S&P Credit rating of Telefonica

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 August 11th, 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 A- outlook negative to BBB+ outlook stable. At the same time, S&P´s short-term credit rating remained at A-2.

Madrid, August 18th, 2011.