Exhibit11.1

BUSINESS ETHICS CODE

OBJECTIVE:

Toestablish a Business Ethics Code that declares the ethical values thatmust guide the actions and behavior of the employees of Telefonica CTCChile and its subsidiaries, both internally and externally.

APPLICABLE TO:

Employees of Telefonica CTC Chile and itssubsidiaries

VALUES AND PRINCIPLES OF TELEFONICA CTCCHILE

We are Telefonica CTC Chile, a publicly held stockcorporation that is part of the Telefonica Group. We are fullycommitted with the advancement of our country and the integraldevelopment of its telecommunications industry. We aim to be a companyadmired for the excellence of its services and the transparency of itsactions. In this effort we must act in accordance with our principlesand ethical values regarding our customers, vendors, employees,stockholders, the government and its regulatory agencies, and thecommunity in general.

**Our Customers**are the reason of ourexistence. We must direct all our efforts to them. Customersatisfaction should be the measure of our own satisfaction. We must besure to understand, attend and fulfill all their needs by offering themproducts and services of the highest quality in relation to theirprice. We will never try to take undue advantage of our customerssolely to make temporary profit. We will always sell our products andservices honestly and fairly, relying solely on the product'sattributes. We must give preference to a long-term relationship withour customers based on fairness and mutual gain. If our customersshould have complains or requests, we will make our best effort toattend to their concerns in a efficient and timely manner that willdemonstrate, by our attitudes and acts, and our ongoing commitment toservice.

**Our Vendors**must feel that we appreciate theircontribution to the commitment we have acquired with our customers andthe performance of the Company. We intend to form mutually satisfactorylong-term relationships that will allow the Company to stay current andcompetitive in the marketplace. Our commitment to them is to maintainfair and rigorously impartial relationships, without discrimination orexclusions. The reason for selecting one vendor over another must beonly merit-based. In the same way we expect our vendors'collaboration, commitment and comprehension for the needs and decisionsof the Company, we must put all our effort in fulfilling our commitmentto our vendors.

**Our Employees**are the foundation of ouractions. We fully respect their privacy and dignity. Our commitment isto offer them a comfortable work environment, in which they can developtheir personal and professional potential. We intend to provide themwith broad opportunities for training and participation in personaldevelopment and improvement programs, particularly in the use of newtechnologies. We will spare no effort in providing a safe workingenvironment that is protective of their health, security and personalintegrity.

**Our personnel policies**are based on principlesof equal employment opportunities and the outmost respect for employeeassociations. There will be no form of discrimination in employmentpractices, so our employees can enjoy equal employment opportunitiesand treatment, regardless of ethnic origin, political beliefs, sex,age, handicap or religion. We fully respect the employee's rightsto form and join unions or associations, provided solely that theyadhere to the law and abide by the bylaws. In the absence of a union,the Company will remain absolutely neutral to the preferences taken bythe employees, whether they decide to form and then join unions or tostay as is. We unreservedly acknowledge the right of every employee todecide whether their employment contracts will be negotiatedcollectively or individually.

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**We expect a lot from our employees**.For sure, the highest standards of technical excellency andprofessional behavior. We expect them to put the success of the Companyover partial or personal interests and to be accountable for theirdecisions and actions. We also expect an unquestionable ethicalbehavior both in their professional and personal life. We considerresponsibility, honesty, proactiveness, diligence, professionalism,objectivity and respect towards others, values that should guide all ofour actions.

We must all put special attention to situationswhich present **conflicts of interest** with either customers orvendors. That is how we preserve fairness in our relations and thelegality of our decisions. Any information, resources or influencesthat are available to us as a result of our position can never be useddirectly or indirectly for the benefit of ourselves or third parties inviolation of laws or to the detriment of the interests of theCompany.

We also expect from our employees their **commitmentto the Company,**the unrestricted defense of the Company'sinterests and patrimonial integrity, the efficient use of its goods andresources for the Company only, with a view towards savings, physicalpreservation and rational utilization. We consider it essential touphold all laws and regulations that apply to us, as well as therigorous handling of confidential information available on the Company,which must be kept with special zeal, especially the ones regarding ouremployees, customers and vendors.

The correct use of**privileged information** deserves special mention. It should neverbe used for personal gain nor to induce third parties to tradesecurities, which price might be influenced by this information.Persons with access to privileged information, must not perform anytype of transaction that uses that information nor disclose it,communicate it, nor recommend or advice third parties to acquire orsell securities based on that information.

Finally we expect ouremployees to contribute with their **attitudes and behavior** tocreate an environment of trust and respect in which rules of healthycoexistence are observed and conducts that could be interpreted ascontempt or disrespect towards other co-workers are avoided. This doesnot imply tolerance of the inappropriate conduct of others. Ethicalbehavior is a shared responsibility and violations or deviations fromthis principles and values affect us all without distinction. We mustall become caretakers of the ethical reputation of the Company.

**Our commitment to the shareholders**. We are the trustees ofour shareholders. They expect our decisions and actions to be alignedwith the creation of value, and we owe the utmost transparency. We willalso try to provide profitability in line with market conditions, witha sound, forward-looking business model.

**Our commitment tothe goverment and its regulatory agencies** is to uphold thegoverning laws and regulation aplicable to the Company and tocontribute in maintaining a modern and competitive Telecomunicationsindustry.

**Our Company is commited to the development of Chileand the well-being of its people**, in its own area of action. Inparticular, the Company will conduct its operations and will provideits services respecting all current legislation and adopting measuresto protect the environment. It will also maintain shareholders,regulators and the public at large fully and promptly informed of allmatters inherent to it, and it will encourage the development of thetelecommunications industry in the country through the services itprovides.

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CODE OF ETHICS

SECTION 1— EMPLOYEES

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| 1.1  | GeneralPrinciples |

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| •  | We must maintainunquestionable ethical behavior in the course of both our professionaland private lives. |

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| •  | The normaltasks of our work must be performed with loyalty towards the Company,in defense of its interests, image and patrimonial integrity, upholdingthe governing laws and regulations and providing reliableinformation. |

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| •  | We must fulfillour obligations and responsabilities with, honesty, proactivity,diligence, professionalism, objectivity and with respect towardsothers. |

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| •  | We must make everycustomer the subject of our daily work, making his satisfaction ourown. |

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| •  | We are commited to attainexcellence in the quality of the service we provide as a result of ourcollective efforts. |

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| •  | We mustfully accept the demads of being leaders of our work teams and us suchaccept the personal responsabilities that this involves. |

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| •  | We must not directly or indirectlyuse, for our own benefit, the resources or influences that areavailable to us as a result of our position in theCompany. |

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| •  | The decisions made onthe job must be always based on an analysis of the circumstances and ofthe possible consequences for the Company. We must always ensure, aboveall, the success of the Company over partial or personal interests andbe accountable for our decisions. |

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| 1.2  | LaborRelationships |

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| •  | There will be noform of discrimination in employment practices so all our employees canenjoy equal employment opportunities, regardless of ethnic origin,political beliefs, sex, age, handicap or religion. |

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| •  | All employees with the exceptionsindicated by law, have the right to form or join unions and employeeassociations, with the sole restriction that they abide by the law andby their particular bylaws. |

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| •  | Inthe absence of an union the Company will remain neutral and will notprevent the organization of employees. Nor shall it discriminate infavor or against the affiliation of employees to such associations. |

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| •  | The Company acknowledges the rightof every employee to decide whether their contracts will be negotiatedcollectively or individually. |

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| 1.3  | Workenvironment and conditions |

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| •  | TheCompany is intent on providing a safe working environment to itsemployees, free of health and security hazards. It shall furnish, whennecessary, appropriate safety clothing and equipment for the purpose ofpreventing accidents or damage to an employee'shealth. |

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| •  | In their treatment ofemployees, executives will always maintain an attitude that promotes aconstructive work environment, including habitual rules on socialcoexistence. They shall avoid conduct that implies disrespect orcontempt towards otheremployees. |

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| •  | The privacy anddignity of employees must be highly respected and the rule must be tokeep only personal information needed for the correct operation of theCompany. |

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| 1.4   | Use of goods andInformation. |

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| •  | The goods,facilities and financial resources of the Company will be utilized onlyto fulfill its mission, at all times under standards of efficiency,reasonableness and savings. |

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| •  | Allinformation acquired in the ordinary course of business will always be"For Internal Use Only," so it must beguarded with particular zeal. It is forbidden to comment on it or giveit to unauthorized third parties. This information should never be usedfor personal or third-party gain contrary to governing laws or to thedetriment of the interests of the Company, its customers or itsvendors. |

SECTION 2 — CUSTOMERS ANDVENDORS

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| 2.1  | Customerrelationships |

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| •  | Ourcustomer's needs must be understood, attended to and satisfied byoffering them quality products and services on competitive terms.Requests and complains should be resolved in a timely and efficientway. |

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| •  | Our products and servicesmust be sold honestly and fairly, relying solely on the product'sattributes. No deceit shall be used for profit'ssake. |

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| •  | The exchange of customerinformation will be permitted only when there is reasonable knowledgethat the information is being received and used according tolaw. |

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| 2.2   | Vendorrelationships |

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| •  | All equipment,supplies, services and the like must be purchased according to merit.Vendors, suppliers and subcontractors must receive fair and equitabletreatment without discrimination. |

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| •  | It is indispensable that allfinancial settlements, reports, controls and billings accuratelyreflect the transactions with our vendors and the fulfillment of theircommitments with the Company. |

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| 2.3   | Conflictsof interest |

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| •  | In their treatmentof vendors, customers or other persons with whom the Company hasbusiness relations, when conflicts of interest exist, employees mustdeclare them in an opportune and transparent fashion, so theappropriate decision can be made according to the respectiveregulation. |

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| •  | For this purpose,conflict of interest will be understood as "anyincompatibility arising in an act or negotiation between the Companyand a related person when there are business, family or emotionalrelations between the related person and the person who is evaluating,performing or deciding on such act and/or participating in theadministration, supervision or control of the processes derived fromthe same, and such relations make it presumable that there is lack ofindependence or partiality, all of which augments the likelihood thatthe related person and/or employees of the corporation participating inany of such acts will benefit directly or indirectly and unduly andindistinctly." GPNP No. 601 on this matter shall befollowed in all these aspects. |

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| •  | The general principles of behavior,of the persons that have conflicts of interest must consider: |

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| •  | Independence: They should act atall times with loyalty to the Telefonica CTC Chile Group and itsshareholders, with independence of interests of third parties orthemselves. |

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| •  | Abstention: Theyshould abstain from influencing or intervening decision-making thatmight affect the persons or entities with which there areconflicts. |

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| •  | Confidentiality: Thepersons in a conflict of interest situation will abstain from access toinformation classified as confidential that affects such conflict. |

SECTION 3 — THE ENVIRONMENT AND THECOMMUNITY

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| •  | The Company iscommitted to the preservation of the environment. Consequently, everyemployee is committed to perform their daily work and provide servicestaking actions to minimize, within reasonable means, the impact to theenvironment and to comply with governing environmentallaws. |

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| •  | TheCompany will maintain shareholders, regulators and the general publicfully informed, in a timely manner, of all matters inherent to it. |

SECTION 4 — FINANCIAL ASPECTS AND SECURITIESMARKETS

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| 4.1  | PrivilegedInformation |

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| •  | Privilegedinformation available must not be used for personal gain, disclosed tothird parties nor used to induce third parties to trade securitieswhich price might be influenced by this privileged information. Personswith access to any type of privileged information must not, perform andmust refrain from directly or indirectly taking part in the followingactivities: |

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| —  | Preparing orperforming any type of operation in regard to securities affected bythe privilegedinformation. |

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| —  | Disclosing orcommunicating said information to third parties, except in the ordinarycourse of their work, position orprofession. |

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| —  | Recommending oradvising third parties to acquire or transfer securities or financialinstruments or to acquire or transfer them based on suchinformation. |

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| •  | Moreover,executives that have access to such information, especially the ChiefExecutive Officer and the Chief Financial Officer, are forbidden toperform and must abstain from performing personal financialtransactions in regard to such securities in the followingperiods: |

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| •  | On the closing month ofthe quarter through the date of disclosure of the Financial Statementsto the regulatory agencies and to the financial market. |

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| •  | 30 days prior to the emission ofany new affected securities. |

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| •  | Notwithstanding the aforementioned,affected persons may, on an exceptional basis, request authorizationfrom the Ethics Committee to perform transactions in these periodsprovided they comply with governing law in thisregard. |

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| •  | Bearer securities issuedby Telefonica CTC Chile or its Subsidiaries, financial instruments andcontracts of any type granting the right to purchase such securitiesand those underlying them, whether securities or instruments issued byTelefonica CTC Chile or its Subsidiaries, shall be considered affectedsecurities. |

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| 4.2  | Incompatibility |

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| •  | Inthe interest of preserving the independence of opinion, the ChiefExecutive Officer and the corporate managers can't have workedfor the registered independent public accounting firm retained to auditthe financial statements for a period of at least one year prior to thebeginning of theaudit. |

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| 4.3  | Communications andCertifications |

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| •  | During the studyor negotiation phase of any judicial proceeding or financialtransaction that might appreciably influence the price of the affectedsecurities or instruments, the involved executivesmust: |

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| •  | keep a documentary recordof each confidential transaction that contains the names of the personsparticipating in thetransaction. |

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| •  | explicitly warn thepersons involved in the confidential transaction that the informationis confidential, that they have the duty of keeping it confidential andare forbidden to use it, and that they must restrict the disclosure ofthis information strictly to individuals, in and outside of theorganization, who need to know it and they must adopt the securitymeasures necessary for the custody, filing, access to, reproduction anddistribution of theinformation. |

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| •  | Communicate thisfact to the Ethic Committee. |

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| •  | Investors,the markets, governmental entities or other authorized institutions andthe general public will be provided with truthful,, clear, fair, exact,complete, comprehensible and timely information while upholding theapplicable laws, rules andregulations. |

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| •  | The Chief ExecutiveOfficer and the Chief Financial Officer will certify that for everyannual report on the financial statements that: (i) they have read thereport, that is truthful, that it reflects the state of the Company andthat it does not contain omissions of material facts, to the knowledgeof the signatory, (ii) that they are responsible for establishing andmaintaining internal controls, which ensure the disclosure ofaccounting information, they have also evaluated the effectiveness ofthese controls within the 90 days prior to the report and that thefinding are present in said report of the financial statements, (iii)that they have disclosed to the registered independent publicaccounting firm performing the audit and to the Audit Committee allsignificant deficiencies in the design or operation of the internalcontrols that might affect the ability to file, process, summarize andreport financial data; any fraud, material or not, that involvesexecutives or employees that would affect internal controls; and thatany significant changes in the internal controls have been disclosed inthe report. The same rules apply to the subsidiaries of Telefonica CTCChile for equivalent positions. |

SECTION 5 — THERESPONSIBILITY OFEMPLOYEES

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| •  | All employees ofTelefonica CTC Chile and it subsidiaries have the obligation to abideby this Code of Business Ethics code, the policies that regulate it,the governing regulations and the InternalRegulations. |

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| •  | Any breach of thisCode shall, if pertinent, be considered a labor violation. Theforegoing shall be without prejudice to any potential infringement ofthe law and civil or criminal liability enforceable in each case. |

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| •  | Employees must not be tolerant ofimproper behavior in others. Therefore, all employees have theobligation to advise their superiors, the Corporate Audit Division orany of the members of the Ethics Committee of any real or presumedviolations of this Code. |

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| •  | Thecompany encourages its employees to make these denouncementsresponsibly and forbids any internal administrative retaliation againstthose employees. |

SECTION 6 — THE OPERATION OF THEETHICS COMMITTEE

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| •  | The EthicsCommittee will be composed of the Chief Executive Officer, the ChiefFinancial Officer, the Human Resources Manager, the Planning andControl Manager, the Audit Manager and the SeniorCounsel. |

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| •  | Any employee may,through any of the members of the Ethics Committee, present informationregarding a breach of this Code in person or by letter. All suchcommunications will be treated with confidentiality and reserve. |

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| •  | The respective Managers andexecutives shall, in coordination with the Corporation's EthicsCommittee, apply the respective sanctions to the employees who do notabide by these provisions or the procedures related to the same. |

SECTION 7 — EFFECTIVEDATE

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| •  | This document willtake effect upon publication on the Company website, which should bewithin thirty days after approval by the Board of Directors.Thereafter, it is presumed to be known by all employees of TelefonicaCTC Chile and its subsidiaries. |

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