S&P Credit Rating of Telefónica

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

SIGNIFICANT EVENT

On Thursday May 24th, the credit rating agency Standard & Poor´s Rating Services (S&P's) published its decision to lower the long-term credit rating of Telefónica, S.A. from BBB+ outlook negative to BBB outlook negative. At the same time, the rating agency's short-term credit rating remained at A-2.

Madrid, May 25th, 2012.