2. Important notice This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not statements of historical facts, and reflect goals of the company's management. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts,” "projects" and "targets" and similar words are intended to identify these forward-looking statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, the results of operations of the company to be achieved may be different from the company's current goals and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update them in light of new information or future developments.
4. Key Highlights PT’s exposure to high growth markets remains intact after Oi’s transaction and continues to enjoy a solid financial position 2010 Pro-Forma Oi ** Financial highlights Euro million ∆% y.o.y 2009* 2010 3,733 11.8 1,557 10.0 41.7 685 848 709 4,829 1,079 3,742 15.2 1,492 12.2 39.9 5,672 798 693 2,100 711 +0.2% +3.3pp -4.2% +2.2pp -1.8pp n.m. -5.9% -2.2% -56.5% -34.0% Operating revenues Contribution from international assets (Pct) EBITDA Contribution from international assets (Pct) EBITDA margin (Pct) Net Income Capex EBITDA minus Capex Net debt After-tax unfunded pension liability 55.5 48.0 * Adjusted in order to recognise Vivo as a discontinued operation ** Assuming consolidation of 25.6% of Telemar and 44.4% of Contax for last twelve months 9M10 Note: In 2010, net income includes one-off items related to the capital gain obtained with the disposal of Brasilcel, the accumulated currency translation adjustments that were recognised in net income on the date of disposal, adjustments to the book value of certain assets, provisions for contingencies and other non-recurring costs. In 4Q09 net income includes the capital gain related to the sale of Médi Télécom.
5. Key Highlights In 4Q10, PT has 84 million customers and in the domestic operations Meo continues to drive growth in traffic generating lines, broadband and pay-TV 2010 Pro-Forma Oi** 4Q10 net adds Operational highlights Thousand customers ∆% y.o.y 2010 2009 83,956 Total customers Wireline retail accesses (RGUs) Fixed lines net adds Retail fixed broadband customers Fixed broadband net adds Pay-TV customers Pay-TV Net adds TMN customers TMN Net adds Data as a pct of service revenues (Pct) 21,555 4,527 -51 1,001 139 830 249 7,419 167 24.6 20,157* 4,189 -96 862 152 581 269 7,252 319 23.1 +6.9% +8.0% +47.1% +16.1% -8.7% +42.9% -7.4% +2.3% -47.7% +1.5pp 1 37 61 105 * Adjusted in order to recognise Vivo business as a discontinued operation ** Assuming PT’s customers in 2010 and Oi customers in 9M09
6. Key Highlights The transformation of the business model resulted in growth of traffic generating lines after seven years and residential revenue growth of 5.2% in 4Q10 Solid growth in residential revenues and customers Inflection of wireline revenue trend Residential retail revenues Indexed (100=2009) Wireline domestic retail revenues growth* and PSTN/ISDN linesnet adds Percentage Revenues 5.2% Lines 4Q10 4Q09 Residential customers Thousand 2009 2010 1,673 809 775 1,662 +1% +43% +19% 540 679 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 2007 2010 2009 2008 Fixed lines Fixed broadband Pay-TV * 1Q10 and 2Q10 adjusted for the change in the recognition of contract penalties Source: Company reports
7. PT in the forefront of fibre roll-out in Europe Key Highlights PT Others PT will have 1.6 million homes with FTTH at the end of 2011... ... and will position Portugal as a leader in FTTH in Europe FTTH/B homes passed in Portugal Thousands Penetration of FTTH/B Passed/total households. Dec 2010. % 2,159* Portugal (2011E) 38* 28 Bulgaria 35 1,559 Denmark +600 Sweden 1,150 Other Portugal (2010) 27 17 1,600 France 1,000 800 Finland Norway 2011E 2010 2009 Russia PT was awarded the FTTH Council Europe’s innovation prize in "Deployment and Operation of FTTH Networks" in February 2011 * Assumes only additional passed homes for PT, i.e. 600 thousand more until the end of 2011 Note: double-counting may exist in number of passed homes when served by more than one operator; Only countries with more than 2 million households were considered. Source: FTTH Council; Yankee Group; INE
8. Key Highlights In Voice, increased popularity of tribal plans required a response by TMN but impacted revenue performance TMN had no choice but to follow the competition... ... which impacted revenues Tribal plan timeline Billing revenues %, y.o.y. -2.0 -2.6 -8.4 -4.5 Mar 2008 Optimus launches TAG Sep 2008 Optimus launches TAG without monthly fee Apr 2010 TMN launches Moche with no monthly fee -10.2 0* cent/min for all calls, SMS, MMS and video calls Billing ARPU %, y.o.y. May 2008 TMN and Vodafone launch tribal plans Mar 2010 Vodafone launches Extreme/Extravagan-za with no monthly fee -6.7 -6.9 -11.6 -12.7 -8.9 4Q10 3Q10 2Q10 1Q10 4Q09
9. Key Highlights Value proposition of TMN’s tariff plans for the pre-paid market has been enhanced with the launch of “e nunca mais acaba” >17,000 e-mails* Unlimited voice and SMS within TMN or >100,000 likes on facebook 500 MB included (internet versions only) No mandatory top up – keep talking if you fail to recharge or >1,000 Youtube movies** * Per month. Excluding attachments (average of 30KB/e-mail) ** Per month. Average of 500KB/movie
10. Key Highlights Domestic performance impacted by intense competition in mobile in the youth segment but wireline recovery is robust and cash flow is stable Revenue performance driven by solid execution in wireline and international businesses EBITDA impacted by top-line at TMN and investment in customer growth in wireline Cash-flow is stable reflecting strong cost discipline while still investing in future-proof technology Revenues Euro million EBITDA Euro million EBITDA minus CAPEX Euro million 0.2% 3,742 3,733 -4.2% 1,557 1,492 -2.2% -1.0% 709 693 1,929 1,948 Wireline -6.8% Wireline 800 745 221 Wireline 234 -8.6% -5.3% TMN 1,387 TMN 1,518 TMN Other Other 108 83 426 -20 -33 268 Other 2010 2009 2010 2009 2010 2009
11. Key Highlights Solid revenue and EBITDA growth in international assets driven by marketing and commercial efforts EBITDA Proportional. Euro million Revenues Proportional. Euro million 0.9% 6.4% 224.1 222.0 2010 2009 2010 2009 Note: Proportional revenues and EBITDA were calculated by applying the direct equity stake of PT or via Africatel, where PT holds a 75% stake. The 2010 figures were adjusted in order to considerer constant exchange rates and exclude the impacts from changes in the consolidation perimeter and in certain regulatory and accounting issues.
14. Solid funding position with Euro 6.3bn of cash and facilities available of which Euro 3.7bn is earmarked for Oi transaction
15. Receivable of Euro 2bn from Telefonica still pendingNet Debt Euro Million Cost of debt Net Debt to EBITDA 2.5x 5.0% Reported 5,528 747 31 Dec 2009 3.6x 747 4.3% Ex-Vivo 4,829 1.4x 4.4% 2,100 31 Dec 2010 Proforma* 2.1x 5,568 * Including Vivo and Oi transaction
16. Exceptional DPS Maximum range Key Highlights Solid and predictable dividend policy offering a yield in 2011 of 15.8% PT is offering a solid, predictable and credible remuneration policy PT is already delivering on its commitments 1.575 1.300 1.000 0.650 0.752 0.717 0.683 0.650 0.710 0.690 0.670 0.650 0.575 Paid in year… 2012 2011 2010 2015 2014 2013 Dividend yield 15.8% 9.4% * Subject to Annual Shareholders’ Meeting approval Note: The exceptional cash dividend and the remuneration package proposal are subject to market conditions, PT’s financial condition, applicable law regarding the distribution of net income, including additional shareholder approvals, as applicable, and other factors considered relevant by the Board at the time.
36. Feb 2010 First 3D broadcast Feb 2010 Multi-room PVR May 2010 World Cup interactivechannel and 3D broadcast Oct 2010 First worldwide operator to broadcast a surf event in 3D Strategic Review - Residential Meo is driving innovation and offers a comprehensive range of services and the best customer experience in the pay-TV market Nov 2010 Launch of Meo online (VoD at PC) and Music Box Nov 2010 Launch of Games- on-demand service 2010 2009 2010 Jul 2010 New apps: Facebook, Flickr, Oceanlook and Sapo Sep 2010 New local channel included Sep -Oct 2010 More interactivity over killer shows: Widget Ídolos and “Secret Story” Dec 2010 Meo Remote launch
37. Strategic Review - Residential Meo’s superior performance has been confirmed by independent studies …and provides the best service Meo leads on functionalities and performance… Views from experts: “…Victory goes to Meo service. Meo is technologically more developed...” “… (Meo) offers higher performance and more functionalities.” “… if you are an advanced user who values internet performance , you can only choose Meo Fibra” Fibre customers survey* Score (1-10) Image quality Internet bandwidth DVR VOD Cable Operator Cable Operator Cable Operator Cable Operator Sound quality Content STB Energy consumption Cable Operator Cable Operator Cable Operator Cable Operator * Excludes Scores with “Router” and “Cabling” to FTTH vs. DOCSIS (FTTN) different topology Source: Exame Informática (Feb 2011)
38. Strategic Review - Residential Meo enjoys the best customer perception and satisfaction in the market Meo has the highest brand notoriety in Portugal… … and has the best service attributes recognised by its customers Top-of-mind of Portuguese TV operators %. 2010 Best service attributes % of respondents*. Nov 2010 45.1 Pay-TV operator 1 25.4 Pay-TV operator 2 3.1 Pay-TV operator 3 3.0 Pay-TV operator 4 2.2 Cable operator * Customers of each operator assessing the following attributes: pricing, advertisement, promotions, support, SAC, channel offering, TV functionalities, image quality and internet access. Source: Publivaga
39. Strategic Review - Residential Meo has achieved 30% market share in 33 months and is underpinning broadband market share gains … leading to solid market share gains Sustained growth since launch… Pay-TV market share Percentage Pay-TV customer base and net adds Thousand Net adds TV 100 100 100 PT 14 23 30 19 Other 14 14 Cable Operator 67 61 63 56 4Q10* 4Q09 4Q08 4Q10 2Q10 4Q09 2Q09 4Q08 2Q08 Broadband customer base and net adds Thousand Broadband market share Percentage Net adds BB 100 100 100 1,001 PT 43 46 48 37 Other 21 19 28 Cable Operator 33 33 29 4Q10* 4Q09 4Q08 4Q10 2Q10 4Q09 2Q09 4Q08 2Q08 10 consecutive quarters of market share gains Pay-TV customer growth supporting take up of broadband * PT estimates based on companies reports
40. Strategic Review - Residential The transformation of the business model resulted in growth of traffic generating lines after seven years and residential revenue growth of 5.2% in 4Q10 Solid growth in residential revenues and customers Inflection of wireline revenue trend Residential retail revenues Indexed (100=2009) Wireline domestic retail revenues growth* and PSTN/ISDN linesnet adds Percentage Revenues 5.2% Lines 4Q10 4Q09 Residential customers Thousand 2009 2010 1,673 809 775 1,662 +1% +43% +19% 540 679 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 2007 2010 2009 2008 Fixed lines Fixed broadband Pay-TV * 1Q10 and 2Q10 adjusted for the change in the recognition of contract penalties Source: Company reports
41. e Strategic Review - Residential Growing importance of fibre in Meo customer base with positive impact in churn and net adds … driving pay-TV growth and reducing churn Fibre already represents ~15% of Meo customers… Meo customers and fibre weight Thousand Meo Net Adds** 2010s. 2010* 830 702 Fibre 42% 581 58% ADSL
+ DTH 443 Meo churn rate** Avg 2010. % ADSL
+ DTH -10pp 15% Fibre 10% 4% 0% 2Q09 4Q09 2Q10 4Q10 Fibre customers already account for ~21% of commercially available homes* and ~14% of total passed homes Fibre ADSL * Average commercially available households 2009-2010 ** Residential segment
51. Launch of Music Box Strategic Review - Personal TMN has been implementing a successful and innovative smartphone and wireless data strategy TMN demos 3D content by phone through LTEproject Launch of TMN’s customer care support through Facebook and Twitter TMN announces launch of Samsung Omnia 7, the first Windows 7 phone in Portugal Broadcast of FIFA World Cup Games Live on Meo Mobile Iphone 4 launch Jan Mar May Jul Sep 2010 Nov Launch of TMN A1, first own brand phone with Android TMN launches Samsung Galaxy S the most advanced Android Smartphone TMN launches Samsung Blue Earth, a solar rechargeable phone with the first ecological SIM card in the world Galaxy Tab launch with access to main weekly newspaper TMN launches “unlimited” pricing plan Launch of Sapo A5 the first own brand handset with Android OS
52. Strategic Review - Personal Distinctive offer addressing market needs TMN has analysed market needs… … to define its portfolio of smartphones Focus groups participants OS included in mobile offer ~4,400 interviewees 2010 2009 2008 2007 2006 Number of handsets tested 386 handsets analysed Number of smartphones offered 2010 2010 2009 2008 2007 2006 Operator 2 Operator 1 Regular market studies to analyse behaviours and equipment preferences Source: operators’ corporate websites
53. Strategic Review - Personal Competitive equipment pricing … and was the 1st operator to introduce unlimited plans** TMN has been lowering equipment costs… Smartphone prices Euro Cost per data traffic* Euro per MB First mass market smartphone in Portugal allowing for a 50% price reduction 8.50 QTEK S100 QTEK S200 TMN launched the first unlimited voice and data pricing plan (flat rates) HTC Dual Touch Bluebelt Soft Stone -56% TMN A1 7 Million customers campaign 0.03 * Plan cost divided by total data included **Fair usage policy
61. … up to €8.06/month with unlimited channelsUtilities Price
62. Strategic Review - Personal In Voice, increased popularity of tribal plans required a response by TMN but impacted revenue performance TMN had no choice but to follow the competition... ... which impacted revenues Tribal plan timeline Billing revenues %, y.o.y. -2.0 -2.6 -8.4 -4.5 Mar 2008 Optimus launches TAG Sep 2008 Optimus launches TAG without monthly fee Apr 2010 TMN launches Moche with no monthly fee -10.2 0* cent/min for all calls, SMS, MMS and video calls Billing ARPU %, y.o.y. May 2008 TMN and Vodafone launch tribal plans Mar 2010 Vodafone launches Extreme/Extravagan-za with no monthly fee -6.7 -6.9 -11.6 -12.7 -8.9 4Q10 3Q10 2Q10 1Q10 4Q09
63. Strategic Review - Personal Value proposition of TMN’s tariff plans for the pre-paid market has been enhanced with the launch of “e nunca mais acaba” >17,000 e-mails* Unlimited voice and SMS within TMN or >100,000 likes on facebook 500 MB included (internet versions only) No mandatory top up – keep talking if you fail to recharge or >1,000 Youtube movies** * Per month. Excluding attachments (average of 30KB/e-mail) ** Per month. Average of 500KB/movie
77. 93% coverage of national territory (best among national operators)Characteristics Price (Euros) 3.6 Mbps 7.2 Mbps 21.6 Mbps WiFi Router 29.90 49.90 79.90 99.90 3G territory coverage November 2009. % Includes free access to nationwide PT WiFi over 1,600 hot spots Operator 2 Operator 3 * Study published by Exame Informática (January 2010) made by P3 consulting Source: Anacom study evaluating QoS in urban areas and main roads (Nov 2009)
78.
79.
80.
81.
82.
83. Key partnership with Cisco and Microsoft for cloud computing * Including ~500 network and OAM supervision professionals (Operations Administration Management), +300 assistants at the Call Centre and ~400 field force technicians
84. Strategic Review – Corporate and SME/SoHo PT is leveraging technological know-how and infrastructure to strengthen its ICT offers and innovation leadership Advanced energy management technology Biggest data centre in Portugal with competitive dimension across Europe Data centres size in Portugal* Thousand sqm Utilisation of renewable energy sources Free cooling system Installed capacity New data centre Control and monitoring Energy efficiency 15,0 – 17,0** Player 2 Player 3 Energy efficiency PUE* Energy consumption Player 4 2.1 -40% 1.2 1.2 Player 5 Other New PT’s data centre Best worldwide practices Portugal current average New PT’s data centre Existing Data centres *Server areas only i.e. Excludes technical and office areas **Depends on relocation of already installed capacity *** “Power Usage Effectiveness”: Total energy consumed by actual energy spend in the equipment
88. Communication through instant messaging and web based video conference servicesExchange + Tested cloud architecture and unique know-how in the development of cloud based services PT’s unique capacity of data centre services supported by next generation fibre opticalnetwork Sharepoint Lync Portuguese SMEs first in the world to access Microsoft new SaaS software 1ªphase: IaaS (servers/ virtual desktops) and Webex 2ªphase: UCaaS (Unified Communications as a Service)
89.
90. Integrated F-M convergent offers including equipments and software (e.g. Office 2010 in Office Box package)
93. Focus on mobile broadband penetration to increase number of services per customer
94. Dedicated area in stores and support line available 24x7+157% +96% 2010 2009 2008 2010 2009 2008 Internet on mobile phones TV customers +129% +83% 2010 2009 2008 2010 2009 2008
95.
96. Focus on Managed Services and outsourcing solutions for large corporations
99. Vertical end-to-end solutions on specific markets+5% +2pp 4Q10 4Q09 4Q10 4Q09 +16% +22% 4Q10 4Q09 4Q10 4Q09 Mobile broadband data cards High bandwidth VPN accesses * IT/IS, Outsourcing and Managed Services ** WAN, LAN and Voice Managed Services + Data Centre and Security Managed Services. Data includes total installed base
100. PT in the forefront of fibre roll-out in Europe Strategic Review – Technology and Innovation PT Others PT will have 1.6 million homes with FTTH at the end of 2011... ... and will position Portugal as a leader in FTTH in Europe FTTH/B homes passed in Portugal Thousands Penetration of FTTH/B Passed/total households. Dec 2010. % 2,159* Portugal (2011E) 38* 28 Bulgaria 35 1,559 Denmark +600 Sweden 1,150 Other Portugal (2010) 27 17 1,600 France 1,000 800 Finland Norway 2011E 2010 2009 Russia PT was awarded the FTTH Council Europe’s innovation prize in "Deployment and Operation of FTTH Networks" in February 2011 * Assumes only additional passed homes for PT, i.e. 600 thousand more until the end of 2011 Note: double-counting may exist in number of passed homes when served by more than one operator; Only countries with more than 2 million households were considered. Source: FTTH Council; Yankee Group; INE (5.7 million households for Portugal)
101.
102. ~80% of fibre mobile stations connected with IP/Ethernet technology at the end of 2011
103. TMN is one out of 61 mobile operators (~7% of world total) with LTE roll-out already planned or in implementation
104. Modernisation of all 2G network allowing for quality improvement, increased network capacity and enabling of 4G
105. Using national hot-spot network (~1.600) to off-load data traffic from the mobile network Source: 3G Americas
106. Competitive position Strategic Review – Brazil Oi is the only operator with a fully integrated service offering under a single brand in Brazil Oi operates in all markets under a single brand… …and with a nationwide coverage Customer per region Millions.Sep 2010 Fixed Mobile Broadband Pay-TV Region I I II Telefónica III Broadband Fixed Mobile 2º 1º 1º Telmex Region II Region III Mobile Broadband Fixed Mobile 4º 1º 1º 4º Source: Company reports
107.
108. Appointment of chairman of Engineering & Network, Technology & Innovation and Product Offering committee
130. Strategic Review – Africa and other Several new campaigns were launched throughout the year to increase penetration and boost usage Africa Angola (Unitel) Promotions with roaming data Bonus campaigns to increase mobile data usage Implementation of a fibre backbone Namibia (MTC) New broadband brand launched in November (Netman) Handset campaign discounts/ Christmas specials New pricing plans “Tango zero” and “back to school” Christmas promotion Contemplating a car draw (BMW 116d) New wireline campaigns free calling on weekends and nights New TV channels bundle to increase market momentum Cape Verde (CVT) Campaigns to stimulate pre-paid top-ups Christmas promotion based on SMS bonuses for the main top-ups Celebration of the 100,000 customers with a handset promotion São Tomé (CST) ROW Timor (TT) Christmas promotion focused of pre-paid customers acquisition Promotion campaigns “TT Barato” with price reduction on the 2nd minute Promotion campaign with free on-net usage Macau (CTM) Push mobile data and voice subscription through pre-registration of income requests Campaigns to simulate the subscription and usage of services Rolled out the 100m fibre broadband upgrade
131. Strategic Review – Africa and other Solid revenue and EBITDA growth in international assets driven by marketing and commercial efforts EBITDA Proportional. Euro million Revenues Proportional. Euro million 0.9% 6.4% 224.1 222.0 2010 2009 2010 2009 Note: Proportional revenues and EBITDA were calculated by applying the direct equity stake of PT or via Africatel, where PT holds a 75% stake. The 2010 figures were adjusted in order to considerer constant exchange rates and exclude the impacts from changes in the consolidation perimeter and in certain regulatory and accounting issues.
133. Fixed Broadband Pay-TV Quarter Operational Review Traffic generating lines grew after seven years and Meo is also leading to broadband market share gains … and underpinning the turnaround of the wireline segment TV and broadband with solid growth … Residential customer base Thousand Net adds and Retail RGU’s net adds Thousand PSTN TV Fixed broadband 26 5 -14 -14 -15 -17 4Q10 3Q10 2Q10 1Q10 Market share percentage BB + pay-TV penetration in total residential accesses Percentage 48.6 30* 48* 47.3 45.7 44.2 4Q10 3Q10 2Q10 1Q10 4Q10 3Q10 2Q10 1Q10 4Q10 3Q10 2Q10 1Q10 Pay-TV Fixed BB * PT estimates Source: Operator reports
134. Quarter Operational Review Retail revenues of residential segment up more than 5% and EBITDA and cash flow trends are also improving Residential retail revenues showing healthy growth leading to… … solid resilience of wireline retail revenues Residential wireline retail revenues base 100 (index 100=4Q09) Retail revenue growth %. y.o.y 5.2% 3.9 2.0 1.2* 1.1 0.7* 0.4 0.4 0.2 -4.1 -6.1 -8.3 -8.6 3Q10 1Q10 3Q09 1Q09 3Q08 1Q08 4Q10 4Q09 Continued sequential improvement of EBITDA trends Lower capex notwithstanding FTTH coverage and continued customer growth Wireline capex Euro million EBITDA delta y.o.y Euro million -7.3% FY 4Q 3Q 2Q 1Q FY 4Q 3Q 2Q 1Q 4Q08 2Q08 4Q10 2Q10 4Q09 2Q09 2009 2010 * Adjusting for the change in the recognition of contract penalties
143. Lower capex as a result of convergence trends and synergies29.4 +3.8pp +18.0pp 43.7 43.6 24.2 39.9 11.4 4Q10 4Q09 4Q08 4Q10 4Q09 4Q08
144.
145. Other opex down 31.8% reflecting benefits of F-M mobile convergence
146. Total opex lower by Euro 15 million notwithstanding an increase of Euro 10 million in programming costs
147.
148. Quarter Financial Review Domestic performance impacted by intense competition in mobile in the youth segment but wireline recovery is robust and cash flow is stable Revenue performance driven by solid execution in wireline and international businesses EBITDA impacted by top-line at TMN and investment in customer growth in wireline Cash-flow is stable reflecting strong cost discipline while still investing in future-proof technology Revenues Euro million EBITDA Euro million EBITDA minus CAPEX Euro million 0.2% 3,742 3,733 -4.2% 1,557 1,492 -2.2% -1.0% 709 693 1,929 Wireline 1,948 -6.8% Wireline 800 745 221 Wireline 234 -8.6% -5.3% TMN 1,387 TMN TMN 1,518 Other Other 108 83 426 -20 -33 268 Other 2010 2009 2009 2010 2010 2009
149. Quarter Financial Review Capex intensity driven by FTTH and Meo customer growth Lower wireline capex following significant rollout of FTTH and higher efficiency of customer investments Wireline CAPEX and CAPEX to sales Euro million 29.0% 27.2% -1.9pp 565 524 Capex continues to be directed to FTTH and 3G and innovative services Other 377 343 Consolidated CAPEX and CAPEX to sales Euro million Customer -1.4pp 22.7% 21.3% 2010 2009 -5.9% 3G and 3.5G investments undertaken in 2008 and 2009 ensure wide coverage and quality of service 848 798 TMN CAPEX and CAPEX to sales Euro million 2010 2009 11.9% 9.6% -2.3pp -26.1% 180 133 2010 2009
152. Solid funding position with Euro 6.3bn of cash and facilities available of which Euro 3.7bn is earmarked for Oi transaction
153. Receivable of Euro 2bn from Telefonica still pendingNet Debt Euro Million Cost of debt Net Debt to EBITDA 2.5x 5.0% Reported 5,528 747 31 Dec 2009 3.6x 747 4.3% Ex-Vivo 4,829 1.4x 4.4% 2,100 31 Dec 2010 Proforma* 2.1x 5,568 * Including Vivo and Oi transaction
154. Quarter Financial Review Following the transfer of regulated pension plans, PT’s balance sheet risk profile has improved Salaries to suspended employees have an average maturity of 4 years and pensions of 13 years Unfunded pension obligations of Euro 0.7bn Unfunded obligations Euro million Change in gross unfunded obligations Euro million Discount rate: Euro 352 mn, o.w. Euro 262mn related to regulated pensions * Mortality table: Euro 100 mn, o.w. Euro 83 mn related to regulated pensions * Pensions and
healthcare oblig. 13 years duration 1 Jan 2010 1,467 MKT value of funds PRB cost 39 Net
actuarial
losses Unfunded pensions
and healthcare oblig. 4 years duration Curtailment 149 -35.4% Net
reimbursement Salaries to suspended
pre-retired empl. 26 Payments 161 Total gross
unfunded oblig. Setlement 1,022 Gross 949 After-tax
unfunded oblig. 711 31 Dec 2010 Net
after tax 711 *liabilities associated to regulated pension plans were transferred Caixa Geral de Aposentações
156. Exceptional DPS Maximum range Shareholder Remuneration Solid and predictable dividend policy offering a yield in 2011 of 15.8% PT is offering a solid, predictable and credible remuneration policy PT is already delivering on its commitments 1.575 1.300 1.000 0.650 0.752 0.717 0.683 0.650 0.710 0.690 0.670 0.650 0.575 Paid in year… 2012 2011 2010 2015 2014 2013 Dividend yield 15.8% 9.4% * Subject to Annual Shareholders’ Meeting approval Note: The exceptional cash dividend and the remuneration package proposal are subject to market conditions, PT’s financial condition, applicable law regarding the distribution of net income, including additional shareholder approvals, as applicable, and other factors considered relevant by the Board at the time.
157. For further information: Nuno Vieira Investor Relations Director +351 21 500 1701 nuno.t.vieira@telecom.pt www.telecom.pt
