Telefónica S.A

Press Release

10-24-05

TELEFÓNICA HONORED WITH AWARD FOR GOOD CORPORATE
GOVERNANCE PRACTICES

     • The award was granted by Centro para la Estabilidad Financiera [Center for Financial Stability] (CEF).

Buenos Aires, October 24, 2005.- Telefónica de Argentina, the business line of basic and public telephony services, Internet access and telephone directories of Telefónica Group has been honored for its Good Corporate Governance Practices with the relevant annual award granted by the Centro para la Estabilidad Financiera (CEF).

Telefónica de Argentina S.A. ranked second in the Transparency and Disclosure Index designed by CEF, a non-for-profit organization, the purpose of which is assessing companies’ corporate governance quality and transparency.

In Argentina, the introduction of Good Governance Practices was implemented following a parliamentary resolution, through the so called Public Offer Transparency Regime foreseen by Decree 677/01. Telefónica de Argentina sets apart from other companies as far as good governance practices development is concerned because it has put in place additional practices which go beyond those expressly set forth under the abovementioned rule.

Among the Good Corporate Governance Practices implemented by Telefónica in compliance with Decree 677/01, we can mention the setting up of an Audit Committee, mostly made up of independent directors, the purpose of which is exercising accounting and financial surveillance over the company’s operations and judging whether the agreements entered with related parties conform to market conditions. Moreover, Telefónica has developed other practices, such as setting up a Disclosure Committee which receives, classifies and analyzes all corporate information in order to determine which information should be communicated to the markets, issuing Securities-Related Management Regulations intended for restricting operations related to corporate bonds of Telefónica Group by top managers, issuing Ethic Regulations for Financial and Accounting Areas providing action guidelines to be followed by those in charge of such areas, issuing Regulations-related Information to Markets intended for placing Telefónica at the forefront of market transparency, introducing a Good Corporate Governance section in Telefónicas’s Web home page, just to name a few.

The two most recent actions implemented by Telefónica assisting in developing good corporate governance policies include introducing a report channel and informant protection procedures, through which employees may provide information on possible irregularities affecting accounting, internal financial information control systems or accounts auditing of the Company or its Group; and issuing the Manual of Ethical Rules detailing the fundamentals on which the company’s members should base and focus their behavior, either within the company or towards customers and third parties. These actions derive from US law requirements, since Telefónica is listed on the New York Stock Exchange.

Good Corporate Governance allows companies to take the necessary measures and help investors and people in general to regain their trust, which requires a process of review of laws, institutions and mechanisms ruling the financial markets and corporate governance.

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