Portugal's meo TV adds 76k subscribers in 4Q09

LISBON — Portugal Telecom (Lisbon: PTC; NYSE: PT) announced today its full year results for the year ended 31 December 2009.

Wireline

In 4Q09 retail net additions reached 109 thousand, as a result of the significant growth of the pay-TV service, which accounted for 76 thousand net additions, bringing the total pay-TV customers to 581 thousand and showing a sequential acceleration in net additions.

The continued success of the Meo pay-TV offer is underpinning the performance of the wireline segment even though it was only launched on a nationwide basis in April 2008 and is yet to reach critical mass.

Meo has further reinforced its position as the most innovative pay-TV offer in the Portuguese market by launching various features to differentiate its offer, including: (1) real video-on-demand (VoD) with DVD-like features and a catalogue of more than 2,000 movies including high definition (“HD”); (2) catch-up TV; (3) electronic programming guide accessible remotely through the internet and the mobile phone; (4) TV channel recording, which can be remotely programmed through the internet or through the mobile phone; (5) gaming, karaoke and several interactive content and service areas; (6) access to personal photo folders, and (7) customised offers for kids, continuously enhanced with new contents. In addition, PT has also launched Meo@PC, allowing customers to have online access to Meo’s pay-TV service through the PC, strengthening the mobility and convergence attributes of Meo and further enhancing its differentiation in the pay-TV market.

Meo provides access to a comprehensive content offering, with more than 120 TV channels and over 2,000 VoD titles. The VoD offer, which includes blockbusters from five Hollywood studios is a key differentiating feature of the service as more than 50% of Meo’s IPTV customers have already used VoD on a paid basis (+11.2pp, as compared to 4Q08), consuming on average 2.5 movies per month. In 4Q09, as part of the Christmas campaign and focusing on increasing VoD usage, PT launched a Gift Voucher with a cover pricing of Euro 20 to use in VoD at a Euro 15 price. PT has been continuously strengthening its Meo offer with new features and content, namely through the development of partnerships with key content producers and suppliers.

On 1 January 2010, PT launched the FOX Life channel, available through IPTV and Satellite, as announced on 15 October. On 18 December 2009, PT also reinforced its offer to the youth segment, launching an exclusive new channel dedicated to teenagers, SIC K, in a partnership with free-to-air channel SIC. Additionally, in December 2009, PT also reinforced its VoD offer with exclusive Portuguese musical theatre content.

Domestic Mobile

In 2009, TMN invested significantly in the differentiation of its portfolio of handsets and services offered. TMN makes available to its customers data and value added services such as: (1) “internetnotelemóvel”, an internet access service and an innovative portal, developed exclusively for TMN, enabling internet access on mobile phones in any place and at any time with prices starting at Euro 5 per month; (2) “musicbox”, the first unlimited music download service for both mobile handsets and PC’s with prices starting at Euro 1.99 per week; (3) “meo mobile”, a mobile TV service, made available through the Meo brand, available everywhere with access to 38 channels including live content with prices starting at Euro 0.91 per day; (4) “App Store”, a mobile application store with hundreds of applications, both free and paid, and with a wide range of areas of interest, namely sports, news, travel, etc; (5) “pond”, an online aggregator of media and social networking applications with three main areas: user generated content like photos and videos in a partnership with PT’s Sapo web portal, Flickr, Picasa, Youtube; social networking, namely Facebook, and blogging, through Twitter, Sapo Blogs and Blogger, and (6) MMS Face Fun, an exclusive and innovative service that allows customers to transform their pictures by merging it with another picture.

Operating Data – meo TV customers (k):

4Q08  1Q09  2Q09  3Q09  4Q09
----  ----  ----  ----  ----
 312   384   443   505   581
 101    72    59    62    76

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