guaranteed by TELEFÓNICA, S.A.

We have acted as Spanish counsel to Telefónica, S.A. (the “Guarantor”) and Telefónica Emisiones, S.A.U. (the “Company”), for purposes, among others, of issuing a legal opinion addressed to you in connection with the issuance by the Company of US$1,250,000,000 aggregate principal amount of its 4.949% Fixed Rate Senior Notes due 2015 (the “4.949% Fixed Rate Notes”) and US$1,000,000,000 aggregate principal amount of its 5.877% Fixed Rate Senior Notes due 2019 (the “5.877% Fixed Rate Notes” and together with the 4.949% Fixed Rate Notes, the “Notes”). The Notes will be unconditionally guaranteed (the “Guarantee”) by the Guarantor. We have taken instructions solely from the Company and the Guarantor.

This opinion letter is being furnished pursuant to paragraph (d) of Clause 2 of the underwriting agreement dated as of June 22, 2009, among the Company and the Guarantor, on the one hand, and the underwriters listed in Schedule 1 (the “Underwriters”), on the other hand (the “Underwriting Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Underwriting Agreement.

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I. Documents reviewed

In arriving at the opinions expressed below, we have reviewed the following documents:

(a)		A copy of the Underwriting Agreement.

(b)		A copy of the global notes dated [•], 2009 evidencing the Notes and a copy of the Guarantee.

(c)		A copy of the public deed of issue of the Notes (escritura de emisión) executed on June [•], 2009, before the Notary Public of Madrid Mr. [•] (the “Public Deed of Issuance”).

(d)		A copy of the announcement related to the issue of the Notes published in the Official Bulletin of the Mercantile Registry (Boletín Oficial del Registro Mercantil) on [•], 2009.

(e)		A copy of the Registration Statement on form F-3 registered with the United States Securities and Exchange Commission (including the base prospectus attached thereto) dated May 8, 2009, with file number 333-159062 (the “F-3”).

(f)		A copy of the preliminary prospectus supplement dated June 22, 2009, filed with the United States Securities and Exchange Commission on June 22, 2009.

(g)		A copy of the final prospectus supplement relating to the offering of the Notes dated July 22, 2009, filed with the United States Securities and Exchange Commission on July 23, 2009 (the “Prospectus Supplement”).

(h)		A copy of the indenture dated as of May 8, 2009, among the Company, the Guarantor and The Bank of New York Mellon (the “Indenture”).

(i)		A copy of the supplemental indentures, one with respect to the 4.949% Fixed Rate Notes and one with respect to the 5.877% Fixed Rate Notes, each dated as of [•], 2009, among the Company, the Guarantor and The Bank of New York Mellon (collectively, the “Supplemental Indentures”).

(j)		A copy of the tax certification agency agreement dated as of June 20, 2006, among the Company, the Guarantor, Acupay System LLC (“Acupay”) and [The Bank of New York (as successor to JPMorgan Chase Bank, N.A.)], as amended by the letter of appointment dated [•], 2009, among the Company, the Guarantor and Acupay (jointly, the “Tax Certification Agency Agreement”).

(k)		The information publicly available on the website of the Spanish Central Mercantile Registry (www.rmc.es) with respect to the Guarantor on June 10, 2009;

(l)		A copy of the by-laws (estatutos) of the Guarantor, as publicly available at the Web page of the Guarantor (www.telefonica.com) on June 10, 2009.

(m)		A certification related to the Company issued by the Mercantile Registry of Madrid on March 31, 2009.

(n)		A copy of forms PE-1 (declaración de préstamos y créditos exteriores) (one for each of the 4.949% Fixed Rate Notes and the 5.877% Fixed Rate Notes), each dated [•], 2009.

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(ñ)		A copy of a certification of the resolutions approved by the Executive Committee of the Guarantor held on April 7, 2006.

(o)		A copy of a certification of the resolutions adopted by the Guarantor as sole shareholder of the Company on April 7, 2006.

(p)		A copy of a certification of the resolutions approved by the Board of Directors of the Guarantor held on March 25, 2009.

(q)		A copy of a certification of the resolutions adopted by the Guarantor as sole shareholder of the Company on May 4, 2009.

The Underwriting Agreement, the Indenture, the Supplemental Indentures, the Tax Certification Agency Agreement, the Notes and the Guarantee will be hereinafter collectively referred to as the “Documents”.

II. Assumptions

In rendering the opinions expressed below, we have assumed:

(a)		The genuineness of all signatures appearing in the documents which, or copies of which, we have examined.

(b)		The authenticity and completeness of all documents submitted to us as originals and the conformity to the originals and completeness of all documents submitted to us as copies.

(c)		The power and authority to execute of, and the due execution by, all parties to the Documents (other than the Guarantor and the Company) and that such execution will bind such parties and that the performance thereof is within the capacity and powers of each of the parties thereto (other than the Guarantor and the Company).

(d)		That each of the parties to the Documents (other than the Guarantor and the Company) is duly incorporated and validly existing under the laws of the country of incorporation.

(e)		That the Documents have been executed and delivered, by Mr. Santiago Fernández Valbuena, Mr. Miguel Escrig Meliá, Mr. Juan José Gómez Miguelañez or Mr. Eduardo Alvarez Gómez on behalf of the Guarantor and by Mr. Juan José Gómez Migueláñez or Mr. Miguel Escrig Meliá, Joint and Several Directors of the Company (Administradores Solidarios) on behalf of the Company, and by each of the other parties thereto, in forms conforming to the final drafts reviewed by us.

(f)		That all the documents that should have been filed with the Mercantile Registry of Madrid by the Company have been filed at the date of our search and that a search in respect of matters which are stated therein since the date of our search would not reveal any circumstances or the filing of documents which would affect the conclusions reached herein and that the content of the certification issued by the Mercantile Registry of Madrid on March 31, 2009, accurately reflects the entries held at such Registry in relation to the Company.

(g)		That there are no and there will be no contractual or similar restrictions binding on any person which would affect the conclusions of this opinion resulting from any agreement or arrangement not being a document specifically examined by us for purposes of this opinion and there are no

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arrangements between any of the parties to the Documents which modify or supersede any of the terms thereof.

(h)		That there are no decisions or resolutions adopted or passed by the corporate bodies of the Company or the Guarantor revoking or amending the decisions and resolutions referred to in paragraphs I.(ñ), I(o), I(p) and I.(q) above, and that the by-laws (estatutos) of the Guarantor and the Company and the Public Deed of Issuance which have been reviewed by us are those in force as of the date hereof.

(i)		That the Documents are legal, valid, binding and enforceable under the laws of the state of New York, and that insofar as any obligation under the Documents, the F-3 and the Prospectus Supplement is to be performed in, or is otherwise subject to the laws of, any jurisdiction other than Spain, will not be illegal or ineffective by virtue of any law of, or contrary to public policy in, that jurisdiction.

(j)		That there are no and there will be no matters or events of a factual nature not disclosed to us which would affect the conclusions herein.

(k)		That all the voting rights of the Company belong to the Guarantor and that the exclusive activity of the Company is the issuance of debt and other financial instruments.

(l)		That the proceeds of the issuance of the Notes, net of management and issuance costs, will be permanently deposited with the Guarantor or a company of its consolidated group which could use the proceeds for the general corporate purposes of the group.

(m)		That the obligations of the Guarantor under the Guarantee constitute, under the laws of the state of New York, an irrevocable and unconditional guarantee of the Guarantor, and under the Guarantee the holders of the Notes may enforce the Guarantee directly against the Guarantor, the obligations of the Guarantor are independent of the obligations of the Company and the Guarantor shall be liable as principal and sole debtor (garantía solidaria e irrevocable).

(n)		That the Notes will be admitted to listing on an organized secondary market in an OECD country.

As to matters of fact material to the opinions expressed below, we have, when relevant facts were not independently established by us, examined and relied upon certificates of officials and other representatives of the Guarantor and the Company.

III. Spanish Law

We do not represent ourselves to be familiar with the laws of any jurisdiction other than Spain as they stand at present and, therefore, we express no opinion on any question arising under any laws other than the laws of Spain as they stand at present. In giving this opinion we have assumed that such documents listed above, expressed to be governed by the laws of a country other than Spain constitute legal, valid, binding and enforceable obligations of the respective parties thereto under such laws.

Our involvement in the transaction described herein has been limited to our role as Spanish counsel to the Company and the Guarantor and, as a consequence thereof, we assume no obligation to advise any other party to this transaction and, furthermore, we assume no obligation to advise either you or any other party of

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changes of law or facts that could occur after the date of the opinion, even though the change may affect the legal analysis or conclusions given in this opinion.

Legal concepts are expressed in the documents in English terms and may not be identical or equivalent to those that exist under the laws of Spain. Therefore, this opinion may only be relied upon the express condition that the interpretation arising of this opinion is governed by Spanish law in a proceeding brought before a Spanish court.

None of the Civil Code, the Commercial Code, any Spanish regulation or Spanish case law specifically regulate, address or provide information with respect to a transaction where a Spanish sociedad anónima carries out an issuance of debt instruments in the United States registered under the United States Securities Act of 1933 and pursuant to an indenture qualified under the United States Trust Indenture Act of 1939. Thus, the opinions included in Section IV below are based on the existing opinions of scholars that have addressed such issues and on our interpretation of Spanish law. In addition, the Public Deed of Issuance has been registered with the Madrid Mercantile Registry and pursuant to Article 7 of the Mercantile Registry Regulations (Reglamento del Registro Mercantil) there is a presumption of validity of the content of the Mercantile Registry.

IV. Opinion

Based upon and subject to the foregoing, and subject to the further exceptions, limitations and qualifications set forth below, it is our opinion that:

1.		Valid existence

		Each of the Company and the Guarantor has been duly incorporated and is validly existing as a sociedad anónima under the laws of the Kingdom of Spain.

2.		Corporate power and corporate action

		Each of the Company and the Guarantor has corporate power to own, lease and operate its properties and conduct its business.

3.		Valid execution of agreements

		The Underwriting Agreement has been duly authorized, executed and delivered by the Guarantor and the Company.

		The Indenture and the Supplemental Indentures have been duly authorized, executed and delivered by the Guarantor and the Company.

		The Tax Certification Agency Agreement has been duly authorized, executed and delivered by the Guarantor and the Company.

		The Guarantee has been duly authorized, executed and delivered by the Guarantor.

		The Notes have been duly authorized, executed and delivered by the Company.

4.		Choice of law

		The choice of the laws of the State of New York as the governing law of the Documents is valid and shall be recognized and enforced by the Spanish courts. The effectiveness of this choice is subject to the laws of the State of

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New York being evidenced to the Spanish courts pursuant to Article 281 of the Civil Procedural Law.

5.		Authorizations and consents

		Save for (A) obtaining from the Bank of Spain the números de operación financiera (N.O.F.), which have been obtained and (B) the registration of the Public Deed of Issuance with the Mercantile Registry and the publication of the announcement related to the issue of the Notes in the Official Gazette of the Mercantile Registry, which have taken place, no consent, approval, authorization, order, regulation, qualification or clearance of or with any court or governmental agency or regulatory body in Spain having jurisdiction over the Company or the Guarantor and its subsidiaries or any of their properties or of any stock exchange authorities in Spain is required for (i) the valid authorization, execution and delivery of the Documents by the Company and the Guarantor, (ii) the issuance and delivery of the Notes or the sale of the Notes or to make interest and all other payments (including on maturity or early redemption) in United States dollars on the Notes, or (iii) for the consummation of the transactions contemplated hereby or thereby on the part of the Company or the Guarantor. This notwithstanding, once the Notes have been paid in full, this circumstance must be registered at the Mercantile Registry of the place where the Company is domiciled.

6.		Absence of conflicts

		Neither the sale of the Notes by the Company, the execution by the Guarantor and the Company of the Documents nor the consummation of any of the other transactions contemplated in the Documents and the Notes will conflict with, result in breach of, or constitute a default under the by-laws of the Guarantor or the Company, or any order or regulation known to us to be applicable to the Guarantor or the Company.

7.		Applicable Spanish tax law

		The tax regime set forth in Additional Provision Two of Law 13/1985 of May 25 on Investment Ratios, Own Funds and Information Obligations of Financial Intermediaries (Ley 13/1985, de 25 de mayo, de coeficientes de inversión, recursos propios y obligaciones de información de los intermediarios financieros), as amended by Law 19/2003 of July 4 on Foreign Capital Transfers and Financial Transactions and on Certain Measures to Prevent Money Laundering (Ley 19/2003, de 4 de Julio, sobre régimen jurídico de los movimientos de capitales y de las transacciones económicas con el exterior y sobre determinadas medidas de prevención del blanqueo de capitales), Law 23/2005 of November 18 on Certain Tax Measures to Promote the Productivity (Ley 23/2005, de 18 de noviembre, de reformas en materia tributaria para el impulso a la productividad) and Law 4/2008, of December 23 that abolishes the Net Wealth Tax, generalizes the VAT monthly refund system and introduces other tax measures (Ley 4/2008, de 23 de diciembre, por la que se suprime el gravamen del Impuesto sobre el Patrimonio, se generaliza el sistema de devolución mensual en el Impuesto sobre el Valor Añadido, y se introducen otras modificaciones en la normativa tributaria) (“Law 13/1985”), will apply to the Notes.

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Law 13/1985 establishes rules governing the issuance of preference shares and other debt instruments by Spanish financial entities and Spanish non-financial listed entities, whether directly or through a group subsidiary incorporated either in Spain or in a European Union Member State (other than tax havens as defined in Royal Decree 1080/1991 of July 5, 1991, as amended).

8.		Tax regime of payments made in respect of the Notes under Law 13/1985

		Under Law 13/1985, any payments in respect of the Notes made by the Company to a non-Spanish resident holder, who does not operate with respect to the Notes through a permanent establishment in Spain, shall not be subject to taxation in Spain pursuant to Royal Legislative Decree 5/2004 of March 5, promulgating the consolidated text of the Non-Resident Income Tax Law (Real Decreto Legislativo 5/2004, de 5 de Marzo, por el que se aprueba el Texto Refundido de la Ley del Impuesto sobre la Renta de no Residentes), and no withholding tax shall be required on such payments, except in the case of payments made to non-Spanish resident holders who fail to comply with certain tax residency certification procedures, which will receive such payment subject to Spanish withholding tax, currently at the rate of 18%.

9.		Tax regime of payments made in respect of the Notes if Law 13/1985 does not apply

		If the Notes are not listed on an organized secondary market in an OECD country on any Interest Payment Date (as defined in the Prospectus Supplement), Law 13/1985 will not apply to the Notes. In such case, any payments in respect of the Notes made by the Company to a non-Spanish resident holder, who does not operate with respect to the Notes through a permanent establishment in Spain, will be subject to Spanish withholding tax at the current rate of 18%, except in the case of payments made to non-Spanish resident holders who are (A) resident in a European Union Member State other than Spain, or a permanent establishment located in a European Union Member State of residents of other European Union Member States, provided that such holders (i) do not operate with respect to the Notes through a permanent establishment in Spain, and (ii) are not resident or nationals of, are not located in, nor obtain the income through, a tax haven territory (as defined in Royal Decree 1080/1991 of July 5, 1991, as amended); or (B) resident for tax purposes in a country which has entered into a convention for the avoidance of double taxation with Spain which provides for an exemption from Spanish tax or a reduced withholding tax rate with respect to interest payable to any beneficial owner of the Notes, and provided further that said holders deliver evidence of their tax residence in accordance with the Spanish tax law.

10.		Tax regime of payments made under the Guarantee

		Although no clear precedent, statement of law or regulation exists in relation hereto, in our opinion all payments made by the Guarantor to a non-Spanish resident holder under the Guarantee may be characterized as an indemnity and made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by Spain or any political subdivision or authority thereof or therein having power to tax.

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However, in the event that the Spanish Tax Authorities were to take the view that the Guarantor had validly, legally and effectively assumed all the obligations of the Company under the Notes by way of subrogation, payments of interest in respect of the Guarantee would fall under the scope of Law 13/1985 and, therefore, the tax treatment applicable to such income will be that described in paragraph 8 above or, in the event that the Notes are not listed on an organized secondary market in an OECD country on any Interest Payment Date (as defined in the Prospectus Supplement), and consequently Law 13/1985 does not apply to the Notes such payments will be subject to the tax treatment described in paragraph 9 above.

11.		Tax information reporting requirements

		According to Law 13/1985, the issuance of the Notes by the Company will be subject to certain reporting requirements (which includes disclosure of the identities of the beneficial owners of the Notes and the activities performed by the Company). These disclosure obligations have been developed by Royal Decree 1065/2007 of July 27 enacting the General Regulations on the Actions and Proceeding Relating to Tax Management and Tax Audit and on Development of the Common Rules of the Procedures to Apply Taxes (Real Decreto 1065/2007, de 27 de julio, por el que se aprueba el Reglamento General de las actuaciones y los procedimientos de gestión e inspección tributaria y de desarrollo de las normas comunes de los procedimientos de aplicación de los tributos).

		Notwithstanding the above, Law 4/2008 of December 23 modified, effective as from 26 December 2008, section 3 of the Additional Provision Two of Law 13/1985, which requires Spanish issuers and guarantors to identify beneficial owners of certain preferred shares and other debt instruments issued under Law 13/1985.

		According to the new wording of such section 3, the information obligations will be limited to those residents for tax purposes in Spain, whether natural or legal persons, as well as to non-Spanish tax residents acting through a permanent establishment in Spain. It also establishes that the submission of such information will be made in the form to be further developed in accordance with future regulations.

		In this context, the Spanish General Tax Directorate (GTD) issued two binding rulings dated January 20, 2009 (no. V0077/09 and V0078/09) upon the request of the Spanish Bank and Savings Bank Associations, where the GTD points out that “until new regulations are approved to develop the procedures that will have to be utilised under the new legal framework established by Law 4/2008, the procedures established (...) in article 44 of Royal Decree 1065/2007 of 27 July on securities issued under the second additional provision of Law 13/1985 of 25 May will still apply”.

		As of the date of issuance of this opinion, the regulations that will develop section 3 of the Additional Provision Two of Law 13/1985, as amended by Law 4/2008 of December 23, are still pending to be approved. Therefore, pursuant to the content of the above referred binding rulings, Spanish issuers and guarantors of preferred shares and debt instruments governed by Law 13/1985, such as the Notes, must continue applying the procedures established in Royal Decree 1065/2007 until the Spanish government passes regulations developing the new legal framework.

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The Company, the Guarantor and The Bank of New York Mellon have agreed certain procedures with the relevant clearing system (i.e., The Depository Trust Company or “DTC”) and with Acupay (as described under heading “Taxation — Spanish Tax Considerations — Evidencing of Beneficial Owner Residency in Connection with Interest Payments” of the Prospectus Supplement, and Annexes A and B to the Prospectus Supplement) which, in our opinion, comply with the reporting requirements set forth by Law 13/1985, as developed by Royal Decree 1065/2007.

12.		Stamp duty and other transfer taxes

		No stamp or other issuance or transfer taxes or duties are payable by or on behalf of the Underwriters to the Kingdom of Spain or any political subdivision or taxing authority thereof or therein in connection with the sale of the Notes to the Underwriters in the manner contemplated hereby, or the resale and delivery of such Notes by the Underwriters in the manner contemplated in the Prospectus Supplement.

13.		Spanish Net Wealth Tax

		Effective from January 1, 2008, Spanish Law 4/2008 of December 23 grants individual taxpayers, whether or not such individuals are considered residents in Spain for tax purposes, a tax allowance equivalent to 100% of the Net Wealth Tax due, and eliminates the obligation to file any tax form with the Spanish tax authorities in connection with such tax.

		Therefore, Notes held by an individual not resident in Spain for tax purposes will not be subject to Net Wealth Tax in Spain.

14.		Spanish Inheritance and Gift Tax

		Irrespective of the tax residence of a holder of Notes at the time of death or gift, the transfer of the Notes as a result thereof will not be subject to Inheritance and Gift Tax in Spain provided that the Notes are not located in Spain and the rights attaching to such Notes are not exercisable within the Spanish territory nor the heir or the beneficiary, as the case may be, is resident in Spain for tax purposes. Any holder of Notes will not be deemed to be resident, domiciled or carrying on business in Spain by reason only of holding such Notes.

15.		Choice of foreign courts

		The Spanish courts will determine the validity of the submission to exclusive jurisdiction contained in clause 14 of the Standard Provisions of the Underwriting Agreement and clause 1.15 of the Indenture, in accordance with the laws of Spain although such agreements are subject to the laws of the State of New York. In view of that, the submission contained in clause 14 of the Standard Provisions of the Underwriting Agreement and clause 1.15 of the Indenture to any federal or state court in the Borough of Manhattan, the City of New York as the dispute resolution proceeding thereunder is valid and shall be recognized and enforced by the Spanish courts in any action or proceedings brought in relation thereto before them, provided that said submission is formally alleged in accordance with the procedural laws of Spain.

16.		Execution of foreign judgments

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A judgment duly rendered by the courts of New York, pursuant to a legal action instituted before such courts in connection with the Underwriting Agreement, the Indenture and the Supplemental Indentures would be enforceable in the competent courts of Spain, provided that prior to the time such New York court judgment is introduced into a Spanish court for enforcement there is no material contradiction or incompatibility with a judgment rendered or judicial proceedings outstanding in Spain, in accordance with Article 523.2 and the Derogation Provision of the current Civil Procedural Law and subject to the former Civil Procedural Law of 1881, the substantive provisions of which are found in Articles 951 to 958, both inclusive. Such provisions and the case law set forth that any final judgment rendered outside Spain may be enforced in Spain in three different situations: (i) in the cases and in accordance with the provisions of any applicable treaty; (ii) in the absence of any such treaty, in case it is alleged and evidenced that the jurisdiction where the foreign judgment was given recognizes Spanish judgments on a reciprocal basis when the requirements established in such foreign jurisdiction for the recognition of Spanish judgments are complied with and provided that some minimal conditions are met (inter alia, that the matter is not subject to Spanish exclusive jurisdiction for certain matters, does not infringe public policy and is not in contradiction with a previous Spanish judgment); and (iii) in the absence of an applicable treaty and when the reciprocity has not been alleged, in those cases in which the judgment given in the foreign jurisdiction complies with the requirements set forth in article 954 of the Civil Procedural Law of 1881 (which the case law identifies with the minimal conditions referred to above and include the regularity of the proceeding followed by the foreign court and the authenticity of the judgment). Since there is no applicable treaty between Spain and the United States, unless the conditions under (ii) above are met, the conditions referred to in (iii) above will have to be satisfied in order to enforce a judgment of a New York court in Spain.

V. Qualifications to Opinion

The opinions expressed above are subject to the following qualifications:

(i)		Our opinions expressed above are subject to the effects and result of the operations involved in any applicable bankruptcy, insolvency (concurso), moratorium or similar laws affecting creditors’ rights generally, as well as to any principles of public policy (orden público).

(ii)		Without prejudice to the general qualification set forth in the preceding paragraph, it is worth mentioning that the credit rights will be subordinated by law in the insolvency proceedings if they are held by creditors which are considered “especially related” to the insolvent debtor pursuant to article 92.5 of Law 22/2003, of 9 July 2003, on Insolvency (the “Insolvency Law”) (among others, because the creditor holds an interest in the insolvent debtor or is part of the same group, because the creditor is a director of the insolvent debtor or may be considered a “de facto” director thereof, or because the creditor is the assignee or successor of credit rights previously held by any of the foregoing).

		After the amendment of the Insolvency Law pursuant to Royal Decree-Law 3/2009 of 27 March, it has been clarified that credit rights against the

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Company arising from the Notes benefiting of the guarantee of the Guarantor will not be classified as subordinated obligations, provided that the holders of the Notes are not especially related persons.

(iii)		The above references to the insolvency legislation may not be deemed exhaustive, there may be other rules which, in one way or the other, may also have an impact on the transaction analyzed.

(iv)		The term “enforceable” in this opinion means that the obligations assumed by the relevant party under the relevant documents are of a type that the Spanish courts would generally enforce. However, it does not mean that those obligations will necessarily be enforced in all circumstances in accordance with their terms. In particular, enforcement before the Spanish courts will be subject to the following:

	(a)		a Spanish court may refuse to give effect to any provision of the Documents on the grounds that such provision conflicts with Spanish public policy (orden público).

	(b)		the Spanish courts will apply the law subject to the equitable principles and may not grant enforcement in the event that they deem a right has not been exercised in good faith or that it has been exercised in abuse of right (abuso de derecho) and will not enforce an obligation in case of fraud;

	(c)		a Spanish court may issue an award of damages where specific performance is deemed impracticable;

	(d)		the validity and performance of contractual obligations may not be left at the discretion of one of the contracting parties as per Article 1,256 of the Civil Code;

	(e)		a Spanish court may not enforce a contractual provision which requires any party thereto to pay any amounts on the grounds that such provision is a penalty within the meaning of Articles 1,152 et seq. of the Civil Code, which the court considers obviously excessive as a pre-estimate of damages; in this event the court may reduce the amount of the penalty; and

	(e)		the exercise of rights and the enforcement thereof is limited by applicable statute of limitations.

(v)

In Spanish Procedural law, the rules of evidence in any judicial proceeding cannot be modified by agreement between the parties and, consequently, any provisions of the Documents in which determinations, certificates, notifications, opinions or the like made by the parties are to be deemed conclusive in the absence of manifest error would not be upheld by a Spanish court. The assessment of any evidence provided in any judicial proceeding will correspond to the Spanish court. The admissibility of evidence or as supporting documentation before a Spanish court or authorities, of any document that is not in the Spanish language may be subject to the provision of an officially sworn translation into Spanish.

(vi)

The laws of the State of New York may not be applied by Spanish courts, pursuant to Articles 12.3 and 12.4 of the Civil Code and Article 16 of the Rome Convention on the law applicable to contractual obligations, if the

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Spanish courts determine that the choice in the Documents of the laws of the state of New York has been made with the intent of avoiding the application of mandatory Spanish laws or legal requirements or if the applicable laws of the State of New York were contrary to Spanish public policy.

(vii)		The Spanish courts have exclusive jurisdiction, inter alia, with respect to matters relating to the incorporation, validity, nullity and dissolution of companies or legal entities having their domicile in the Spanish territory, and to any decisions and resolutions of their corporate bodies, as well as with respect with the validity or nullity of any recordings with a Spanish registry, and the recognition and enforcement in Spain of any judgment or arbitration award obtained in a foreign country.

(viii)		Our opinion expressed in paragraph IV.11 above, has been issued under the assumption that the web-based system and the electronic telecommunications system that will be utilized by Acupay in the collection, confirming, transmission and filing of the Beneficial Owner information (the “Acupay System”) will function in a manner such that all of the Beneficial Owner information entered in the Acupay system by participants in DTC, once reconciled and processed through both Acupay and DTC EDS system following the operational arrangements agreed by both parties, will coincide with the information contained in the original paper copies of the Tax Certificates duly issued and signed by the relevant participants in DTC in the form of [Exhibits I, II and III] to Annex [C] to the Tax Certification Agency Agreement and delivered to the Company and the Guarantor. In particular, as regards the procedures described in Annex [B] to the Tax Certification Agency Agreement, our opinion has been issued under the assumption that Euroclear, its participants and the Specialized Depositary (as this term is defined in said Annex [B]) will act in the manner and in accordance with the operational arrangements described in Annex [B] to the Tax Certification Agency Agreement.

This opinion letter is rendered to the addressees identified herein in connection with the above described transaction. This opinion letter is not to be used, circulated, quoted or otherwise referred to for any other purpose and persons other than its addressees shall not make decisions based on the opinion letter or claim any liability for its content without our prior written consent.

Very truly yours,

Rafael Sebastián/ Jesús López Tello

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Schedule 1 — Underwriters

Citigroup Global Markets Inc.

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

Morgan Stanley & Co. Incorporated

BNP PARIBAS Securities Corp.

Calyon Credit Agricole CIB

Credit Suisse Securities (USA) LLC

Mitsubishi UFJ Securities (USA), Inc.

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TELEFÓNICA EMISIONES, S.A.U.

DEBT SECURITIES
unconditionally and irrevocably guaranteed
by
TELEFÓNICA, S.A.

UNDERWRITING AGREEMENT
STANDARD PROVISIONS

June 22, 2009

Ladies and Gentlemen:

Telefónica Emisiones, S.A.U., a sociedad anónima unipersonal incorporated under the laws of The Kingdom of Spain (the “Company”), may from time to time enter into one or more underwriting agreements (each an “Underwriting Agreement”) that provide for the sale of certain of its securities specified in the particular Underwriting Agreement (the “Designated Securities”). The basic provisions set forth herein to the extent applicable to securities of the type represented by the Designated Securities will be incorporated by reference in any such Underwriting Agreement relating to a particular issue of Designated Securities. Each Underwriting Agreement will be entered into, with such additions and deletions as the parties thereto may determine and shall be specified in such Underwriting Agreement. The Underwriting Agreement may appoint a lead underwriter or underwriters (collectively, the “Representative(s)”) for the particular issue of Designated Securities and will specify the underwriters participating in such offering (the “Underwriters”, which term shall include any Underwriter substituted pursuant to Section 15 hereof). Payment of principal and interest on the Designated Securities will be fully and unconditionally guaranteed by Telefónica, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Guarantor”) pursuant to the terms of guarantees to be dated as of the Closing Date (as defined below) (the “Guarantees”).

The obligation of the Company to issue and sell any of the Designated Securities, the obligation of the Guarantor to guarantee the Designated Securities, and the obligation of the Underwriters to purchase any of the Designated Securities shall be evidenced by the Underwriting Agreement with respect to the Designated Securities specified therein. The Underwriting Agreement, including the provisions incorporated therein by reference, is herein referred to as “this Agreement.” The obligations of the Underwriters under this Agreement shall be several and not joint. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as defined therein.

The terms and rights of any particular issue of Designated Securities shall be as specified in the Underwriting Agreement relating thereto and in or pursuant to the applicable indenture (the “Indenture”) identified in the Underwriting Agreement. An

Underwriting Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted.

4. Representations and Warranties.

The Company and the Guarantor, jointly and severally, represent and warrant to, and agree with, each of the Underwriters named in the applicable Underwriting Agreement, as of the Applicable Time and as of the Closing Date, with respect to the Designated Securities as follows:

(a) An “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”)) in respect of the Designated Securities (File No. 333-159062) has been filed with the Securities and Exchange Commission (the “Commission”); such registration statement and any post-effective amendments thereto, each in the form heretofore delivered or to be delivered to the Representative(s) and, excluding exhibits to such registration statement but including all documents incorporated by reference in each prospectus contained therein, delivered to the Representative(s) for each of the other Underwriters became effective under the Securities Act upon filing; and no other document with respect to such registration statement or any such document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission. For purposes of this Agreement, the base prospectus filed as part of the Registration Statement, in the form in which it has most recently been filed with the Commission on or prior to the date hereof, relating to the Designated Securities, is hereinafter called the “Basic Prospectus”; “Preliminary Prospectus” means the Basic Prospectus together with any preliminary prospectus (including any preliminary prospectus supplement) relating to the Designated Securities filed with the Commission pursuant to Rule 424(b) of the rules and regulations (the “Rules and Regulations”) of the Commission under the Securities Act and provided to the Representative(s) for use by the Underwriters; “Registration Statement” means, collectively, the parts of such registration statement, including all exhibits thereto and any final prospectus supplement relating to the Designated Securities filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part thereof pursuant to Rule 430B of the Rules and Regulations, as amended as of the time of the most recent post-effective amendment thereto, if any, became or was deemed to have become effective under the Securities Act; “Prospectus” means the Basic Prospectus together with the prospectus (including any final prospectus supplement) relating to the Designated Securities in the form filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and provided to the Representative(s) for use by the Underwriters; “most recent Preliminary Prospectus” means the latest Preliminary Prospectus included in the Registration Statement or filed pursuant to Rule 424(b) of the Rules and Regulations at or immediately prior to the Applicable Time (as hereinafter defined); “Issuer Free Writing

Prospectus” means any “issuer free writing prospectus” (as defined in Rule 433 of the Rules and Regulations) relating to the Designated Securities; and “Disclosure Package” means the most recent Preliminary Prospectus and any Issuer Free Writing Prospectus issued at or prior to the Applicable Time (including the final term sheet or term sheets prepared pursuant to Section 5(a) below (the “Term Sheet(s)”) and attached to the applicable Underwriting Agreement, as such definition may be amended or supplemented by terms of the applicable Underwriting Agreement). “Applicable Time” is defined in the applicable Underwriting Agreement. Any references herein to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any documents incorporated by reference therein as of the date of such Preliminary Prospectus or the Prospectus, as the case may be, and any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any documents filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of such Preliminary Prospectus or the Prospectus, as the case may be, and incorporated by reference in such Preliminary Prospectus or the Prospectus. For purposes of Section l of this Agreement, all references to the Registration Statement, any post-effective amendments thereto and the Prospectus will be deemed to include, without limitation, any electronically transmitted copies thereof, including, without limitation, any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”).

(b) (i) No stop order suspending the effectiveness of the Registration Statement has been issued by the Commission; (ii) to the best knowledge of the Company and the Guarantor after due enquiry no proceeding for that purpose has been initiated or threatened by the Commission; (iii) no notice of objection of the Commission to the use of such registration statement and any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company or the Guarantor; and (iv) no order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission. The Registration Statement conforms in all material respects, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform in all material respects, to the requirements of the Securities Act and the Rules and Regulations; the Registration Statement and any post-effective amendments thereto do not and will not, as of the applicable effective date or dates, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendment or supplement thereto will not, as of its date and as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation or warranty will not apply to (i) any statements or omissions made in reliance upon, and in conformity with, written information furnished

to the Company or to the Guarantor by any Underwriter through the Representative(s) expressly for inclusion therein, such information being that identified in each applicable Underwriting Agreement, or (ii) the part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended, of the trustee.

(c) There is no contract or document required to be described in the Registration Statement, the Disclosure Package or the Prospectus or to be filed as an exhibit to the Registration Statement or to a document incorporated by reference into the Registration Statement, the Disclosure Package or the Prospectus which is not described or filed as required.

(d) The Disclosure Package, as of the Applicable Time, did not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty will not apply to any statements or omissions made in reliance upon, and in conformity with, written information furnished to the Company or the Guarantor by any Underwriter through the Representative(s) expressly for use in the Disclosure Package, such information being that identified in each applicable Underwriting Agreement.

(e) The Guarantor has been, since the initial filing of the Registration Statement, and is a “well-known seasoned issuer” and has not been, since the initial filing of the Registration Statement, and is not an “ineligible issuer” (as such terms are defined in Rule 405 of the Rules and Regulations).

(f) Neither the Company nor the Guarantor has made or will make any offer relating to the Designated Securities that would constitute an Issuer Free Writing Prospectus, unless such Issuer Free Writing Prospectus has been previously consented to by the Representative(s) and is substantially in form and substance as attached to the applicable Underwriting Agreement; the Company and the Guarantor will comply with the requirements of Rule 433 of the Rules and Regulations with respect to any such Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; any such Issuer Free Writing Prospectus will not, as of its issue date and through the Closing Date, include any information that conflicts with the information contained in the Registration Statement, the Preliminary Prospectus and the Prospectus; any such Issuer Free Writing Prospectus, when taken together with the information contained in the Registration Statement, the Preliminary Prospectus and the Prospectus, did not, when issued or filed pursuant to Rule 433 of the Rules and Regulations, and does not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict

with the information in the Registration Statement, the Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company and the Guarantor will give prompt notice thereof to the Underwriters and, if requested by the Underwriters, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission.

(g) The documents incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus that were or hereafter are filed with or furnished to the Commission, at the time they were or hereafter are so filed or furnished, complied or will comply, as the case may be, in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder.

(h) Each of the Company and the Guarantor has been duly incorporated and is validly existing as a limited liability corporation (a sociedad anónima) under the laws of the Kingdom of Spain.

(i) This Agreement, the tax certification agency agreement dated June 20, 2006 among the Company, the Guarantor, Acupay System LLC and the paying agent under the Indenture, as amended by the letter of appointment dated on or around July 6, 2009 among the Company, the Guarantor and Acupay System LLC (the “Tax Certification Agency Agreement”), the Indenture and the Guarantees will have been duly authorized, executed and delivered by the Company and the Guarantor as of the Closing Date and, once so authorized, executed and delivered will constitute legal, binding and enforceable obligations of the Company and the Guarantor, as applicable, subject to all applicable laws affecting creditors’ rights generally in the event of insolvency (concurso), bankruptcy, winding-up, reorganization or liquidation of the Company or the Guarantor, as the case may be, or any equitable remedies.

(j) The sole shareholder of the Company has duly delegated in favor of any of the joint and several directors (Administradores Solidarios) of the Company the capacity to authorize the issuance by the Company of the Designated Securities. The Designated Securities, when executed, authenticated and delivered in accordance with the Indenture, will constitute legal, valid, binding and enforceable obligations of the Company, as applicable, subject to all applicable laws affecting creditors’ rights generally in the event of insolvency (concurso), bankruptcy, winding-up, reorganization or liquidation of the Company.

(k) The execution and delivery of this Agreement, the Tax Certification Agency Agreement, the Indenture and the Guarantees, and the consummation of the transactions herein and therein contemplated and compliance with the terms hereof and thereof do not conflict and will not

result in a breach of any of the terms or provisions of, or constitute a default under, the constitutive documents of the Company or the Guarantor, as the case may be, the laws of the Kingdom of Spain or any indenture, trust deed, mortgage or other agreement or instrument to which the Company or the Guarantor, as the case may be, is a party or by which it or any of its properties is bound, or infringe any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental body or court, domestic or foreign, having jurisdiction over the Company or the Guarantor, as the case may be, or its properties, except in any such case for any conflicts, breaches or defaults that would not have a material adverse effect on the financial position or prospects of the Guarantor and its subsidiaries, considered as one enterprise (a “Material Adverse Effect”).

(l) Since the date of the latest financial statements included or incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus or the respective dates as of which information is given in the Registration Statement, the Disclosure Package and the Prospectus, none of the Company, the Guarantor or any of Telefónica de Espana, S.A., Telefónica Internacional, S.A. and Telefónica O2 Europe plc (formerly O2 plc) (the “Material Subsidiaries”) has sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Registration Statement, the Disclosure Package and the Prospectus and except any such loss or interference that would not result in a Material Adverse Effect.

(m) All material authorizations, consents, approvals, filings, notifications and registrations required by the Company or the Guarantor, as the case may be, for or in connection with the performance by the Company or the Guarantor, as the case may be, of the obligations expressed to be undertaken by it herein have been obtained and are in full force and effect, or, as the case may be, have been effected, except (i) such as may be required by the securities, Blue Sky or similar laws of the various states of the United States in connection with the offer and sale of the Designated Securities, (ii) such approvals as have been requested or obtained, (iii) the publication of an announcement related to the issue of the Designated Securities in the Official Gazette of the Mercantile Registry (Boletin Oficial del Registro Mercantil), (iv) the registration of a public deed (escritura de emisión) related to the issue of the Designated Securities in the Mercantile Registry, (v) obtaining a número de operación financiera (N.O.F.) from the Bank of Spain and (vi) the registration with the Mercantile Registry of the fact that the Designated Securities have been paid out.

(n) Neither the Company, the Guarantor, nor any person that is controlled by the Company or the Guarantor, as the case may be, nor any person acting on its or their behalf, except for the Underwriters as to whom no representation or warranty is made, has taken or will take, directly or

indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to cause or result in, the stabilization in violation of applicable laws or manipulation of the price of the Designated Securities of the Company to facilitate the sale or resale of the Designated Securities and the Guarantees.

(o) Neither the Company nor the Guarantor is an “investment company,” as such term is defined in the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”).

(p) The consolidated financial statements of the Guarantor, together with the related schedules and notes (the “Financial Statements”) included or incorporated by reference in the Registration Statement, the Disclosure Package or the Prospectus present fairly the financial position of the Guarantor and its consolidated subsidiaries at the dates indicated and the statement of operations, shareholders’ equity and cash flows of the Guarantor and its consolidated subsidiaries for the periods specified; said Financial Statements have been prepared in conformity with international financial reporting standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”), which do not differ from IFRS as adopted by the European Union (IFRS-EU) applied in accordance with applicable law throughout the periods involved. The supporting schedules, if any, included or incorporated by reference in the Registration Statement, the Disclosure Package or the Prospectus present fairly in accordance with IFRS as issued by the IASB the information required to be stated therein. The selected financial data and the summary financial information included or incorporated by reference in the Registration Statement, the Disclosure Package or the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the Financial Statements incorporated by reference in the Registration Statement, the Disclosure Package or the Prospectus.

(q) Other than as set forth or incorporated by reference in the Registration Statement, the Disclosure Package and the Prospectus, there are no actions, suits or governmental proceedings pending to which the Company, the Guarantor or any subsidiary of the Guarantor is a party or of which any asset of the Company, the Guarantor, or any subsidiary of the Guarantor is the subject which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or to impair the ability of the Company or the Guarantor to consummate the transactions contemplated hereby; and, to the best of the Guarantor’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any court or governmental, regulatory or stock exchange authority having jurisdiction over the Company, the Guarantor, any Material Subsidiary or any of their respective assets (each a “Governmental Authority”) or any other party, which could reasonably be expected to have a Material Adverse Effect, or to impair the ability of the Company or the Guarantor to consummate the transactions contemplated hereby.

(r) Based on the evaluation of its disclosure controls and procedures performed in conjunction with its Form 20-F filed for the last fiscal year, the Guarantor is not aware of (i) any material weaknesses in its internal controls; or (ii) any material fraud, that involves management or other employees who have a significant role in the Guarantor’s internal controls.

(s) The Company is a wholly—owned subsidiary of the Guarantor, the Guarantees are full and unconditional; and no subsidiary of the Guarantor will guarantee the Designated Securities.

(t) As long as certain conditions are met, under Law 13/1985 of 25 May on Investment Ratios, Own Funds and Information Obligations of Financial Intermediaries (Ley 13/1985, de 25 de mayo, de coeficientes de inversión, recursos propios y obligaciones de información de los intermediarios financieros), as amended by Law 19/2003 of 4 July, on Foreign Capital Transfers and Financial Transactions and on Certain Measures to Prevent Money Laundering (Ley 19/2003, de 4 Julio, sobre régimen jurídico de los movimientos de capitales y de las transacciones económicas con el exterior y sobre determinadas medidas de prevención del blanqueo de capitales), Law 23/2005 of 18 November, on Certain Tax Measures to Promote the Productivity (Ley 23/2005, de 18 de noviembre, de reformas en materia tributaria para el impulso a la productividad) and Law 4/2008, of 23 December that abolishes the Net Wealth Tax, generalizes the VAT monthly refund system and introduces other tax measures (Ley 4/2008, de 23 de diciembre, por la que se suprime el gravamen de Impuesto sobre el Patrimonio, se generaliza el sistema de devolución mensual en el Impuesto sobre el Valor Añadido, y se introducen otras modificaciones en la normativa tributaria) (“Law 13/1985 of 25 May”), any payments in respect of the Designated Securities made by the Company to a non-Spanish resident holder, who does not operate with respect to the Designated Securities through a permanent establishment in Spain, shall not be subject to taxation in Spain pursuant to Royal Legislative Decree 5/2004 of March 5, promulgating the consolidated text of the Non-Resident Income Tax Law (Real Decreto Legislativo 5/2004, de 5 de Marzo, por el que se aprueba el Texto Refundido de la Ley del Impuesto sobre la Renta de no Residentes) (the “NRIT Law”), and no withholding tax shall be required on such payments, except in the case of payments made to non-Spanish resident holders who fail to comply with certain tax residency certification procedures, which will receive such payments subject to Spanish withholding tax at the currently applicable rate.

5. Representations and Warranties of the Underwriters.

Each Underwriter represents and warrants to, and agrees with, the Company, the Guarantor and each other Underwriter that:

(a) it has not made, and will not make any offer relating to the Designated Securities that would constitute a “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) required to be filed with the

Commission, other than the information contained in the Term Sheet(s) prepared pursuant to section 5(a) below, without the prior written consent of the Company, the Guarantor and the Representative(s);

(b) it and its respective affiliates (as defined in Rule 501(b) under the Securities Act) and any person acting on its or their behalf has complied and will comply with the selling restrictions set out in Annex A hereto;

(c) neither it nor its respective affiliates (as defined in Rule 501(b) under the Securities Act) nor any person acting on its or their behalf has taken or will take, directly or indirectly, any action designed to cause or to result in, or that has constituted, or which might reasonably be expected to cause or result in, the stabilization or manipulation of the price of the Designated Securities in violation of applicable laws;

(d) in connection with the initial distribution of the Designated Securities, it will not sell Designated Securities to any purchaser thereof in an aggregate amount of less than $75,000; and

(e) in connection with this offering, sale of the Designated Securities or any other services the Underwriters may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Underwriters: (i) no fiduciary or agency relationship between the Underwriters, on the one hand, and the Company and the Guarantor, on the other, exists; and (ii) the Underwriters are not acting as advisors, expert or otherwise, to either the Company or the Guarantor, including, without limitation, with respect to the determination of the price of the Designated Securities, and such relationship between the Underwriters, on the one hand, and the Company and the Guarantor, on the other, is entirely and solely commercial, based on arms-length negotiations.

6. Purchase and Sale.

(a) The Company agrees to sell to each Underwriter named in the applicable Underwriting Agreement and each Underwriter, upon the basis of the representations and warranties contained in this Agreement, but subject to the conditions in this Agreement, agrees to purchase from the Company severally and not jointly, the aggregate principal amounts of Debt Securities set forth opposite their names in Schedule I of the applicable Underwriting Agreement at the respective purchase prices set forth in such Underwriting Agreement, plus accrued interest, if any, from the date set forth therein to the date of payment and delivery.

(b) The several commitments of the Underwriters to purchase the Designated Securities pursuant to the applicable Underwriting Agreement shall be deemed to have been made on the basis of the representations,

warranties and agreements contained in this Agreement and shall be subject to the terms and conditions set forth in this Agreement.

7. Delivery and Payment.

The global certificates for the Designated Securities to be purchased by the Underwriters shall be delivered by or on behalf of (and at the expense of) the Company to or upon the order of the Underwriters against payment by the Underwriters of the purchase price therefor by wire transfer of immediately available funds, payable to or upon the order of the Company, at the Scheduled Closing Date, as set forth in the applicable Underwriting Agreement, and as the Representative(s) shall designate, which date and time may be postponed by agreement among the Underwriters, the Company and the Guarantor (such date and time of delivery and payment for the Designated Securities being herein called the “Closing Date”). Payment for the Designated Securities shall be made against delivery to the Underwriters of the Designated Securities registered in such names and in such denominations as the Underwriters shall request in writing, with any transfer taxes payable in connection with the transfer of the Designated Securities to the Underwriters duly paid by the Guarantor. The Company agrees that delivery of the Designated Securities will be made on the Closing Date through the book-entry facilities of The Depository Trust Company (“DTC”). Upon issuance, all Designated Securities will be represented by one or more global securities registered in the name of a nominee of the DTC.

8. Covenants and Agreements of the Company and the Guarantor.

The Company and the Guarantor, jointly and severally, covenant with each Underwriter of the Designated Securities as follows:

(a) The Company and the Guarantor will file the Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than the Commission’s close of business on the second Business Day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 424(b). The Company or the Guarantor will notify the Representative(s), promptly after filing of the Registration Statement, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed. The Company or the Guarantor will notify the Representative(s) promptly of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for additional information; the Company and the Guarantor will prepare and file with the Commission, promptly upon the reasonable request of the Representative(s), any amendments or supplements to the Registration Statement or the Prospectus which, in the reasonable opinion of the Representative(s), may be necessary or advisable in connection with the distribution of the Designated Securities; and neither the Company nor the Guarantor will file any amendment or supplement to the Registration Statement or the Prospectus or file any document under the Exchange Act

before the termination of the offering of the Designated Securities by the Underwriters if such document would be deemed to be incorporated by reference into the Prospectus, which filing is not consented to by the Representative(s) after reasonable notice thereof (such consent not to be unreasonably withheld or delayed). The Company and the Guarantor will prepare one or more Term Sheets, containing solely a description of the Designated Securities, substantially in the form attached to the applicable Underwriting Agreement and approved by the Representative(s) and file such Term Sheet or Term Sheets pursuant to Rule 433(d) under the Securities Act within the time period prescribed by such Rule. The Company or the Guarantor will advise the Representative(s) promptly of the issuance by the Commission or any State or other regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus or suspending the qualification of the Designated Securities for offering or sale in any jurisdiction, of the institution of any proceedings for any such purpose, or of receipt by the Company or the Guarantor from the Commission of any notice of objection to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) of the Rules and Regulations; and the Company and the Guarantor will use their reasonable best efforts to prevent the issuance of any stop order or other such order or any such notice of objection and, if a stop order or other such order is issued or any such notice of objection is received, to obtain as soon as practicable the lifting or withdrawal thereof.

(b) Subject to the selling restrictions set forth in Annex A to this Agreement, the Company and the Guarantor will use their reasonable best efforts, in cooperation with the Underwriters, to qualify the Designated Securities for offering and sale under the securities laws of such jurisdictions as the Representative(s) may reasonably request; provided, however, that neither the Company nor the Guarantor shall be obligated to file any general consent to service of process, subject itself to taxation or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction.

(c) The Company and the Guarantor shall prepare the Disclosure Package and the Prospectus in a form approved by the Underwriters, and will promptly furnish the Underwriters with copies of the Registration Statement, the Preliminary Prospectus, the Term Sheets, any Issuer Free Writing Prospectus and the Prospectus in such quantities as the Underwriters may from time to time reasonably request, and will not file or publish any amendment or supplement to the Registration Statement, the Disclosure Package or the Prospectus, except in accordance with Section 1(f) above, and unless they have furnished a copy to the Underwriters for their review and, except as required by law, will not publish any such proposed amendment or supplement to which the Underwriters reasonably object. If at any time prior to completion of the distribution of the Designated Securities (as determined by the Underwriters) any event occurs as a result of which the Registration Statement, the Disclosure Package or the Prospectus, each as then amended or

supplemented, would contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company and the Guarantor will promptly so notify the Underwriters. If so notified, the Underwriters shall forthwith suspend any solicitation of offers to purchase Designated Securities and shall cease using the Registration Statement, the Disclosure Package or the Prospectus. If the Company and the Guarantor should decide to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, as the case may be, to correct such statement or omission, the Company and the Guarantor, upon the completion thereof, will furnish to the Underwriters a reasonable number of copies of such amendment or supplement to the Registration Statement, the Disclosure Package or the Prospectus.

(d) The Company and the Guarantor shall furnish to the Underwriters as soon as practicable and thereafter from time to time prior to the completion of the distribution of the Designated Securities (as determined by the Underwriters) as many copies of the Registration Statement, the Disclosure Package and the Prospectus and any amendments thereof and supplements thereto as the Underwriters may reasonably request.

(e) The Company or the Guarantor will pay the required Commission filing fees relating to the Designated Securities within the time period required by Rule 456(b)(1) of the Rules and Regulations and otherwise in accordance with Rules 456(b) and 457(r) of the Rules and Regulations.

(f) If required by Rule 430B(h) of the Rules and Regulations, the Company or the Guarantor will prepare a prospectus in a form approved by the Representative(s) and file such prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than may be required by such Rule; and, except as required by law or approved by the Representative(s) (which approval shall not be unreasonably withheld), neither the Company nor the Guarantor will make any further amendment or supplement to such prospectus.

(g) The Guarantor will use its reasonable best efforts, and shall cause the Company to use its reasonable best efforts, to ensure that at or prior to the Closing Date (i) the public deed in respect of the Designated Securities is registered in the Madrid Mercantile Registry and (ii) the announcement related to the issue of the Designated Securities is published in the Official Gazette of the Mercantile Registry (Boletín Oficial del Registro Mercantil).

(h) The Guarantor will use its reasonable best efforts, and shall cause the Company to use its reasonable best efforts, to ensure that the Designated Securities qualify as debt instruments (instrumentos de deuda) under Law 13/1985 of 25 May.

(i) The Guarantor will use its reasonable best efforts, and shall cause the Company to use its reasonable best efforts, to ensure that the disbursement minutes in respect of the Designated Securities are registered in the Madrid Mercantile Registry.

(j) The Guarantor will use its reasonable best efforts, and shall cause the Company to use its reasonable best efforts, to permit the Designated Securities to be eligible for clearance and settlement through DTC.

(k) The Guarantor will use its reasonable best efforts, and shall cause the Company to use its reasonable best efforts, to list the Designated Securities on an organized market in an OECD country no later than 45 days prior to the first day on which interest on such Designated Securities is payable (the “First Interest Payment Date”) and to maintain such listing at all times prior to and including the First Interest Payment Date.

(l) From the date of the applicable Underwriting Agreement and continuing to and including 10 days following the Closing Date, the Guarantor will not, and shall ensure that the Company does not, without the prior written consent of the Representative(s) (which consent shall not be unreasonably withheld), offer, sell, contract to sell or otherwise dispose of in the United States any U.S. dollar-denominated debt securities issued or guaranteed by the Guarantor which are substantially similar to the Designated Securities.

(m) The Guarantor agrees that for as long as the Designated Securities are outstanding it will maintain sufficient ownership of the share capital of the Company, directly or indirectly, to control its actions.

(n) If the Designated Securities are listed by the Company on a an organized market in the European Union, the Company will use its reasonable best efforts to maintain a paying agent in a European Union member state that will not be obliged to withhold or deduct tax pursuant to the European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN Council meeting of 26/27 November 2000 (each, a “Directive”) or any law implementing or complying with, or introduced in order to conform to, such Directive.

(o) The Company and the Guarantor acknowledge and agree that in connection with this offering, sale of the Designated Securities or any other services the Underwriters may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Underwriters: (i) no fiduciary or agency relationship between the Company and the Guarantor, on the one hand, and the Underwriters, on the other, exists; (ii) the Underwriters are not acting as advisors, expert or otherwise, to either the Company or the Guarantor, including, without limitation, with respect to the determination of the price of the Designated Securities, and such relationship between the Company and the

Guarantor, on the one hand, and the Underwriters, on the other, is entirely and solely commercial, based on arms-length negotiations; (iii) any duties and obligations that the Underwriters may have to the Company or the Guarantor shall be limited to those duties and obligations specifically stated herein; and (iv) the Underwriters and their respective affiliates may have interests that differ from those of the Company and the Guarantor. The Company and the Guarantor hereby waive any claims that the Company or the Guarantor may have against the Underwriters with respect to any breach of fiduciary duty asserted to be owed by the Underwriters to the Company or the Guarantor in connection with this offering.

9. Conditions of Underwriters’ Obligations.

The obligations of the several Underwriters to purchase and pay for the Designated Securities they have severally agreed to purchase under this Agreement on the Closing Date are subject (i) to the accuracy in all material respects of the representations and warranties of the Company and the Guarantor contained in this Agreement as of the date of this Agreement and the Closing Date, (ii) to the accuracy in all material respects of the statements of the Company and the Guarantor made in any certificates pursuant to the provisions hereof delivered prior to or concurrently with such purchase, (iii) to the performance by the Company and the Guarantor of their obligations under this Agreement, and to the following further conditions:

(a) The Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 5(a) hereof; all filings (including, without limitation, the final term sheet prepared pursuant to Section 5(a) hereof) required by Rule 424(b) or Rule 433 of the Rules and Regulations shall have been made, and no such filings will have been made without the consent of the Representative(s); no stop order suspending the effectiveness of the Registration Statement or any amendment or supplement thereto, preventing or suspending the use of the Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, or suspending the qualification of the Designated Securities for offering or sale in any jurisdiction shall have been issued; no proceedings for the issuance of any such order shall have been initiated or threatened; no notice of objection of the Commission to use the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) of the Rules and Regulations shall have been received by the Company; and any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been disclosed to the Underwriters and complied with the Underwriters’ satisfaction.

(b) No Underwriter shall have been advised by the Company or shall have discovered and disclosed to the Company that the Registration Statement, the Disclosure Package or the Prospectus or any amendment or supplement thereto, contains an untrue statement of fact which in the opinion of the Underwriters, or in the opinion of counsel to the Underwriters, is material, or omits to state a fact which, in the opinion of the Underwriters, or

in the opinion of counsel to the Underwriters, is material and is required to be stated therein or is necessary to make the statements therein not misleading.

(c) At the Closing Date, the Underwriters shall have received a certificate, dated as of the Closing Date, of the Guarantor signed by the principal financial or accounting officer of the Guarantor, certifying, with respect to the Guarantor, that at the Closing Date and subsequent to the dates as of which information is given in the Disclosure Package, (i) no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the Commission (ii) there shall not have been any material adverse change in the financial condition, earnings or prospects of the Guarantor and its subsidiaries, considered as one enterprise, (iii) there shall not have been any downgrading in the rating of any debt securities or preferred stock of the Guarantor or debt securities or preferred stock unconditionally guaranteed by the Guarantor by Moody’s Investor Services, Inc., Fitch Ratings Ltd. or Standard and Poor’s Corporation, or any public announcement that any such rating agency has under surveillance or review its rating of any debt securities or preferred stock of the Guarantor or debt securities or preferred stock unconditionally guaranteed by the Guarantor (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating), (iv) each of the Company and the Guarantor shall have complied with all agreements and satisfied all conditions on its respective part to be performed or satisfied hereunder at or prior to the Closing Date, and (v) the representations and warranties of the Company and the Guarantor set forth in Section 1 above and in the applicable Underwriting Agreement, if any, are accurate in all material respects as though expressly made at and as of the Closing Date. In addition, at the Closing Date, the Underwriters shall have received a certificate dated as of the Closing Date of the Company signed by a director of the Company certifying, with respect to the Company, the matters set forth in this Section 6(c)(iv) and (v).

(d) At the Closing Date, the Underwriters shall have received a signed opinion or opinions of counsel reasonably satisfactory to the Underwriters, dated as of the Closing Date.

(e) At the Applicable Time, the Underwriters shall have received letters of accountants, ordinarily referred to as “comfort letters”, confirming information as specified in the applicable Underwriting Agreement and dated the date on which the Term Sheets and/or the Prospectus are dated, as applicable from those accountants of the Guarantor or any of its subsidiaries as specified in the applicable Underwriting Agreement.

(f) At the Closing Date, the Underwriters shall have received letters of accountants dated as of the Closing Date, confirming information as specified in the comfort letters delivered pursuant to Section 6(e) above, from those accountants of the Guarantor or any of its subsidiaries as specified in the applicable Underwriting Agreement.

(g) At or prior to the Closing Date, (i) the public deed in respect to the Designated Securities shall have been registered in the Madrid Mercantile Registry; and (ii) the announcement related to the issue of the Designated Securities shall have been published in the Official Gazette of the Mercantile Registry (Boletin Oficial del Registro Mercantil).

If any of the conditions specified in this Section 6 or in Section 2 of the applicable Underwriting Agreement shall not have been fulfilled in all material respects when and as required by this Agreement to be fulfilled, this Agreement may be terminated by the Underwriters upon notice to the Company and the Guarantor at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 7 herein. Notwithstanding any such termination, the provisions of Sections 8, 9, 10, 14 and 16 herein shall remain in effect.

10. Payment of Expenses.

The Guarantor will pay costs and expenses incident to the performance of the Company’s and the Guarantor’s obligations under this Agreement as the parties may separately agree.

11. Indemnification.

(a) The Company and the Guarantor jointly and severally agree to indemnify and hold harmless the Underwriters and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred and reasonably and properly documented, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations), the Disclosure Package, or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) against any and all expense whatsoever (including reasonable fees and disbursements of counsel chosen by the Underwriters), reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under clause (i) above; provided, however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of (A) an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing to the Company or the Guarantor by the Underwriters expressly for use in the Registration Statement, any Issuer Free Writing Prospectus, the Disclosure Package or the Prospectus (or any amendment or supplement to the

Prospectus) or (B) an untrue statement or omission or alleged untrue statement or omission of a material fact in any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus (or any amendment or supplement to part of any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus) delivered to any person if such untrue statement or omission was corrected in any subsequent Issuer Free Writing Prospectus, Preliminary Prospectus or Prospectus or any amendment or supplement thereto, if copies thereof were delivered to such Underwriter sufficiently in advance of the Applicable Time to enable such Underwriter to deliver such copies to such person and a copy thereof was not furnished to such person prior to the confirmation of the sale of Designated Securities to such person.

(b) Each Underwriter severally, but not jointly, agrees to indemnify and hold harmless the Company and the Guarantor, and each person, if any, who controls the Company or the Guarantor, within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 8(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in any Issuer Free Writing Prospectus, the Disclosure Package or the Prospectus (or any amendment or supplement to the Prospectus), in reliance upon and in conformity with information furnished in writing to the Company or the Guarantor by the Underwriters expressly for use in such Issuer Free Writing Prospectus, Disclosure Package or Prospectus (or any amendment or supplement to the Prospectus).

(c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through forfeiture or impairment of procedural or substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnified

party shall have the right to employ counsel to represent the indemnified party and their respective controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against the indemnifying party under this Section 8 if the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action, if in the written opinion of counsel to either the indemnifying party or the indemnified party, representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them or the indemnifying party shall have failed to employ counsel within a reasonable period of time, and in that event the fees and expenses of one firm of separate counsel (in addition to the fees and expenses of one local counsel in each applicable jurisdiction) shall be paid by the indemnifying party. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party. The indemnified party shall not be liable for any settlement of any proceeding effected without its written consent.

12. Contribution.

If the indemnification provided for in Section 8 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) of Section 8, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) of Section 8, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor, on the one hand, and the Underwriters, on the other, from the offering of the Designated Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantor, on the one hand, and the Underwriters, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Underwriters from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantor or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue

statement or omission. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to above in this Section 9. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this Section 9 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this Section 9. Notwithstanding the provisions of this Section 9, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Designated Securities purchased by it were resold exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this Section 9 to contribute are several in proportion to their respective purchase obligations and not joint.

13. Representations, Warranties and Agreements.

The representations, warranties, indemnities, agreements and other statements of the Underwriters, the Company and the Guarantor and their officers set forth in or made pursuant to this Agreement will remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company, the Guarantor or the Underwriters or controlling person and will survive delivery of and payment for the Designated Securities.

14. Termination of Agreement.

(a) The Underwriters may terminate this Agreement, by notice to the Company or the Guarantor, at any time at or prior to the Closing Date:

(i) if there has been, since the Applicable Time, except as otherwise set forth or contemplated by the Registration Statement, the Disclosure Package and the Prospectus, any change, or any development (other than as set forth in or contemplated by the Registration Statement, the Disclosure Package and the Prospectus), in the financial condition, earnings or prospects of the Guarantor and its subsidiaries, considered as one enterprise, which, in the judgment of the Representative(s), is material and adverse in the context of the issuance, offer and sale of the Designated Securities and makes it impracticable or inadvisable to proceed with completion of the offering or the sale of and payment for the Designated Securities; or

(ii) if, since the Applicable Time there has occurred:

(A) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or in the over-the counter market or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by such exchange or by order of the Commission, or any other Governmental Authority, or

(B) any material suspension of trading of any equity securities issued by the Guarantor by the Commission, the Comisión Nacional del Mercado de Valores, the Spanish Stock Exchanges or the New York Stock Exchange, or

(D) any major disruption of settlements of securities or clearance services in the United States or with respect to DTC, or

(E) any change or any development involving a prospective change in national or international political, financial or economic conditions or exchange controls which, in the judgment of the Representative(s), makes it impracticable or inadvisable to proceed with the completion of the offering or sale of and payment for the Designated Securities, or

(F) any attack on, or outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration of war by the United States Congress or any other substantial calamity or emergency if, in the judgment of the Representative(s), the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impracticable or inadvisable to proceed with completion of the offering or sale of and payment for the Designated Securities.

(b) If the Underwriters propose to terminate this Agreement pursuant to Sections 11(a)(i), 11(a)(ii)(E) or 11(a)(ii)(F), the Representative(s) shall enter into consultations with the Guarantor by telephone. Such consultation shall take place among one senior representative of each of the Representative(s) and the Guarantor. The senior representative(s) of the Representative(s) will explain in depth the basis of their determination and the senior representative of the Guarantor will relay the views of the Company and the Guarantor to the Representative(s). If no such consultation takes place within a time period as reasonably determined by the Representative(s) to be

appropriate, despite the best efforts of the Representative(s) to reach the senior representative of the Guarantor, or if no consensus can be reached during that period, the Representative(s) may (unanimously, if there is more than one Representative), in the name of the Underwriters, effect the termination of the obligations of the Underwriters under this Agreement.

(c) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party, except to the extent provided in Section 7. Notwithstanding any such termination, the provisions of Sections 8, 9, 10, 14 and 16 shall remain in effect.

15. Notices.

All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered, mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the address of the Representative(s) described in the applicable Underwriting Agreement (with a copy to the General Counsel at the same address). Notices to the Company and the Guarantor shall be directed to them at the following address:

Telefónica S.A.
Distrito C, Ronda de la Comunicación, s/n
28050 Madrid
SPAIN
Attention: General Counsel

16. Parties. This Agreement is made solely for the benefit of the Underwriters, the Company and the Guarantor and, to the extent expressed, any person controlling the Company, the Guarantor or the Underwriters, and their respective executors, administrators, successors and assigns and, no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include any purchaser, as such purchaser, from the Underwriters of the Designated Securities.

17. Submission to Jurisdiction.

Each party to this Agreement irrevocably agrees that any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated by this Agreement will be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, and, to the extent permitted by law, irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company and the Guarantor will each irrevocably appoint CT Corporation System, New York, New York, as its Authorized Agent (the “Authorized Agent”) upon whom process may be served in any such suit, action or proceeding arising out of or based on this Agreement or the transactions contemplated

by this Agreement which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York and each party to this Agreement expressly consents to the jurisdiction of any such court in respect of any such suit, action or proceeding, and waives any other requirements of or objections to personal jurisdiction with respect thereto. The Company and the Guarantor each represents and warrants that the Authorized Agent has agreed to act as said agent for service of process, and the Company and the Guarantor each agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company or the Guarantor, as the case may be, shall be deemed, in every respect, effective service of process upon the Company or the Guarantor.

18. Default by one or more of the underwriters.

(a) If any Underwriter or Underwriters shall default in its or their obligation to purchase the Designated Securities which it or they have agreed to purchase pursuant to this Agreement (the “Defaulted Designated Securities”), the Representative(s) may in its or their discretion arrange for itself or themselves or another party or other parties satisfactory to the Company to purchase such Defaulted Designated Securities on the terms contained in this Agreement. If within 36 hours after such default by any Underwriter the Representative(s) does not or do not arrange for the purchase of such Defaulted Designated Securities, then the Company shall be entitled to a further period of 36 hours within which to procure another party or other parties satisfactory to the Representative(s) to purchase such Defaulted Designated Securities on such terms. In the event that, within the respective prescribed period, the Representative(s) notify the Company that it or they have so arranged for the purchase of such Defaulted Designated Securities, or the Company notifies the Representative(s) that it has so arranged for the purchase of such Defaulted Designated Securities, the Representative(s) or the Company shall have the right to postpone the Closing Date for such Designated Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Disclosure Package or the Prospectus, or in any other documents or arrangements, and the Company and the Guarantor agree to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representative(s) may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement.

(b) If, after giving effect to any arrangements for the purchase of the Defaulted Designated Securities by the Representative(s) and the Company as provided in subsection (a) above, the aggregate principal amount of such Defaulted Designated Securities which remains unpurchased does not exceed 15% of the aggregate principal amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to

purchase the principal amount of Designated Securities which such Underwriter agreed to purchase pursuant to this Agreement and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities which such Underwriter agreed to purchase pursuant to this Agreement) of the Defaulted Designated Securities for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

(c) If, after giving effect to any arrangements for the purchase of the Defaulted Designated Securities by the Representative(s) and the Company as provided in subsection (a) above, the aggregate principal amount of Defaulted Designated Securities which remains unpurchased exceeds 15% of the aggregate principal amount of the Designated Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Designated Securities of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Guarantor, except for the expenses to be borne by the Guarantor as provided in Section 7 hereof, the indemnity agreement in Section 8 hereof and the contribution agreement in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

19. Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

20. Counterparts.

This Agreement may be executed in one or more counterparts and, when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement.

21. Entire Agreement.

This Agreement constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof.

22. Amendments.

This Agreement may be amended or supplemented only if such amendment or supplement is in writing and is signed by each party hereto.

ANNEX A

Selling Restrictions

1. The Designated Securities may not be offered or sold in Spain.

2. Other than in the United States, no action has been or will be taken by the Company or the Guarantor in any jurisdiction that would permit a public offering of the Designated Securities or the Guarantees or possession or distribution of any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto or any other offering material relating to the Designated Securities or the Guarantees in any country or jurisdiction where action for that purpose is required. Each Underwriter agrees that it will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Designated Securities or has in its possession or distributes any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus or any amendments or supplements thereto or any such other material.

3. Each Underwriter represents and agrees that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the United Kingdom Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of the Designated Securities or the Guarantees in circumstances in which Section 21(1) of the FSMA does not apply to the Company or the Guarantor; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Designated Securities or the Guarantees in, from or otherwise involving the United Kingdom.

4. In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (other than Spain, where Designated Securities may not be offered or sold) (each, a “Relevant Member State”), each Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Designated Securities to the public in that Relevant Member State other than an offer:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

Annex-1

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

(d) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Designated Securities to the public” in relation to any Designated Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Designated Securities to be offered so as to enable an investor to decide to purchase or subscribe the Designated Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

5. The Notes may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

6. The Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or

Annex-2

more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

7. The Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Annex-3

EX-4.2 3 u07160exv4w2.htm EX-4.2 EX-4.2

EXHIBIT 4.2

FIRST SUPPLEMENTAL INDENTURE

among

TELEFÓNICA EMISIONES, S.A.U.,
as Issuer,

TELEFÓNICA, S.A.,
as Guarantor

and

THE BANK OF NEW YORK MELLON,
as Trustee and Paying Agent

[ • ], 2009

$1,250,000,000

FIXED RATE SENIOR NOTES DUE 2015

TABLE OF CONTENTS


			Page
ARTICLE 1
Definitions and Other Provisions of General Application

Section 1.01. Definitions			1
Section 1.02. Conflict with Trust Indenture Act			5
Section 1.03. Effect of Headings and Table of Contents			5
Section 1.04. Successors and Assigns			5
Section 1.05. Separability Clause			5
Section 1.06. Benefits of Supplemental Indenture			5
Section 1.07. Governing Law			5
Section 1.08. Execution in Counterparts			6
Section 1.09. Recitals by the Issuer and the Guarantor			6
Section 1.10. Ratification and Incorporation of Original Indenture			6

ARTICLE 2
Designated Securities

Section 2.01. Creation of Designated Securities			6
Section 2.02. Limitation on Aggregate Principal Amount of Designated Securities			6
Section 2.03. Payment of Principal			7
Section 2.04. Interest and Interest Rate			7
Section 2.05. Paying Agent			8
Section 2.06. Place of Payment			11
Section 2.07. Denominations			11
Section 2.08. Listing			11
Section 2.09. Security Certificates			11
Section 2.10. Defeasance and Covenant Defeasance			12
Section 2.11. Additional Amounts			12
Section 2.12. Redemption			12
Section 2.13. Applicable Procedures and Tax Certification Procedures			13
Section 2.14. Maintenance of Tax Certification Procedures			13

EXHIBIT A Form of Security Certificate Representing Designated Securities			A-1

THIS FIRST SUPPLEMENTAL INDENTURE, dated as of [ • ], 2009, among Telefónica Emisiones, S.A.U., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Issuer”), Telefónica, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Guarantor”), and The Bank of New York Mellon, a New York banking corporation, as trustee (the “Trustee”, which term includes any successor Trustee) and paying agent (the “Paying Agent”, which term includes any successor Paying Agent).

WHEREAS, the Issuer has heretofore entered into an Indenture, dated as of May 8, 2009 (as amended and supplemented, the “Original Indenture”), with the Guarantor and the Trustee;

WHEREAS, the Original Indenture is incorporated herein by reference and the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”;

WHEREAS, the Issuer proposes to create a new series of Securities under the Indenture;

WHEREAS, Mr. Miguel Escrig Meliá, as Director (Administrador Solidario) of the Issuer and exercising the delegation to issue debt securities approved by the Guarantor as sole shareholder of the Issuer on May 4, 2009 in favor of the Directors (Administradores Solidarios) of the Issuer, hereby resolves to issue the Designated Securities (as this term is defined in Section 2.01 below) in an aggregate principal amount of $1,250,000,000 and with the terms and conditions referred to in this Supplemental Indenture; and

WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Issuer and the Guarantor, in accordance with its terms, have been done;

NOW, THEREFORE, for and in consideration of the premises and the purchases of the Designated Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of Designated Securities, as follows:

ARTICLE 1
Definitions and Other Provisions of General Application

Section 1.01. Definitions. For all purposes of this Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles”, or “GAAP”, with respect to any computation required or permitted hereunder shall mean (i) in the case of the Issuer’s and the Guarantor’s unconsolidated financial statements, the accounting principles generally accepted in the Kingdom of Spain and (ii) in the case of the Guarantor’s consolidated financial statements, International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, which do not differ from IFRS as adopted by the European Union, in each case as in effect at the date of such computation and as applied by the Issuer or the Guarantor, as the case may be;

(d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Supplemental Indenture;

(e) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision; and

(f) all terms used but not defined in this Supplemental Indenture, which are defined in the Original Indenture, shall have the meanings assigned to them in the Original Indenture.

“Business Day” means a day other than a Saturday, a Sunday or any other day on which banking institutions in New York, New York, London, England or the city of Madrid, Spain are authorized or required by law or executive order to close.

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Designated Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Designated Securities being redeemed.

than three such Reference Treasury Dealer Quotations, the average of all such Quotations or, if only one such Quotation is obtained, such Quotation.

“Depositary” means The Depository Trust Company and its successors.

“Designated Guarantee” means that certain guarantee dated [ • ], 2009, executed and delivered by the Guarantor and endorsed on each Security Certificate representing Designated Securities, pursuant to which, among other things, the Guarantor shall unconditionally and irrevocably guarantee to the Holders of the Designated Securities the due and punctual payment of principal of, premium, if any, and interest and all other amounts due under the Indenture and the Designated Securities.

“Designated Securities” has the meaning ascribed in Section 2.01.

“Guarantor” means the Person named as “Guarantor” in the first paragraph of this Supplemental Indenture.

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Issuer and the Guarantor.

“Interest Payment Date” has the meaning ascribed in Section 2.04(b).

“Issuer” means the Person named as “Issuer” in the first paragraph of this Supplemental Indenture.

“Letter of Appointment” means the letter of appointment dated as of [ • ], 2009 among the Issuer, the Guarantor and the Tax Certification Agent.

“New York Business Day” means a day other than a Saturday, a Sunday or any other day on which banking institutions in New York, New York are authorized or required by law or executive order to close.

“Paying Agent” means the Person named as “Paying Agent” in the first paragraph of this Supplemental Indenture.

“Redemption Date” has the meaning ascribed in Section 2.12.

“Redemption Price” has the meaning ascribed in Section 2.12.

“Reference Treasury Dealer” means each of (1) Morgan Stanley & Co. Incorporated and its successors, provided that if the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), the Issuer and the Guarantor will substitute therefore another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Issuer and the Guarantor.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by the Reference Treasury Dealer at 5:00 p.m. on the third New York Business Day preceding such Redemption Date.

“Regular Record Date” means the 10^th New York Business Day prior to the applicable Interest Payment Date.

“Stated Maturity” means January 15, 2015.

“Supplemental Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended in accordance with the terms of the Indenture.

“Tax Certification Agency Agreement” means that certain Tax Certification Agency Agreement dated as of June 20, 2006 among the Issuer, the Guarantor, the Paying Agent (as successor to JPMorgan Chase Bank, N.A.) and the Tax Certification Agent (as defined below), as amended, supplemented, modified, replaced or restated from time to time in accordance with its terms.

“Tax Certification Agent” means Acupay System LLC, a New York limited liability corporation, or any successor Tax Certification Agent appointed in accordance with the terms of the Tax Certification Agency Agreement.

“Tax Certification Procedures” means those certain procedures to collect certain information with respect to the Designated Securities or the Beneficial Owners thereof specified in the Letter of Appointment, as such procedures may be amended, supplemented, modified or replaced from time to time in accordance with the terms of the Tax Certification Agency Agreement.

“Treasury Rate” means, with respect to any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H. 15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month), (2) if the period from the Redemption Date to the maturity date of the Designated Securities to be redeemed is less than one year, the weekly average yield on actually traded United States

Treasury securities adjusted to a constant maturity of one year, or (3) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated by the Independent Investment Banker on the third New York Business Day preceding the Redemption Date.

“Trustee” means the Person named as “Trustee” in the first paragraph of this Supplemental Indenture.

Section 1.02. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern the Indenture, the provision of the Trust Indenture Act shall control. If any provision of this Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act shall be deemed to apply to this Supplemental Indenture as so modified or to be excluded, as the case may be.

Section 1.03. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

Section 1.04. Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the Issuer or the Guarantor shall bind their respective successors and assigns, whether so expressed or not.

Section 1.05. Separability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 1.06. Benefits of Supplemental Indenture. Nothing in the Indenture, the Designated Securities or the Designated Guarantee, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Designated Securities, any benefit or any legal or equitable right, remedy or claim under the Indenture.

Section 1.07. Governing Law. Pursuant to Section 5-1401 of the General Obligations Law of the State of New York, this Supplemental Indenture, the Designated Securities and the Designated Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 1.08. Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 1.09. Recitals by the Issuer and the Guarantor. The recitals in this Supplemental Indenture are made by the Issuer and the Guarantor only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Designated Securities, the Designated Guarantee and of this Supplemental Indenture as fully and with like effect as if set forth herein in full.

Section 1.10. Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this Supplemental Indenture shall be read, taken and construed as one and the same instrument.

ARTICLE 2
Designated Securities

Section 2.01. Creation of Designated Securities. There is hereby created a new series of Securities to be issued under the Indenture, to be designated as Fixed Rate Senior Notes due 2015 (the “Designated Securities”). The Designated Securities have been designated as series H of the Issuer in the public deed of issuance executed by one of the Directors (Administradores Solidarios) of the Issuer on June 25, 2009 and registered with the Mercantile Registry of Madrid on [•], 2009.

Section 2.02. Limitation on Aggregate Principal Amount of Designated Securities. The aggregate principal amount of the Designated Securities shall initially be limited to $1,250,000,000 (except for Designated Securities represented by any Security Certificate authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Designated Securities pursuant to Section 2.4, 2.5, 2.7, 9.6 or 11.7 of the Original Indenture and except for any Designated Securities which, pursuant to Section 2.3 of the Original Indenture, are deemed never to have been authenticated and delivered under the Indenture). The Issuer may from time to time, without the consent of the Holders of Designated Securities, create and issue further securities having the same terms and conditions as the previously issued Designated Securities in all respects (or in all respects except for the issue date, the first payment of interest thereon and/or the issue price), so that such further issue shall be consolidated and form a single series with the Outstanding Designated Securities; provided, however, that any such further issuance will only be made if either such additional securities are issued with no more than de minimis original issue discount for U.S. federal income tax purposes or any such further issuance is a “qualified

reopening” as such term is defined under Treasury Regulations Section 1.1275-2(k)(3) promulgated under the Internal Revenue Code of 1986, as amended.

Section 2.03. Payment of Principal. The principal of the Outstanding Designated Securities shall be due and payable at the Stated Maturity.

Section 2.04. Interest and Interest Rate.

(a) The Designated Securities will bear interest from [ • ], 2009 or from the most recent date through which the Issuer has paid or provided for interest on the Designated Securities at an annual rate of 4.949%.

(b) Subject to and in accordance with the Tax Certification Procedures, the Issuer or the Guarantor, as the case may be, will pay interest on the Designated Securities on each January 15 and July 15 of each year, beginning on January 15, 2010 until Maturity, and at Maturity (each an “Interest Payment Date”).

(c) Interest on the Designated Securities will be computed on the basis of a 360-day year of twelve 30-day months. Except as described below for the first Interest Payment Date, on each Interest Payment Date, the Issuer or the Guarantor, as the case may be, will pay interest on the Designated Securities for the period commencing on and including the immediately preceding Interest Payment Date and ending on and including the day immediately preceding that Interest Payment Date.

(d) On the first Interest Payment Date, the Issuer or the Guarantor, as the case may be, will pay interest for the period beginning on and including the issue date of the Designated Securities and ending on and excluding the first Interest Payment Date.

(e) If any Interest Payment Date would fall on a day that is not a Business Day, the interest payment shall be postponed to the next day that is a Business Day, and no interest on such payment shall accrue for the period from and after such Interest Payment Date.

(f) If the Maturity of any Designated Security is not a Business Day, payment of principal and interest on the applicable Designated Security will be made on the next succeeding day that is a Business Day, and no interest will accrue for the period from and after such Maturity.

(g) Subject to and in accordance with the Tax Certification Procedures, interest on each Designated Security will be paid only to the Person in whose name such Designated Security was registered at the close of business on the Regular Record Date for the applicable Interest Payment Date.

Section 2.05. Paying Agent.

(a) Upon the terms and subject to the conditions contained herein, the Issuer hereby appoints The Bank of New York Mellon as the initial Paying Agent under the Indenture for the purpose of performing the functions of the Paying Agent with respect to the Designated Securities.

(b) The Paying Agent shall exercise due care in performing the functions of the Paying Agent for the Designated Securities.

(c) The Paying Agent accepts its obligations set forth herein, upon the terms and subject to the conditions hereof, including the following, to all of which the Issuer and the Guarantor agree:

(i) The Paying Agent shall be entitled to such compensation as may be agreed in writing with the Issuer and the Guarantor for all services rendered by the Paying Agent, and the Issuer and the Guarantor promise to pay such compensation and to reimburse the Paying Agent for the reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) incurred by it in connection with the services rendered by it hereunder upon receipt of such invoices as the Issuer and the Guarantor shall reasonably require. The Issuer and the Guarantor agree to indemnify the Paying Agent for, and to hold it harmless against, any and all loss, liability, damage, claims or expenses (including the costs and expenses of defending against any claim of liability) incurred by the Paying Agent that arises out of or in connection with its acting as Paying Agent hereunder, except such as may result from the negligence, willful misconduct or bad faith of the Paying Agent or any of its agents or employees. The Paying Agent shall incur no liability and shall be indemnified and held harmless by the Issuer and the Guarantor for, or in respect of, any actions taken, omitted to be taken or suffered to be taken in good faith by the Paying Agent in reliance upon (A) the written opinion of counsel satisfactory to it and upon obtaining the prior written consent of the Issuer or the Guarantor or (B) written instructions from the Issuer and the Guarantor. The provisions of this paragraph shall survive the termination of this Supplemental Indenture.

(ii) In acting under the Indenture and in connection with the Designated Securities, the Paying Agent is acting solely as agent of the Issuer and the Guarantor and does not assume any obligations to, or relationship of agency or trust for or with, any of the Holders of the Designated Securities.

(iii) The Paying Agent shall be protected and shall incur no liability for or in respect of any action taken or omitted to be taken or anything suffered by it in reliance upon the terms of the Designated Securities, any notice, direction, certificate, affidavit, statement or other paper, document or communication reasonably believed by it to be genuine and to have been approved or signed by the proper party or parties.

(iv) The Paying Agent shall be obligated to perform only such duties as are herein specifically set forth and any duties necessarily incidental thereto, and no implied duties or obligations shall be read into the Indenture against the Paying Agent.

(v) Unless herein otherwise specifically provided, any order, certificate, notice, request, direction or other communication from the Issuer or the Guarantor made or given by it under any provision of the Indenture shall be sufficient if signed by any proper officer or an authorized person of the Issuer or the Guarantor, as the case may be.

(vi) The Paying Agent may, upon obtaining the prior written consent of the Issuer and the Guarantor, perform any duties hereunder either directly or by or through agents or attorneys, and the Paying Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

(vii) Under no circumstances will any party to this Supplemental Indenture be liable to any other party to this Supplemental Indenture for any special, indirect, punitive or consequential loss or damage (including, but not limited to, the loss of business, goodwill, opportunity or profit) whether or not foreseeable and even if advised of the possibility of such loss or damage and regardless of whether the claim for loss or damage is made in negligence, for breach of contract, breach of trust, breach of fiduciary obligation or otherwise.

(d) (i) The Paying Agent may at any time resign as Paying Agent by giving written notice to the Issuer and the Guarantor of such intention on its part, specifying the date on which its desired resignation shall become effective; provided, however, that such date shall not be earlier than 60 days after the receipt of such notice by the Issuer and the Guarantor, unless the Issuer and the Guarantor agree in writing to accept less notice. The Paying Agent may be removed (with or without cause) at any time by the filing with it of any instrument in writing signed on behalf of the Issuer and the Guarantor by any proper officer or an authorized person thereof and specifying such removal and the date when it is intended to become effective, subject to (if such Paying Agent is not the Trustee) the written consent of the Trustee, which consent shall not be unreasonably withheld. Such resignation or removal shall take effect only upon the date of the appointment by the Issuer and the Guarantor, as hereinafter provided, of a successor Paying Agent. If within 60 days after notice of resignation or removal has been given, a successor Paying Agent has not been appointed, the Paying Agent may petition a court of competent jurisdiction to appoint a successor Paying Agent. A successor Paying Agent shall be appointed by the Issuer and the Guarantor by an instrument in writing signed on behalf of the Issuer and the Guarantor, as the case may be, by any proper officer or an authorized person thereof and the successor Paying Agent. Upon the appointment of a successor Paying Agent and acceptance by it of such appointment, the Paying

Agent so superseded shall cease to be such Paying Agent hereunder. Upon its resignation or removal, the Paying Agent shall be entitled to the payment by the Issuer and the Guarantor of its compensation, if any is owed to it, for services rendered hereunder and to the reimbursement of all reasonable out-of-pocket expenses incurred in connection with the services rendered by it hereunder.

(ii) Any successor Paying Agent appointed hereunder shall execute and deliver to its predecessor and to the Issuer and the Guarantor an instrument accepting such appointment hereunder, and thereupon such successor Paying Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of such predecessor with like effect as if originally named as such Paying Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obliged to transfer and deliver, and such successor Paying Agent shall be entitled to receive, copies of any relevant records maintained by such predecessor Paying Agent.

(iii) Any Person into which the Paying Agent may be merged or converted or with which the Paying Agent may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Paying Agent shall be a party, or any Person succeeding to all or substantially all of the assets and business of the Paying Agent, or all or substantially all of the corporate trust business of the Paying Agent shall, to the extent permitted by applicable law and provided that it shall have an established place of business in The City of New York, be the successor Paying Agent under the Indenture without the execution or filing of any paper or any further act on the part of any of the parties hereto. Notice of any such merger, conversion, consolidation or sale shall forthwith be given to the Issuer and the Guarantor within 30 days of such merger, conversion, consolidation or sale.

(iv) Any notice required to be given by the Paying Agent to any person hereunder other than the Tax Certification Agent shall be given in accordance with Section 1.5 of the Original Indenture. Any notice required to be given to the Tax Certification Agent shall be delivered in person, sent by letter or communicated by telephone (subject, in the case of communication by telephone, to confirmation dispatched within twenty-four hours by letter), to the following address (or to any other address of which the Tax Certification Agent shall have notified the others in writing as herein provided): Acupay System LLC, Attn: Marian Guerrero, 30 Broad Street, 46th Floor, New York, NY 10004, telephone: (212) 422-1222, facsimile: (212) 422-0790. Any notice to be given to the Paying Agent shall be delivered in person, sent by letter or communicated by telephone (subject, in the case of communications by telephone, to confirmation dispatched within twenty-four hours by letter), to the following address (or to any other address of which the Paying Agent shall

have notified the others in writing): The Bank of New York Mellon, 101 Barclay Street, 4E, New York, New York 10286, Attention: Global Corporate Trust. Any notice hereunder given by telephone or letter shall be deemed to be received when in the ordinary course of transmission or post, as the case may be, it would be received.

Section 2.06. Place of Payment. The place or places where, subject to the provisions of Section 10.2 of the Original Indenture, the principal of, and any premium and interest on, and any Additional Amounts in respect of, the Designated Securities shall be payable, Security Certificates representing the Designated Securities may be surrendered for exchange or conversion of the Designated Securities represented thereby and notices and demands to or upon the Issuer or the Guarantor in respect of the Designated Securities and this Indenture may be served shall be the Corporate Trust Office of the Trustee.

Section 2.07. Denominations. The Designated Securities may be issued in denominations of $1,000.

Section 2.08. Listing. From and including the issue date of the Designated Securities to and including the first Interest Payment Date in respect of the Designated Securities, the Issuer will use its reasonable best efforts to obtain or maintain, as applicable, a listing of the Designated Securities on the New York Stock Exchange or another organized market in an OECD country.

Section 2.09. Security Certificates.

(a) The Designated Securities shall initially be represented by one or more Global Certificates substantially in the form of Exhibit A, which shall be deposited with a custodian for the Depositary and the Designated Securities represented thereby will be registered in the name of a nominee of the Depositary, for the accounts of participants in the Depositary.

(b) Designated Securities represented by a Global Certificate may be transferred, in whole and not in part, only: (i) by the Depositary to a nominee of the Depositary, (ii) by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or (iii) by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(c) Beneficial interests in any Designated Securities represented by a Global Certificate will be exchangeable for Designated Securities represented by Definitive Certificates only if: (i) the Depositary notifies the Issuer that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuer within 120 days after the date of such notice from the Depositary, (ii) the Issuer notifies the Trustee in writing that it has reasonably elected to cause the issuance of Designated Securities represented by Definitive Certificates or (iii) there shall have occurred and be continuing an

Event of Default with respect to the Designated Securities and the Designated Securities will be accelerated in accordance with their terms and the terms of the Indenture.

(d) Upon the occurrence of any of the events specified in (i), (ii) or (iii) of (c) above, Designated Securities represented by Definitive Certificates shall be (i) delivered by the Trustee in exchange for beneficial interest in Designated Securities represented by Global Certificates and (ii) registered in such names, and issued in such authorized denominations, as shall be requested by or on behalf of the Depositary in accordance with its customary procedures.

Section 2.10. Defeasance and Covenant Defeasance. The provisions of Sections 4.3 and 10.8 of the Original Indenture will apply to the Designated Securities.

Section 2.11. Additional Amounts. Except as otherwise provided in the immediately following sentence, the provisions of Section 10.4 of the Original Indenture will apply to the Designated Securities. In the event of an early redemption of the Designated Securities for the reasons set forth in Section 11.8(b) of the Original Indenture, the Issuer or the Guarantor, as the case may be, may be required to withhold tax and will pay interest in respect of the principal amount of the Designated Securities redeemed net of the withholding tax applicable to such payments. If this were to occur, Beneficial Owners would have to either follow the “Quick Refund Procedures” set forth in Article II of Annex A or Article II of Annex B, as applicable, to the Letter of Appointment or follow the “Direct Refund from Spanish Tax Authorities Procedure” set forth in Annex C to the Letter of Appointment.

Section 2.12. Redemption. The provisions of Article 11 of the Original Indenture will apply to the Designated Securities. The “Redemption Price” means: (a) with respect to any Designated Securities to be redeemed other than pursuant to Section 11.8 of the Original Indenture, an amount equal to the greater of: (x) 100% of the principal amount of such Designated Securities to be redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date (as defined below) of such Designated Securities and (y) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal thereof and interest thereon (exclusive of interest accrued thereon to the Redemption Date) discounted to the Redemption Date of the Designated Securities being redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 35 basis points for the Designated Securities being redeemed, plus accrued and unpaid interest on the principal amount of such Designated Securities (or any portion thereof) being redeemed to, but excluding, the Redemption Date of the Designated Securities (or any portion thereof) being redeemed; and (b) with respect to any Designated Securities to be redeemed pursuant to Section 11.8 of the Original Indenture, an amount equal to their principal amount, together with accrued and unpaid interest, if any, thereon to but

excluding the Redemption Date. The “Redemption Date” of any Designated Securities to be redeemed will be any Business Day fixed by the Issuer for redemption of such Designated Securities and specified in the applicable notice of redemption provided by the Issuer to the Trustee pursuant to Section 11.2 of the Original Indenture; provided, however, that the Redemption Date of any Designated Securities to be redeemed pursuant to Section 11.8(a) of the Original Indenture shall be an Interest Payment Date.

Section 2.13. Applicable Procedures and Tax Certification Procedures. The Trustee and Paying Agent shall comply with the Applicable Procedures and Tax Certification Procedures with respect to any Designated Securities (and any beneficial interest therein).

Section 2.14. Maintenance of Tax Certification Procedures. So long as any principal amount of the Designated Securities remains outstanding, the Issuer and the Guarantor shall, insofar as it is practicable, maintain, implement or arrange for the implementation of Tax Certification Procedures that will facilitate the collection of information concerning the Designated Securities or the Beneficial Owners thereof so long as such collection is required under Spanish law to allow payment of interest on the Designated Securities free and clear of Spanish withholding tax.

IN WITNESS WHEREOF, each of the parties hereto has caused this Supplemental Indenture to be duly executed on its behalf as of the date first above written.


TELEFÓNICA EMISIONES, S.A.U., as Issuer
By:
	Name:
	Title:	Director (Administrador Solidario)

TELEFÓNICA, S.A., as Guarantor
By:
	Name:
	Title:	Authorized Officer

THE BANK OF NEW YORK MELLON, as Trustee and Paying Agent
By:
	Name:
	Title:

FIRST SUPPLEMENTAL INDENTURE

EXHIBIT A

FORM OF SECURITY CERTIFICATE REPRESENTING DESIGNATED SECURITIES

TELEFÓNICA EMISIONES, S.A.U.

Fixed Rate Senior Notes due 2015

Guaranteed by

TELEFÓNICA, S.A.


No. [•]		CUSIP No. 87938WAJ2 ISIN No. US87938WAJ27

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEFINITIVE CERTIFICATES, THIS GLOBAL CERTIFICATE MAY BE TRANSFERRED, IN WHOLE AND NOT IN PART, ONLY: (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, (II) BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR TO ANOTHER NOMINEE OF THE DEPOSITARY, OR (III) BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY, AND TRANSFERS OF THE SECURITIES REPRESENTED BY THIS GLOBAL CERTIFICATE AND ANY BENEFICIAL INTERESTS IN ANY SECURITIES REPRESENTED BY THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO BELOW.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TELEFÓNICA EMISIONES, S.A.U., a sociedad anónima incorporated under the laws of the Kingdom of Spain (herein called the “Issuer”, which term includes any successor Person under the Indenture referred to hereinafter), for

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value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of $[•] on January 15, 2015 and, subject to and in accordance with the Tax Certification Procedures, to pay interest thereon from [ • ], 2009, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, in arrears on January 15 and July 15 of each year, commencing January 15, 2010, at the rate of 4.949% per annum until Maturity, and at Maturity.

Interest will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided below for the first Interest Payment Date, on each Interest Payment Date, the Issuer will pay interest on the Designated Securities (as defined herein) for the period commencing on and including the immediately preceding Interest Payment Date and ending on and including the day immediately preceding that Interest Payment Date. On the first Interest Payment Date, the Issuer will pay interest for the period beginning on and including [ • ], 2009 and ending on and including January 14, 2010. If any Interest Payment Date falls on a day that is not a Business Day, the interest payment shall be postponed to the next day that is a Business Day, and no interest on such payment shall accrue for the period from and after such Interest Payment Date. If the Maturity of the Designated Securities is not a Business Day, payment of principal and interest on the Designated Securities will be made on the next succeeding day that is a Business Day and no interest will accrue for the period from and after the Maturity.

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name the Designated Securities represented hereby (or one or more Predecessor Securities) are registered at the close of business on the Regular Record Date for such Interest Payment Date, which shall be the 10^th New York Business Day prior to the applicable Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name the Designated Securities represented hereby (or one or more Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Designated Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Designated Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

For informational purposes only, without any substantive effect whatsoever and solely in order to comply with Article 291, letter (d) of the Spanish Corporations Law (Ley de Sociedades Anónimas), approved by Royal Decree (Real Decreto Legislativo) 1564/1989, of December 22, as amended, it is hereby noted that the aggregate principal amount of the Designated Securities was

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equivalent to €889,299,943.08, based on the Noon Buying Rate as determined and published by the Federal Reserve, as of June 26, 2009, for the Euro of $1.4056 per €1.00. Amounts due under the Designated Securities shall not under any circumstances whatsoever be payable in any currency other than U.S. dollars or such coin or currency of the United States as at the time of payment shall be legal tender for the payment of public and private debts.

The Bank of New York Mellon shall initially act as Trustee and Paying Agent with respect to the Designated Securities.

Reference is hereby made to the further provisions of the Designated Securities set forth on the reverse of this Security Certificate, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, the Designated Securities represented by this Security Certificate shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

The public deed of issuance (escritura de emisión) related to the Designated Securities represented hereby was executed on June 25, 2009 before Mr. Jesús Roa Martínez with the number [•] of his files.

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed manually or in facsimile.


Dated: [ • ], 2009	TELEFÓNICA EMISIONES, S.A.U.
	By:
		Name:
		Title:	Director (Administrador Solidario)

CERTIFICATE OF AUTHENTICATION

This is one of the Security Certificates representing the Securities of the series designated thereon referred to in the within-mentioned Indenture.


Dated: [ • ], 2009	THE BANK OF NEW YORK MELLON as Trustee
	Manually By:
		Name:
		Title:	Authorized Officer

The Designated Securities represented by this Security Certificate are unconditionally and irrevocably guaranteed by Telefónica, S.A. on the terms set forth in the within-mentioned Designated Guarantee pursuant to the Indenture.


Dated: [ • ], 2009	TELEFÓNICA, S.A.
	By:
		Name:
		Title:	Authorized Officer

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REVERSE OF SECURITY CERTIFICATE

This Security Certificate is one of the Security Certificates representing a duly authorized issue of Fixed Rate Senior Notes due 2015 (the “Designated Securities”), issued under an Indenture, dated as of May 8, 2009 (as amended and supplemented the “Original Indenture”), among the Issuer, Telefónica, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain (herein called the “Guarantor”, which term includes any successor Person under the Indenture referred to herein), and The Bank of New York Mellon, a New York banking corporation, as Trustee (herein called the “Trustee”, which term includes any other successor trustee under the Indenture), as supplemented with respect to the Designated Securities by the First Supplemental Indenture, dated as of [ • ], 2009, among the Issuer, the Guarantor and The Bank of New York Mellon, as Trustee and Paying Agent (collectively with the Original Indenture, as supplemented, the “Indenture”) and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuer, the Guarantor, the Trustee and the Holders of the Designated Securities and of the terms upon which each Security Certificate representing the Designated Securities is, and is to be, authenticated and delivered.

The Designated Securities will be subject to redemption at any time, as a whole or in part, at the election of the Issuer at a Redemption Price which is equal to the greater of: (i) 100% of the principal amount of the Designated Securities to be redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date of the Designated Securities to be redeemed; and (ii) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal thereof and interest thereon (exclusive of interest accrued thereon to the Redemption Date) discounted to the Redemption Date of such Designated Securities being redeemed on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 35 basis points for the Designated Securities being redeemed, plus accrued and unpaid interest on the principal amount of such Designated Securities (or any portion thereof) being redeemed to, but excluding, the Redemption Date of the Designated Securities (or any portion thereof) being redeemed. Any such redemption will be made in accordance with the terms of the Indenture.

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“Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Quotations or, if only one such Quotation is obtained, such Quotation.

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Issuer and the Guarantor.

“Reference Treasury Dealer” means each of (1) Morgan Stanley & Co. Incorporated and its successors, provided that if the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), the Issuer and the Guarantor will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Issuer and the Guarantor.

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such Redemption Date. The Treasury Rate shall be calculated by the Independent Investment Banker on the third New York Business Day preceding the Redemption Date.

The Issuer may from time to time, without the consent of the Holders of Designated Securities, create and issue further Securities having the same terms and conditions as the previously issued Designated Securities in all respects (or in all respects except for the issue date, the first payment of interest thereon and/or the issue price), so that such further issue shall be consolidated and form a single series with the outstanding Designated Securities; provided, however, that, any such further issuance will only be made if either such additional securities are issued with no more than de minimis original issue discount for U.S. federal income tax purposes, or any such further issuance is a “qualified reopening” as such term is defined under Treasury Regulations Section 1.1275-2(k)(3) promulgated under the Internal Revenue Code of 1986, as amended.

The Designated Securities may be redeemed upon not less than 30 nor more than 60 days’ notice (ending on an Interest Payment Date) given as provided in the Indenture, if (i) as a result of any change in the laws or regulations of the Kingdom of Spain or any political subdivision thereof or any authority or agency therein or thereof having power to tax, or in the interpretation or administration of any such laws or regulations which becomes effective on or after the date of issuance of the Designated Securities, (x) the Issuer or the Guarantor, as the case may be, is or would be required to pay any Additional Amounts (y) the Guarantor is or would be required to deduct or withhold tax on any payment to the Issuer to enable the Issuer to make any payment of principal, premium, if any, or interest on the Securities and such payment cannot with reasonable effort by the Guarantor be structured to avoid such deduction or withholding and (ii) such circumstances are evidenced by the delivery by the Issuer or the Guarantor, as the case may be, to the Trustee of a certificate signed by an authorized officer or director of the Issuer or the Guarantor, as the case may be, stating that such circumstances prevail and describing the facts leading to such circumstances, together with an opinion of independent legal advisers of recognized standing to the effect that such circumstances prevail, at a Redemption Price equal to their principal amount, together with accrued interest, if any, thereon to but excluding the Redemption Date.

If the Designated Securities are not listed on an organized market in an OECD country no later than 45 days prior to the initial Interest Payment Date on such Designated Securities, the Issuer or the Guarantor, as the case may be, may, at its option and having given no less than 15 days’ notice (ending on a day which is no later than a Business Day immediately preceding such Interest Payment Date) to the Holders of such Designated Securities and upon proper notice as provided in the Indenture, which notice shall be irrevocable, redeem all of the outstanding Designated Securities at their principal amount, together with accrued interest, if

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any, thereon to but not including the Redemption Date; provided that from and including the issue date of such Designated Securities to and including such Interest Payment Date, the Issuer will use its reasonable best efforts to obtain or maintain such listing, as applicable. In the event of an early redemption of the Designated Securities for the reason set forth in the immediately preceding sentence, the Issuer or the Guarantor, as the case may be, may be required to withhold tax and will pay interest in respect of the principal amount of the Designated Securities redeemed net of the withholding tax applicable to such payments. If this were to occur, Beneficial Owners would have to either follow the “Quick Refund Procedures” set forth in Article II of Annex A or Article II of Annex B, as applicable, to the Letter of Appointment or follow the “Direct Refund from Spanish Tax Authorities Procedure” set forth in Annex C to the Letter of Appointment.

In the event of redemption of the Designated Securities represented by this Security Certificate in part only, a new Security Certificate representing the unredeemed portion of the Designated Securities represented hereby will be issued and registered in the name of the Holder of the Designated Securities represented hereby upon the cancellation hereof.

All amounts payable (whether in respect of principal, redemption amount, interest or otherwise) in respect of the Designated Securities and the Designated Guarantee by the Issuer or the Guarantor will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Kingdom of Spain or any political subdivision thereof or any authority or agency therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In the event that such withholding or deduction is required by law, the Issuer or the Guarantor shall pay such Additional Amounts as will result in receipt by the Holders of the Designated Securities of such amounts as would have been received by them had no such withholding or deduction been required; provided, however, that the Issuer and the Guarantor will not be required to pay any Additional Amounts in respect of any Designated Security:

(1) to a Holder of such Designated Security who is liable for such taxes, duties, assessments or governmental charges in respect of such Designated Security by reason of it (or the Beneficial Owner for whose benefit it holds such Designated Security) having some connection with the Kingdom of Spain other than the mere holding of such Designated Security (or such beneficial interest);

(2) to a Holder of such Designated Security in respect of whom the Issuer or the Guarantor does not receive such information (which may include a tax residence certificate) concerning such Holder’s

A-8

identity and tax residence (or the identity and tax residence of the Beneficial Owner for whose benefit it holds such Designated Security) as it may require in order to comply with Law 13/1985 of May 25, as amended, Royal Decree 1065/2007 of July 27 and any implementing legislation or regulation;

(3) presented for payment (where presentation is required) more than 30 days after the Relevant Date (as defined below), except to the extent that the relevant Holder would have been entitled to such Additional Amounts on presenting the same for payment on the expiry of such period of 30 days;

(4) where the withholding or deduction is imposed on a payment to or for the benefit of an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such Directives;

(5) presented for payment (where presentation is required) by or on behalf of a Holder (or Beneficial Owner) who would have been able to avoid such withholding or deduction by presenting the relevant Designated Security to another paying agent in a Member State of the European Union;

(6) to or for the benefit of individuals resident for tax purposes in the Kingdom of Spain; or

(7) to or for the benefit of a Spanish-resident legal entity subject to Spanish Corporate Income Tax if (a) the Spanish-resident legal entity fails to identify itself as such to the Issuer and the Guarantor in accordance with article 59.q) or 59.s) of the Corporate Income Tax Regulations approved by Royal Decree 1777/2004 of July 30 or (b) the Spanish tax authorities determine that the Designated Securities do not comply with exemption requirements specified in the Reply to a Consultation of the Directorate General for Taxation (Dirección General de Tributos) dated July 27, 2004 or otherwise and require a withholding to be made;

provided further that Additional Amounts in respect of the Designated Securities will also not be paid with respect to any payment to a Holder of any Designated Securities who is a fiduciary, a partnership, a limited liability company or other than the sole Beneficial Owner of that payment, to the extent that payment would be required by the laws of the Kingdom of Spain (or any political subdivision thereof or any authority or agency therein or thereof having power to tax) to be

A-9

included in the income, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of that partnership, an interest holder in that limited liability company or a Beneficial Owner who would not have been entitled to the Additional Amounts had it been the Holder.

“Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the Paying Agent on or prior to such due date, it means the first date on which the full amount of such moneys having been so received and being available for payment to Holders, notice to that effect shall have been duly given to the Holders in accordance with the Indenture.

The foregoing provisions shall apply mutatis mutandis to any withholding or deduction for or on account of any present or future taxes, assessments or governmental charges of whatever nature of any jurisdiction in which any successor Person to the Issuer or the Guarantor, as the case may be, is organized, or any political subdivision or taxing authority thereof or therein.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the Guarantor and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Issuer, the Guarantor and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Issuer or the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of the Designated Securities represented by this Security Certificate shall be conclusive and binding upon such Holder and upon all future Holders of the Designated Securities represented by this Security Certificate and of the Designated Securities represented by any Security Certificate issued upon the registration of transfer of the Designated Securities represented by this Security Certificate or in exchange thereof or in lieu thereof, whether or not notation of such consent or waiver is made upon this Security Certificate.

As set forth in, and subject to, the provisions of the Indenture, if any Event of Default shall occur in relation to the Designated Securities (taking into account any applicable grace period), the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Designated Securities may, by written notice to the Issuer, at the Corporate Trust Office (and to the Trustee if given by the Holders), declare that the Designated Securities including principal, and all interest then accrued and unpaid on, the Designated Securities shall be immediately due and payable, whereupon the same shall become immediately due

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and payable, at their principal amount together with all interest, if any, accrued and unpaid thereon and Additional Amounts, if any, payable in respect thereof without presentment, demand, protest or other notice of any kind, all of which the Issuer or the Guarantor, as the case may be, will expressly waive, unless, prior thereto, all Events of Default in respect of such Securities of such series shall have been cured.

No reference herein to the Indenture and no provision of the Designated Securities or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal or premium on any overdue interest, on the Designated Securities at the rate or rates herein prescribed.

Except as set forth in the Indenture, the Designated Securities represented hereby may be transferred, in whole and not in part, only: (i) by the Depositary to a nominee of the Depositary, (ii) by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or (iii) by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Beneficial interests in a Designated Security represented by a Global Certificate will be exchangeable for Certificated Securities of this series only if: (a) the Depositary notifies the Issuer that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuer within 120 days after the date of such notice from the Depositary, (b) the Issuer notifies the Trustee in writing that it has reasonably elected to cause the issuance of Certificated Securities of this series or (c) there shall have occurred and be continuing an Event of Default with respect to the Designated Securities and the Designated Securities will be accelerated in accordance with their terms and the terms of the Indenture. Upon the occurrence of any of the events specified in (a), (b) or (c) above, Certificated Securities of this series shall be (x) delivered by the Trustee in exchange for beneficial interest in Designated Securities represented by Global Certificates and (y) registered in such names, and issued in such authorized denominations, as shall be requested by or on behalf of the Depositary in accordance with its customary procedures.

As provided in the Indenture, the Issuer shall cause to be kept at the Corporate Trust Office of the Trustee a Register in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Designated Securities and of transfers of Designated Securities.

No service charge shall be made for any such registration of transfer or exchange, but the Issuer or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith other than as set forth in the Indenture.

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Prior to due presentment of this Security Certificate for registration of transfer of any Security represented hereby, the Issuer, the Guarantor, the Trustee and any agent of the Issuer, the Guarantor or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 2.8 of the Original Indenture) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Issuer, the Guarantor, the Trustee nor any agent of the Issuer, the Guarantor or the Trustee shall be affected by notice to the contrary.

Pursuant to Section 5-1401 of the General Obligations Law of the State of New York, the Indenture, the Designated Securities and the Designated Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York.

All terms used in this Security Certificate which are not otherwise defined herein shall have the meanings assigned to them in the Indenture.

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EX-4.3 4 u07160exv4w3.htm EX-4.3 EX-4.3

EXHIBIT 4.3

SECOND SUPPLEMENTAL INDENTURE

among

TELEFÓNICA EMISIONES, S.A.U.,
as Issuer,

TELEFÓNICA, S.A.,
as Guarantor

and

THE BANK OF NEW YORK MELLON,
as Trustee and Paying Agent

[ • ], 2009

$1,000,000,000

FIXED RATE SENIOR NOTES DUE 2019

TABLE OF CONTENTS


	Page
ARTICLE 1
Definitions and Other Provisions of General Application

Section 1.01. Definitions		1
Section 1.02. Conflict with Trust Indenture Act		5
Section 1.03. Effect of Headings and Table of Contents		5
Section 1.04. Successors and Assigns		5
Section 1.05. Separability Clause		5
Section 1.06. Benefits of Supplemental Indenture		5
Section 1.07. Governing Law		5
Section 1.08. Execution in Counterparts		6
Section 1.09. Recitals by the Issuer and the Guarantor		6
Section 1.10. Ratification and Incorporation of Original Indenture		6

ARTICLE 2
Designated Securities

Section 2.01. Creation of Designated Securities		6
Section 2.02. Limitation on Aggregate Principal Amount of Designated Securities		6
Section 2.03. Payment of Principal		7
Section 2.04. Interest and Interest Rate		7
Section 2.05. Paying Agent		7
Section 2.06. Place of Payment		11
Section 2.07. Denominations		11
Section 2.08. Listing		11
Section 2.09. Security Certificates.		11
Section 2.10. Defeasance and Covenant Defeasance		12
Section 2.11. Additional Amounts		12
Section 2.12. Redemption		12
Section 2.13. Applicable Procedures and Tax Certification Procedures		13
Section 2.14. Maintenance of Tax Certification Procedures		13

EXHIBIT A Form of Security Certificate Representing Designated Securities		A-1

THIS SECOND SUPPLEMENTAL INDENTURE, dated as of [ • ], 2009, among Telefónica Emisiones, S.A.U., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Issuer”), Telefónica, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain (the “Guarantor”), and The Bank of New York Mellon, a New York banking corporation, as trustee (the “Trustee”, which term includes any successor Trustee) and paying agent (the “Paying Agent”, which term includes any successor Paying Agent).

WHEREAS, the Issuer has heretofore entered into an Indenture, dated as of May 8, 2009 (as amended and supplemented, the “Original Indenture”), with the Guarantor and the Trustee;

WHEREAS, the Original Indenture is incorporated herein by reference and the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”;

WHEREAS, the Issuer proposes to create a new series of Securities under the Indenture;

WHEREAS, Mr. Miguel Escrig Meliá, as Director (Administrador Solidario) of the Issuer and exercising the delegation to issue debt securities approved by the Guarantor as sole shareholder of the Issuer on May 4, 2009 in favor of the Directors (Administradores Solidarios) of the Issuer, hereby resolves to issue the Designated Securities (as this term is defined in Section 2.01 below) in an aggregate principal amount of $1,000,000,000 and with the terms and conditions referred to in this Supplemental Indenture; and