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15 November 2010

Moving a step closer to next generation mobile services

Luis Alveirinho

Portugal Telecom

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Important notice

This release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of1995. Such forward-looking statements are not statements of historical fact, and reflect goals of the company'smanagement.

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 unknownrisks and uncertainties. Accordingly, the results of operations of the company to be achieved may be different from thecompany'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 updatethem in light of new information or future developments.

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One PC per

home

One data

communicating

device per

person

One data

communicating

device per

“thing”

Evolving times that will lead to huge data growth and BB4all

One mobile

phone per

person

One PC per

person

Multiple

mobile

phones per

person

Mobility

One fixed

phone per

house

Fixed and

Mobile

Penetration

One PC per

desk

Multiple data

communicating

devices per

person

Trend

Broadband and Convergence

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Mobile Traffic Data Forecast

TB per month. Thousands

CAGR*+125%

2013

2,184

1,032

1,152

2012

1,076

592

484

2011

482

288

194

2010

207

13077

2009

85

55 30

+149%

Laptops

Handsets

+108%

* Compound Annual Growth Rate

Source: CISCO 2009 Report

CAGR*

WORLD

New needs will drive exponential mobile data traffic growth

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7,36,9

6,3

5,75,3

4,9

3,9

2

0,8

In Portugal TMN has lead the development of the mobile

market through two waves

MIMO:

1st mobile

prepaid in the

world

First 3G phone

launched

Mobile data

democra-

tization

1st wave of growth: Voice 2nd: wave of growth: Data

Launch of no-

frills brand

New brand

Innovative

services

Smartphones

Source: Company Reports; Press Releases1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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TMN mobile broadband success brought Portugal to the

forefront in Europe

Second highest penetration of broadband in Europe

Mobile broadband penetration rate - dedicated

data service cards/modems/keysJanuary 2010

* “INFORMAÇÃO ESTATÍSTICA DO SERVIÇO DE ACESSO À INTERNET 2.º TRIMESTRE DE 2010” ANACOM,

Broadband users in Portugal

Millions

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1Mobile*

Wireline*

2T1T4T3T2T1T4T3T2T1T 3T 4T

2007 2008 2009

More broadband users in mobile platform

17.0

16.1

15.1

11.9

10.7

10.5

6.8

6.7

4.0

3.8

3.3

1.72010

2T1T

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Internet data traffic growth in Portugal

* “INFORMAÇÃO ESTATÍSTICA DO SERVIÇO DE ACESSO À INTERNET 2 º TRIMESTRE DE 2010” ANACOM,

Wireline broadband represents 95% of total internet traffic in Portugal

4954

67

87

98103

116

132 135

3.1 3.5 3.8 4.1 4.2 4.5 5.4 6.7 7.2

0

20

40

60

80

100

120

140

160

2Q08 3Q08 4Q08 1Q08 2Q09 3Q09 4Q09 1Q10 2Q10

Wireline

Mobile

Broadband internet data traffic

PB per Quarter

TB = Terabyte (1000 GB)

PB = Petabyte (1000 TB)

EB = Exabyte (1000 PB)

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LTE will increase data usage on the mobile world closing

some gaps against fixed networks through increased

efficiency and performance

Voice

Internet

Mobile TV

Music

3D TV

Kbps

40

Mbps

15010 20170 384 60

2G (GSM)

3G (UMTS)

LTE

HDTV VoD Remote

AppsHealth

Multiplayer

Gaming

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Although spectrum is not yet available, TMN showcased

services over LTE in collaboration with equipment suppliers

Live TV

LTE connected car Remote classroom

Online gaming 3D-TV

Remote Healthcare

•1st Live TV via LTE in the world

•Remote Healthcare demo

•PT Inovação Medigraf , used in

emergency vehicles

•Remote classroom

•Contents provided by PT

Inovação

•Toyota Prius with LTE

•Videos, file download

•Players interacting

through the LTE

network.

•High definition 3D

television and

telepresence

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EU Regulatory Context

Digital Agenda

• By 2013 basic broadband coverage for

all EU citizens .

• By 2020, fast broadband coverage at

30 Megabits per second available to all

EU citizens, with at least half European

households subscribing to broadband

access at 100 Megabits per second.

Radio Spectrum Policy Programme

• by 2012 EU countries should complete

the process of giving licences to

operators to use spectrum bands which

have already been technically

harmonised at EU level for the use of

wireless broadband, (the 900/1800 MHz

bands, the 2.6 GHz band and the 3.4 –

3.8 GHz band).

• by 1st January 2013 EU countries are

asked to open up the 800 MHz band to

wireless broadband, while foreseeing

possible derogations until 2015 in

exceptional cases.

Ensure that sufficient spectrum is

made available for wireless broadband

Wireless broadband is essential to

deliver the targets of Digital Agenda

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Ensure that sufficient spectrum is made available for

wireless broadband

Spectrum Bands for LTE

2.6 GHz

Digital Dividend

Refarming

Spectrum most likely to be used for LTE

Europe/Americas• 800 MHz (EU) / 700 MHZ (Americas)

• 1.8/1.9 GHz and 2.1GHz (1.7 or 1.9 uplink)

• 2.6GHz Global

2.6 GHz Global • Global band (2x70MHz for FDD and 50MHz for TDD)

• Higher frequencies used for extra capacity in dense urban

areas

Digital Dividend• 700/800 MHz WRC07 outcome

• Lower frequencies used for coverage in rural areas and

indoor (ex: 800MHz in EU)

Refarming existing bands• Requires at least 2 x 10 MHz for an efficient mobile

broadband service

• Most likely refarming bands are 1.8/1.9 GHz and 2.1GHz

(1.7 or 1.9 uplink)

700/800MHz 2.6GHz

Coverage Capacity

700, 850, 900MHz, 1.8, 1.9, 2.1, 2.6GHz

800MHz, 900MHz,1.8, 2.1, 2.6GHz

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Available Spectrum for advanced mobile broadband

services in Portugal

470 MHz -

862 MHz

1900-1980 MHz

2110-2170 MHz

2.1 GHz470 M

Hz

862 M

Hz

WRC-07

1800 MHz

800

880 - 915 MHz

925 - 960 MHz

1710 – 1785 MHz

1805 – 1880 MHz

2.6 GHz900 MHz

790 M

Hz

DD2?DVB-H

470MHz -

646 MHz TD

D

TD

D

2010-2025 MHz

TD

D

E-GSM

FDD FDDTDD

800 MHz

2 x 30 MHz

900 MHz

2 x 10MHz

1800 MHz

2 x 30MHz

2.1 GHz

25 MHz (TDD)

2.6 GHz

2 x 70 MHz + 50MHz

Available Spectrum

New Spectrum Free Spectrum

TDD

Uplink (70MHz) Downlink (70MHz)TDD (50MHz)

Uplink (30MHz)Downlink (30MHz)

TMN Sonaecom Vodafone

TDD

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Awarding of new Spectrum for LTE - Portugal

Awarding of new Spectrum

for electronic communication services

4T10 1T11 2T11 3T11 4T11

(Start)

Operators need spectrum for broadband

services

• LTE frequencies: 800/900/1800 MHz and 2.1/2.6 GHz

• 800 MHz and 2,6 GHz with main interest from operators

– 800 MHz band to be free as a result from Digital Dividend

– Probable spectrum usage rights awarding via auction vs beauty contest

• Refarming existing bands• 900/1800 MHz refarming allows

systems included in Dec 2009/766/EC annex 1.

• ANACOM - Awards under consideration in Portugal:

• 2.6GHz, 900/1800MHz, 2.1 GHz, 800MHz

• Flexibility in the use of spectrum

ANACOM: Plano Estratégico 2011 - 2013

The Portuguese national regulator has allowed PT to perform technical trials of LTE in the 2.6GHz

frequency band.

LE

(Finish)

Multiband award first half 2011

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The Digital Dividend - Portugal

• ANACOM defined Analogue Switch Off process:

• Switch-off pilots in 2011

• Coastal areas on 12 January 2012.

• Azores and Madeira on 22 March 2012.

• Rest of the country on 26 April 2012.

Analogue Digital Free

1Mainland Portugal – “ANACOM - Projecto de Decisão Designação da sub-

faixa 790 – 862 MHz para Serviços de Comunicações Electrónicas”

Analogue Switch OffHow much spectrum should mobile operators secure

from broadcasters under the digital dividend?

In the short term• 2x10MHz for an efficient mobile

broadband service• 790-862MHz sub-band for broadband

uses• Aligned with multiband spectrum awards• Coordination with Spain and Morocco

In the long term• Additional spectrum to take advantage of

the full potential of LTE technology.–Digital dividend frequencies are

critical due to their propagationcharacteristics.

–The analogue TV switch-off providesa privileged opportunity to addressthese needs.

Band allocated to broadcasting in Portugal1

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In short…

Mobile data traffic is growing with an accelerated

pace and wireless broadband is essential to

deliver the targets of Digital Agenda

LTE will be the (next) ultimate enabler of next-generation

mobile data services through increased efficiency and

performance, and is expected by all to be an important

complementary solution to address broadband for all

initiatives

Member States and all players must work to ensure that

sufficient harmonized spectrum is made available for

wireless broadband, with special focus on spectrum re-

organisation to take advantage of the technology

evolutions