Terra Networks and the Spanish company TelePizza have entered into a joint venture agreement to create an e-commerce network that will deliver a wide range of products such as videos, compact discs, books, and entertainment goods and other products, directly to consumers within one to twenty-four hours. The two companies will create a virtual shop together. Each company will have a 50% shareholding of the new company.

The new company will sell, distribute and store the products as principal or as agent for other merchants through the network or telecommunication channels, including the new access technology such as digital TV or UMTS for cellular phones. The new company will be created in July with a share capital of 5,600,000 euros.

This alliance combines the distribution capabilities of TelePizza with the great number of Terra's web users. In Spain, TelePizza has 19 million clients, 3.5 million of which are web users. During March, Terra served around 115 million web pages and the ISP service of Terra registered 938,000 clients.

About TelePizza

TelePizza is the leading fast food company in Spain. It operates in eight countries with 767 outlets in 1999. In Spain it operates 512 outlets in 1999, after the launching of 45 new outlets during 1999.

TelePizza opened 132 new outlets with an increase of 107% and totaling 255 outlets outside Spain. TelePizza operates with great success in Spain, Portugal, Mexico, Chile, France, United Kingdom, Chile, Poland and Morocco.

TelePizza offers a wide range of fast food products, including its well-known pizza, sandwiches, hamburgers and snacks. TelePizza has developed a great expertise in product distribution with home delivery in thirty minutes and has achieved a good knowledge of consumer's needs.

TelePizza generated 4,501 million pesetas (27.05 million euros) of net profits, an increase of 23.6% over 1998 results, which totaled 3,641 million pesetas (21.9 million euros).

About Terra Networks

Terra Networks (http://www.terra.es) is the leading provider of Internet access and interactive content and services to residential and SOHO markets in Spanish and Portuguese speaking countries. Terra's ISP business is served to 1.98 million clients. As a content provider Terra serves more than 705 million web pages per month and has registered 63 million visits per month.

On May 16, Terra and Lycos communicated their intention to combine their businesses and operations to create Terra Lycos, the first global portal company in the world. This transaction will facilitate the convergence of their Internet services, media, and interactive content and services. The combined company will operate in 37 countries with more than 60 million clients and users.

Terra currently provides Internet access services in Spain, Brazil, Mexico, Chile, Peru, Guatemala and the United States of America and runs portal services in the above countries and in Argentina, Venezuela, Costa Rica, El Salvador, Honduras, Nicaragua and Panama. In all those markets Terra is developing on-line solutions for marketing, advertising, e-commerce and other related activities. Terra also offers local and international interactive content services thus satisfying the needs and interest of the users in their local communities.

Terra Networks, S.A. is a subsidiary of Telefonica, S.A. and is listed in Spain (TRR) and the Nasdaq National Market (TRRA).