Portugal Telecom Focuses Its Media and Internet Activities in New Subsidiary, PT Multimedia

Business Wire, July 16, 1999

LISBON, Portugal--(BUSINESS WIRE)--July 15, 1999--

Portugal Telecom (NYSE: PT; BVL: PTCO.IN), the Portuguese telecommunications company, today announced the creation of a subsidiary - PT Multimedia SGPS S.A. - to oversee PT's cable television, broadband Internet, electronic commerce and content activities, as well as PT's stake in Paginas Amarelas S.A., the Portuguese Yellow Pages company.

The creation of PT Multimedia is part of a wide-ranging restructuring of the PT Group initiated early this year. PT Multimedia will be one of four customer-oriented strategic business units of the Group, the other three business units being Wireline, Cellular, and International. PT Multimedia will undoubtedly bring operational and strategic focus to one of the highest growth areas of PT's business.

The four operating subsidiaries of PT Multimedia are:

- TV Cabo Portugal S.A. (TV Cabo) - the cable operator of PT which

will focus on developing pay television services, interactive

digital television, web TV and high-speed cable modem access to

the Internet;

- Telepac Comunicacoes Interactivas S.A. - the dial-up ISP business

of Portugal Telecom which will also be involved, from a strategic

view point, in the development of portal and Internet content;

- Paginas Amarelas S.A. - which supports advertising and

interactive content; and

- PT Conteudos - focusing on the production of Portuguese language

channels and premium programming for TV Cabo.

PT Multimedia will be the center of competence for media, interactive and Internet activities of the PT Group, thereby increasing the speed of product development and the time to market of new services.

PT Multimedia's operational autonomy will allow it to grow at a fast pace and adapt quickly to the demands of a rapidly changing environment of Internet and multimedia services.

PT Multimedia will have well-defined areas of focus:

- It will be residential-oriented, focusing on developing new

services for its customers;

- It will work in the narrow and broadband space providing Internet

services through dial-up telephone access and higher speed cable

modem access;

- It will be interactive, with the launch of services such as

video-on-demand, interactive digital television, web-TV, high

speed Internet and E-commerce; and finally

- PT Multimedia will take the lead in developing this business by

capitalizing on PT's existing customer base of over 4 million

people.

In developing its businesses, PT Multimedia has established strategic partnerships, notably the recent agreement with Microsoft in the interactive communications area. As per previous announcements, Portugal Telecom intends to undertake a partial Initial Public Offering of PT Multimedia later this year.

Company information:

TV Cabo Portugal S.A. is the leading pay-television operator in Portugal with a broadband Hybrid-Fibre-Coax cable network covering 1.9 million homes and with full national coverage through a digital satellite platform. By March 31, 1999 TV Cabo had 640,000 customers. Over the last three years, the company has seen annual growth of over 100% in subscriber numbers.

Telepac Comunicacoes Interactivas S.A. is the leading Portuguese ISP with a market share in the range of 75% and around 140,000 subscribers. It has a network with over 200 points of presence nation-wide thus allowing customers access to the Internet through a local call from anywhere in mainland Portugal. Last year the subscriber base grew by over 60%.

Paginas Amarelas S.A. is a joint venture with VNU in Holland. In Portugal, around 35% of registered companies advertise on directories, the highest penetration in Europe. The company also has a very successful Internet based application with over 400,000 registered companies.

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Portugal Telecom is listed on the Lisbon and New York Stock Exchanges and traded on London SEAQ International. Information may be accessed on the Reuters 2000 Service under the symbols PT and PTCO.IN, on Bloomberg and Quotron under the symbol PT. ----------------------------------------------------------------------