Telefonica, Portugal Telecom and Iberdrola Prepay BRL 7 Billion Debt to the Brazilian Government

Business Wire, Jan 28, 1999

SAO PAULO, Brazil--(BUSINESS WIRE)--Jan. 28, 1999--Telefonica Internacional (TISA), Portugal Telecom (PT) and Iberdrola, partners in the main winning consortia in the Brazilian Telebras system auction, have jointly decided to prepay BRL 7 billion in loans related to the acquisition of the companies privatized in that auction. This debt had been scheduled to be repaid in two equal installments on August 4, 1999 and August 4, 2000.

The decision to prepay these debts underscores the confidence that Telefonica, Portugal Telecom and Iberdrola have in the future of the Brazilian economy in general, and in its telecommunications sector in particular. This action results in the immediate conversion of the US dollar-denominated Fixed Rate Notes issued by BNDES (the Brazilian Bank for Economic and Social Development) and subscribed by those companies aiming at the future repayment of the mentioned financing.

The partners' decision is a vote of confidence in Brazil and reflects the foreign investors perception that, following the measures recently taken by the Brazilian authorities, the country's currency situation is on its way to stabilization.

Portugal Telecom, privatized in 1995, is the principal telecommunications provider offering local, domestic long distance and international telephone service throughout Portugal. Additionally, PT and its subsidiaries, the Group, offer domestic mobile services, leased lines, data communications, Internet access and related services, cable television, transmission of broadcasting signals, telex and a variety of other telecommunication services. A secondary offering occurred in June 1996, and a third offering took place in October 1997. Portugal Telecom is listed on the Lisbon and New York Stock Exchanges and traded on London SEAQ International. Information may be accessed on Bloomberg under the symbol PT, on the Reuters 2000 Service under the symbol PT.N and on Quotron under the symbol PT.