Telefónica Buys into PCCW

HONG KONG -- As previously announced, Mr Francis P.T Leung (“MrLeung”) through his wholly owned company, Fiorlatte Limited (“Fiorlatte”), entered into anagreement (“Fiorlatte-PCRD Agreement”) on 9 July 2006 with Pacific Century RegionalDevelopments Ltd. (“PCRD”), pursuant to which Fiorlatte agreed to acquire PCRD’s entirestake in PCCW Limited (“PCCW”), which amounts to approximately 22.65% of the existingissued share capital of PCCW. The purchase price was HK$6.00 per share.

Mr Leung would like to announce that Fiorlatte has now reached binding agreements withTelefonica Internacional S.A.U (“Telefonica”) and separately with each of Li Ka ShingFoundation Limited (“HK Foundation”) and Li Ka Shing (Canada) Foundation (“CanadianFoundation”) so that:

Mr Leung will acquire and will continue to hold the remaining 2.65% interest. Mr Leungexpects to finance this acquisition through a combination of his own resources, bankfinancing and a loan from Mr Li Ka Shing. Mr Leung currently holds PCCW Sharesamounting to approximately 0.7% of PCCW’s issued share capital, directly and throughwholly owned companies, including Fiorlatte. Upon completion of the Fiorlatte-PCRDAgreement and the Transactions, he will hold an aggregate interest of 3.35% in PCCW’sissued share capital.

Telefónica SA (NYSE: TEF)

PCCW Ltd. (NYSE: PCW; Hong Kong: 0008)