Portugal Telecom Reports First Quarter Results1 to March 31, 1999.

LISBON, PORTUGAL--(BUSINESS WIRE)--April 30, 1999--

Portugal Telecom (NYSE: PT; BVL: PTCO.IN), the Portuguese telecommunications company, today announced its first quarter results to March 31, 1999.

A. MANAGEMENT REMARKS

"1999 first quarter results were quite positive for Portugal Telecom.

Consolidated Operating Income reached PTE 36.2 billion (Euro(2) 181 million or $(3) 195 million), driven by strong traffic growth from the fixed network and by cost cutting efforts put in place by the parent company - Portugal Telecom, S.A..

Revenues from the cellular and the cable television businesses also had a very positive performance.

EBITDA and EBIT margins and Return on Sales have shown strong increases in comparison to the first quarter of 1998 (1Q98).

We have continued the corporate reorganization in order to face the challenges of a more liberalized and competitive market. To be stressed are the definition of new focus areas linked to the future development of multimedia, the establishment of strategic partnerships in business areas of high growth potential and new business opportunities, paving the way for full competition, the reinforcement on a market oriented perspective and on key customers.

Anticipating the strong competition coming ahead, Portugal Telecom has been adopting a plethora of initiatives aimed at increasing infrastructure usage, cutting costs and improving corporate efficiency, speeding up the development of the expanding businesses, namely cellular, TV Cabo and Multimedia, Wholesale and Internet, and consolidating the international investments, particularly in Brazil.

----- 1 Not audited information. 2 Euro 1 = PTE 200.482. 3 US dollar equivalents are provided for reader convenience at March

31,1999 noon buying rate of $1 = PTE 185.494. -----

With these measures we have seen in the first quarter a favorable development of the different businesses, which was reflected on a strong demand for Portugal Telecom services and, consequently, led to an increase of revenues and results.

The first quarter of 1999 (1Q99) contained several significant events for PT's future and for the reinforcement of its competitive position, among them:

1. Following the Brazilian Real devaluation, PT decided, on January

27, 1999, to prepay its BRL 2,180 million debt to BNDES (the

Brazilian Bank for Economic and Social Development). This early

repayment was made using the $1.265 billion of US-dollar

denominated Fixed Rate Notes issued by the Brazilian Government

and subscribed to by PT on October 2, 1998. This operation

resulted in a significant debt reduction.

2. On February 1, 1999, the new prices for fixed telephone services

came into effect, continuing PT's efforts to offer cost-related

tariffs. On January 1, 1999, TMN had cut by 20% call prices both

from PT's fixed network to TMN and from TMN to PT's fixed

network among other adjustments in TMN packages prices. These

initiatives contributed significantly to increase usage and to

reinforce PT's competitive position.

3. During the first quarter of 1999, PT established important

strategic partnerships that will certainly have a decisive

contribution on future business development:

(i) on February 5th PT reached an agreement with BRISA,

aiming at the joint management and development of a

telecommunications infrastructure;

(ii) on March 5th PT selected a consortium composed by IBM (IT

global leader), CGI (Canadian IT services group) and Case

(Portuguese IS company), aimed at increasing PT's

efficiency in the IT area and, simultaneously, enhancing

its capability to address new businesses, particularly

for SME and large accounts;

(iii) on March 31st, PT and Microsoft Corporation established a

strategic agreement to jointly develop interactive video

and data services. Microsoft subscribed to part of TV

Cabo's share capital increase that took place at the same

time.

4. As part of its Global Medium Term Program, on March 24th PT

launched its debut 10-year Eurobond transaction. The transaction

was a remarkable success, resulting in the increase of the

previously established amount from Euro 750 million to Euro

1,000 million. This was the first corporate issue for a

Portuguese company. The funds raised were received in April and

were used to refinance a substantial part of the short-term debt

related to the investments made in Brazil in 1998.

PT's performance underlines our commitment to reinforce our competitive position and to create shareholder value. We feel our efforts have been recognized. In the last Annual Shareholders Meeting, all Board proposals were approved."

B. RESULTS AND MARGINS

Consolidated Net Income for the first quarter of 1999 amounted to PTE 26.1 billion (Euro 130 million or $ 141 million). Earnings per Share (and ADS(4)) were PTE 137.5 (Euro 0.68 or $ 0.74), corresponding to a Return on Sales of 17.3%.

----------------------------------------------------------------------
                                       1Q99           1Q98   (DELTA) %
                                 ----------------  ----------
                                   USD     PTE        PTE
----------------------------------------------------------------------
Consolidated Results
 (in millions, except*
    EBITDA (1)                    504.2   93,519     64,185     45.7
    EBIT (2)                      341.6   63,365     36,040     75.8
    Net Income for the Period     140.8   26,125     19,009     37.4
    Earnings per Share*
      (USD/PTE)                    0.74    137.5      100.0     37.4
----------------------------------------------------------------------
Margins (%, except*)
    EBITDA Margin                           61.8       46.9 +14.9 p.p.
    EBIT Margin                             41.9       26.3 +15.6 p.p.
    Return on Sales                         17.3       13.9 + 3.4 p.p.
    EBITDA/Net Interest
     Expenses* (n. of times)                12.3       24.9       /
----------------------------------------------------------------------

(1) EBITDA = Net Income + Taxes + Minority Interests + Interest and Related Expenses + Depreciation and Amortization.

(2) EBIT = Net Income + Taxes + Minority Interests + Interest and Related Expenses.

Excluding the effects of investments made in Brazil last year, Consolidated Net Income in the first quarter would have reached PTE 35,955 million.

Also excluding the exceptional effect of the work force reduction expected in 1999 (PTE 3.6 billion more than in the 1Q98), as well as positive effect of the PTE 16.9 billion gain resulting from the capital increase of TV Cabo Portugal and subscribed by other entities, Consolidated Net Income would have increased by 19.5%, reaching PTE 22.7 billion (PTE 19 billion in 1Q98).

EBITDA amounted to PTE 93.5 billion (Euro 466 million or $ 504 million), which includes the gain of PTE 16.9 billion related to the share capital increase in TV Cabo Portugal. EBITDA Margin reached 61.8%, in comparison to 46.9% in 1Q98. Excluding the effect of the mentioned gain related to TV Cabo's capital increase, EBITDA margin would have reached 50.7%.

The evolution of the EBITDA/Interest Expenses ratio reflects the significant increase in indebtedness related to the investments made in Brazil last year, despite the strong cash flow generation in the quarter.

----- 4 Each ADS represents one ordinary share. -----

C. CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1999 AND 1998

                PORTUGAL TELECOM, S.A. AND SUBSIDIARIES
           (amounts in millions of Portuguese Escudos - PTE -
              and millions of US Dollars - USD, except (*))

----------------------------------------------------------------------
                                            1Q99               1Q98
                                 -------------------------------------
                                       USD         PTE          PTE
----------------------------------------------------------------------
Consolidated Operating
  Revenues, of which:                 815.2      151,206     136,980
    Services Rendered                 740.7      137,399     124,688
    Sales of Merchandise
     and Products                      41.6        7,714       6,340
    Telephone Directory                32.8        6,093       5,952
----------------------------------------------------------------------
Operating Costs and Expenses,
  of which:                           619.9      114,979     101,585
----------------------------------------------------------------------
    Wages, Salaries                   139.1       25,794      25,783
    Post-retirement Benefits           62.0       11,499       8,201
    Depreciation and Amortization     162.6       30,154      28,145
    Other General and Administrative   91.8       17,031      15,546
    Costs of Telecommunications        45.0        8,355       7,480
    Costs of Products Sold             50.9        9,436       6,077
    Marketing and Publicity            16.0        2,964       2,484
    Provisions for Doubtful
     Receivables, Inventories
     and Other                         14.6        2,707       2,054
    Others                             37.9        7,039       5,815
----------------------------------------------------------------------
Operating Income                      195.3       36,227      35,395
----------------------------------------------------------------------
Other Expenses (Income),
  net, of which:                      (19.3)      (3,576)      3,422
----------------------------------------------------------------------
    Interest and Related Expenses     217.0       23,562       4,067
    Interest and Related Income       (67.5)     (12,521)     (1,317)
    Losses on Sales and Disposals
     of Fixed Assets, net              (0.9)        (160)      1,405
    Extraordinary Items               (91.2)     (16,925)          0
    Others                             13.3        2,468        (733)
----------------------------------------------------------------------
Income Before Income Taxes            214.6       39,803      31,973
Provision for Income Taxes            (72.9)     (13,524)    (12,741)
Loss/(Income) Applicable to
 Minority Interests                    (0.8)        (154)       (223)
----------------------------------------------------------------------
Consolidated Net Income               140.8       26,125      19,009
----------------------------------------------------------------------
Earnings per Share(*) (USD/PTE)        0.74        137.5         100
----------------------------------------------------------------------

Consolidated Operating Revenues for the three-month period ended March 31, 1999 totaled PTE 151.2 billion (Euro 754.2 million or $ 815.2 million), representing an increase of 10.4% over 1Q98.

The significant increase registered on Sales of Merchandise and Products (+21.7%) reflects the growth of TMN's sales, which amounted to PTE 4.7 billion on the first quarter of the year, resulting in a strong increase on Cost of Products Sold.

D.  CONSOLIDATED OPERATING REVENUES

                  CONSOLIDATED OPERATING REVENUES (1)
           (amounts in millions of Portuguese Escudos - PTE -
                   and millions of US Dollars - USD)

---------------------------------------------------------------------
     BUSINESSES
                                       1Q99          1Q98    (DELTA) %
                                  --------------   ---------
                                    USD     PTE       PTE
----------------------------------------------------------------------
1. DOMESTIC BUSINESSES             756.3  140,288   132,308      6.0
1.1.  Wireline Businesses,
       of which:                   564.3  104,679   105,652     (0.9)
      Fixed Telephone Services (2) 431.0   79,954    83,465     (4.2)
      Wholesale (3)                 41.1    7,633     6,326     20.7
      Data and Integrated
       Solutions (4)                39.0    7,841     6,667     17.6
      Directories                   32.8    6,093     5,952      2.4
      Sales and Other Revenues      17.0    3,158     3,242     (2.6)
1.2. Cellular Business, of which:  157.0   29,128    22,755     28.0
      Services Rendered            131.7   24,435    18,784     30.1
      Sales                         25.3    4,693     3,971     18.2
1.3. Cable Television/Multimedia    33.6    6,226     3,702     68.2
1.4. Other Businesses                1.4      255       199     28.1
----------------------------------------------------------------------
2. INTERNATIONAL ACTIVITIES         58.9   10,918     4,672    133.7
2.1. Brazil (5)                     48.5    8,998     3,762    139.2
2.2. Other Countries (6)            10.4    1,920       910    111.0
----------------------------------------------------------------------
TOTAL                              815.2  151,206   136,980     10.4
----------------------------------------------------------------------

(1) Does not include intra-group transactions. (2) Does not include interconnection traffic. (3) Includes interconnection traffic, leased lines to telecommunication operators and telecast. (4) Includes data communications, leased lines to end customers and Internet. (5) Includes Mobitel and, in 1Q99, Telesp Celular (10.02% economic interest). (6) In 1Q1999, figure does not include Guine Telecom and does include Cabo Verde Telecom.

In the domestic market an enlarged portfolio of services and products together with a high quality and competitive prices, allowed a strong expansion of the fast growing businesses, namely the cellular business, the cable TV/multimedia and the internet service, the latter gaining importance in the group businesses. The fixed network businesses also performed well, with a significant increase in these services. In the last twelve months, since March 1998, the customer base rose in excess of 1 million clients.

The traffic originated in the fixed network, stimulated by new services and products, like voice mail, call forwarding and call waiting, as well as by the adoption of new prices and the cost benefit relation of the fixed network, posted a very favorable evolution:

-- Total traffic from the fixed line, in minutes, grew 16.7% in 1Q99

compared to 1Q98. Internet traffic showed a tremendous fourfold

growth, representing 15% of the total traffic.

-- The number of conversation minutes by access grew 13.4% when

compared to the correspondent period in 1998, reaching 9.3

minutes per access per day (8.2 minutes in 1Q98).

Fixed Telephone Services

Consolidated revenues from Fixed Telephone Services showed a decrease in the first quarter of 1999 when compared to the corresponding period of 1998, representing 52.9% of total consolidated operating revenues. Turnover growth continued to be affected by price reductions put in place in the first quarter of 1999, namely in National Long Distance (-10.8%) and International calls (-16.6%), compared to 1Q98.

Demand for ISDN lines remained high (a 43.9% increase in the number of lines over the corresponding 1998 period), representing by now more than 8.5% of total fixed main lines.

It is worthwhile to mention the following:

-- The improvement of the quality of service when compared to the

corresponding period of 1998, with the level of faults per 100

accesses showing a 48% decrease, billing complaints per 1,000

invoices showing a decrease of 43% and the digitalization rate

reaching 98.2% (89.2% an year early).

-- The strong increase in services like call waiting, call

forwarding and voice mail, having sales increased, respectively,

270%, 305% and 1,208% from 1Q98 to 1Q99.

-- The launching of the service "PT First Time" and the launching

and promotion of new services targeted to corporate customers,

like the "Corporate Voice Mail" and the "Numero Unico (0707)".

Wholesale

The increase registered in wholesale consolidated revenues (+20.7% in comparison to 1Q98) was mainly due to the growth in consolidated revenues from leased lines to other operators (+45%), despite a 19.1% average price reduction in the last 12 months.

Data and Integrated Solutions

Internet traffic and leased lines to end-users were the primary factors in turnover growth registered in this segment (+17.6% compared to 1Q98). In fact, Internet revenues alone increased by around 121%.

Domestic Cellular Business

Consolidated revenues from cellular business reached PTE 29.1 billion (Euro 145 million or $ 157 million), a 28.0% increase compared to 1Q98.

By March 31, 1999, TMN reached 1,571 thousand subscribers, an 80% increase over 1Q98. TMN's net adds in the first quarter totaled 145 thousand (110 thousand in 1Q98).

Cable Television/Multimedia

In the first quarter of 1999, around 42 thousand new subscribers were added to TV Cabo's customer base. At March 31, 1999, TV Cabo's network covered around 1,696 thousand homes and the total number of customers (of cable and DTH) reached approximately 640 thousand, in comparison to 436 thousand in 1Q98, a rise of 47%.

Average revenue per subscriber in the first three months of 1999 reached approximately PTE 3,300, compared to PTE 3,000 in 1Q98, an 8.5% increase, reflecting the launching of premium services. On March 31, 1999, premium penetration in cable stood at 17.6% compared with 14.8% at year-end 1998.

As previously mentioned, Microsoft and other existing shareholders subscribed to a second TV Cabo share capital increase. Microsoft invested PTE 7.2 billion ($ 38.6 million) in this operation, and established a strategic agreement with PT aimed at the joint development of interactive video and data services, namely broadband Internet access and interactive television, to be launched later this year.

International Activities

Following PT's internationalization process, which culminated in the acquisition of important stakes in the Brazilian market, PT's consolidated revenues from international activities more than doubled in the first quarter of 1999 over 1Q98, reaching PTE 10.9 billion, a 133.7% increase, representing 7.2% of total consolidated operating revenues.

Telesp Celular, the largest PT's company in international markets, was responsible for 63.1% of total consolidated revenues from international activities, and 4.6% of total consolidated operating revenues.

Telesp Celular net adds reached 607 thousand in the twelve month period ended March 31, 1999, of which 152 thousand in the first quarter of 1999.

On April 29, 1999, Telesp Celular announced the launch of "Baby", the first pre-paid service available to cellular customers in Sao Paulo. "We believe that "Baby" will strongly contribute to the company's aggressive growth targets and strengthen its brand name, taking advantage of our successful experience in our domestic market". TMN is the worldwide leader in pre-paid services.

E. CONSOLIDATED COSTS

In the first quarter of 1999, Consolidated Operating Costs and Expenses totaled PTE 115.0 billion (Euro 573.5 million or $ 619.9 million) compared with PTE 101.6 billion in the first quarter 1998.

Wages and Salaries remained at the same level as in the corresponding period of 1998, PTE 25.8 billion (Euro 129 million or $ 139 million), representing 17% of consolidated operating revenues, down from 19% in the previous year.

The increase registered in Post-retirement Benefits reflects staff reductions forecasted for 1999, in which approximately 1,200 employees are expected to opt for early and pre-retirements plans. Thus post-retirement benefits show an increase of PTE 3.3 billion over the first quarter 1998.

Extraordinary Items reflect the PTE 16.9 billion (Euro 84 million or $ 91 million) gain from the share capital increase of TV Cabo Portugal which was entirely subscribed by third parties, resulting in a corresponding reduction of Portugal Telecom's stake from 94% to 87.45%. Brazil's investment impact, totaling PTE 9.9 billion, is reflected both on Interest and Related Expenses and Equity in Earnings of Affiliated Companies. This include related loan interests, equity accounting of stakes in CRT and Telesp (Fixed) and the amortization of goodwill concerning these two companies as well as the goodwill amortization of Telesp Celular.

Effective Tax Rate reached 34.0% which compares to 39.8% in the first quarter 1998.

F.                 CONSOLIDATED BALANCE SHEETS AS OF
                 MARCH 31, 1999 AND DECEMBER 31, 1998

                  PORTUGAL TELECOM, S.A. AND SUBSIDIARIES
               (Amounts stated in millions of Portuguese
              Escudos - PTE and millions of US Dollars - USD)

----------------------------------------------------------------------
                                March 31, 1999           Dec. 31, 98
                         ---------------------------------------------
                             USD             PTE            PTE
----------------------------------------------------------------------
ASSETS
Current Assets             1,239.1         229,846        434,400
Investments, net           1,045.4         193,924        262,065
Fixed Assets, net          3,907.9         724,884        737,178
Intangible Assets, net     1,449.0         268,773        348,288
Other Non-Current
 Assets, net                  69.1          12,816          9,306
Intangible Asset-Post
  Retirement Benefits        363.0          67,342         68,720
----------------------------------------------------------------------
TOTAL ASSETS               8,073.5       1,497,585      1,859,957
----------------------------------------------------------------------
LIABILITIES                5,943.3       1,102,454      1,419,849
Current Liabilities        3,682.7         683,110      1,028,393
Medium and Long-Term Debt  1,081.1         200,531        203,880
Accrued Post Retirement
  Liability                  927.3         172,010        166,356
Deferred Income - Post
 Retirement Benefits          39.3           7,283          7,800
Other Non-Current
 Liabilities                 213.1          39,520         13,420
MINORITY INTERESTS            46.3           8,593          6,016
EQUITY                     2,083.8         386,538        434,092
----------------------------------------------------------------------
TOTAL LIABILITIES AND
  SHAREHOLDERS EQUITY      8,073.5       1,497,585      1,859,957
----------------------------------------------------------------------

The pre-payment of the debt to BNDES resulted in a decrease in Current Assets, as well as in Current Liabilities.

The decrease registered in Investments and Intangible Assets reflects the effect of the devaluation of the Brazilian Real occurred in the first quarter of 1999 and which has observed a positive performance in the last weeks. This negative effect was partially offset by the decrease in underlying Liabilities, resulting in a net reduction of approximately PTE 76 billion (Euro 38 million or $ 410 million) in Equity.

G. INVESTMENT

Capital expenditure in the wireline businesses totaled PTE 13.1 billion (Euro 65 million; $ 71 million), a 16.1% decrease from the corresponding period of 1998. Considering fixed telephone services, the decrease reached 18.1%. Capital expenditure was mainly devoted to improving and expanding data transmission capabilities, as well as improving billing and customer care information systems.

       CAPITAL EXPENDITURE (TANGIBLE AND INTANGIBLE ASSETS) (1)
       (amounts stated in millions of Portuguese Escudos - PTE)

----------------------------------------------------------------------
                                      1Q99         1Q98       (DELTA)%
----------------------------------------------------------------------
DOMESTIC BUSINESSES                  26,723       23,379        14.3
   Wireline Businesses,
    of which:                        13,127       15,649       (16.1)
      Fixed Telephone Services       12,361       15,100       (18.1)
           Domestic                  12,068       13,176        (8.4)
           International                293        1,924       (84.8)
      Data and Integrated Solutions     728          530        37.3
      Other Wireline Businesses          38           18       108.7
   Cellular Business                 11,843        4,521       162.0
   Multimedia/Cable TV Businesses     1,683        3,167       (46.8)
   Other Businesses                      70           43        62.8
INTERNATIONAL ACTIVITIES              1,664          482       245.4
   Brazil                             1,435          268       435.1
   Other Countries                      229          213         7.1
----------------------------------------------------------------------
TOTAL                                28,387       23,861        19.0
----------------------------------------------------------------------
 (1) Not considering variation in advances to suppliers.


H.        INDEBTEDNESS AS OF MARCH 31, 1999 AND DECEMBER 31, 1998

                                DEBT STRUCTURE
            (amounts in million of Portuguese Escudos -PTE-
                      and million of US Dollars-USD)

----------------------------------------------------------------------
                                March 31, 1999  Dec. 31, 98  (DELTA) %
                            -----------------------------------
                                  USD      PTE       PTE
----------------------------------------------------------------------
Domestic Indebtedness,
 of which:                       351.6    65,211    63,400       2.9
      Bonds                      323.5    60,000    60,000       0.0
      Bank Loans                  28.1     5,211     3,400      53.3
Foreign Indebtedness,
 of which:                     3,296.6   611,494   920,584     (33.6)
      Bank Loans               3,225.6   598,336   907,389     (34.1)
      Other Loans                 70.9    13,158    13,195      (0.3)
Total Indebtedness             3,648.1   676,705   983,983     (31.2)
----------------------------------------------------------------------
Cash and Short
 Term-Investments                288.0    53,429   254,122     (79.0)
----------------------------------------------------------------------
Net Debt                       3,360.1   623,276   729,861     (14.6)
----------------------------------------------------------------------

The decrease in Total Indebtedness during the first quarter of 1999 is due to the early payment of the debt to BNDES using the Fixed Rate Notes issued by the Brazilian Government, as previously mentioned. As a result, Cash and Short Term Investments also decreased.

As of March 31, 1999, the gearing ratio - net debt/(net debt + equity) - was 61.7% (62.7% as of December 31, 1998).

As previously mentioned, Portugal Telecom successfully concluded an Euro 1 billion 10 year note issue. The interest rate on the loan is 4.625% which, together with the general decrease in interest rates, will have a positive impact on the average cost of debt, which was 5.70% in the first quarter of 1999, down from 6.73% in 1998 full year.

I. TRANSITION TO THE EURO AND YEAR 2000

Since 1997, Portugal Telecom has been preparing for the introduction of the Euro and the transition to the year 2000.

Work done on Euro adaptation processes for information systems and employee training activities has enabled PT to accept payment in Euros since January 1999 as well as implementing a dual price system on its commercial network. It is also possible to deal with suppliers in Euros.

Euro use will be progressively broadened between 1999 and January 1, 2002. Tariffs will be adjusted for future conversion, billing will be issued in Euros for interested customers and there will be a re-denomination of Portugal Telecom's share capital.

After January 1, 2002 PT will adopt the Euro as its main currency, maintaining the dual price system in its commercial network, containing information in Portuguese escudos on bills. After June 30, 2002, PT will no longer use Portuguese escudos and all monetary references will be in Euros.

PT's year 2000 transition has several phases. By the end of the first quarter of 1999, evaluation and planning year 2000 compliance of our products and services, as well as that of our equipment suppliers and major customers was completed. Certification, re-developing, testing and installing internal used software as well as testing third party equipment and products for year 2000 compliance will be concluded by the end of the first half of 1999. Monitoring and additional testing for our product and services and for products and services provided by third parties as well as internal and external communication will be concluded within the fourth quarter 1999.

Our evaluation has shown that the assets to be discontinued due to the transition to the year 2000 have already exceeded their useful life and therefore have a null value in net terms.

Actions taken in respect of the year 2000 transition involved a cost of approximately PTE 460 million in 1998. PT expects to spend around PTE 3.06 billion on the completion of all year 2000 activities scheduled for 1999, of which PTE 215.8 million was spent during the first quarter.

J. SUBSEQUENT EVENTS

The consortium led by Portugal Telecom, Telefonica, the Moroccan group BMCE - Banque Marrocaine du Commerce Exterieur and Afriquia (a local telecom equipment distributor) was pre-qualified, along with six other bidders, to take part in the bidding for a second GSM mobile telephone license. Currently in Morocco, there is only one mobile telephone service provider and its penetration rate is approximately 0.5%.

---------------------------------------------------------------------- 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. ----------------------------------------------------------------------

-- Unaudited Statistical Information as of March 31, 1999, 1998 and

1997

                   UNAUDITED STATISTICAL INFORMATION
                  AS OF MARCH 31, 1999, 1998 AND 1997

----------------------------------------------------------------------
                                       1Q99          1Q98        1Q97
----------------------------------------------------------------------
Wireline Business
    Fixed Main Lines (`000) (1)       4,140        4,050       3,871
    Main Lines per 100 Inhabitants     41.5         40.7        38.9
    Total Traffic (minutes, million)  3,471        2,974       2,871
    Public Pay Phones (`000)           41.2         37.8        35.1
    Digitalization of Local
     Switching (%)                     98.2         89.2        80.4
    Leased Lines (`000), of which:     48.7         39.7        35.7
    - Digital (%)                        40           27          19
    Internet accesses (`000)            132           81          43
Cellular Business (TMN)
    Cellular Customers in Service
     (`000)                         1,570.6        872.1       370.8
    Quarter Net Adds (`000)           145.0        110.4        38.6
Cable TV/Multimedia Businesses
    Homes Passed (`000)               1,696        1,438       1,033
    Customers (`000), of which:         639          436         200
    - Customers with Premium
      Channels (`000)                   143            /           /
    - DTH Customers (`000)               39            /           /
International Businesses
    Telesp Celular
    - Cellular Telephones
      in Service (`000)               1,956        1,349        n.a.
Employees
    Employees  engaged  in  Fixed
    and  Cellular  Telephone         18,002       18,652      19,226
Services in Portugal
    Accesses (Fixed+Cellular)
    per Employee                        327          272         227
    PT Employees                     21,326       21,655      21,764
Total Investment (PTE million)       29,453       55,175      14,243
--------------------------------------------------------------------
(1) Does not include leased lines or data accesses.