Purchase Share Plan for Employees

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

SIGNIFICANT EVENT

On June 23, 2009, the Annual General Shareholders' Meeting of TELEFÓNICA approved an incentive TELEFÓNICA´s share purchase plan ("Purchase Share Plan for Employees of the Telefónica Group" or "the Plan"), for employees and Executive Directors of the Telefónica Group at international level, including senior managers and other executive personnel.

Throughout the Plan, it is offered to the employees the possibility of acquiring shares of TELEFÓNICA with the commitment from the latter to deliver free of charge to the recipients who sign up for the Plan a certain number of additional shares in TELEFÓNICA, provided that certain requirements are met.

It is hereby attached as Annex the list of the beneficiaries of the first cycle of this Plan who are Directors and Executive Officers.

Madrid, September 17, 2010.

 http://www.rns-pdf.londonstockexchange.com/rns/9267S_-2010-9-17.pdf