ZON announces Full Year 2007 Consolidated Results

LISBON, Portugal — The following report presents a review of key financial and operating highlights for the fiscal year ended 2007, however with specific focus on events in 4Q07.

The last quarter of 2007 was excellent for ZON Multimedia in terms of operational performance with Pay TV subscribers, Broadband and Voice subscribers posting large increases, representing the best quarter ever in terms of RGU growth in the last 3 years.

Key Operational Highlights ('000)           4Q06  4Q07   y.o.y.  2006  2007   y.o.y.

Basic Subscribers Net Additions(1,2)          29    26  (10.6%)     1    67     n.a.
Digital Extended Basic Net Additions          48    26  (46.8%)   161   112  (30.5%)

(1) These figures are related to the total number of Pay-TV basic customers, including the cable and satellite platforms. ZON Multimedia offers several basic services, based on different technologies, directed to different market segments (residential, real estate and hotels), with a distinct geographical scope (mainland Portugal and the Azores and Madeira islands) and with a variable number of channels;
(2) These figures include products in temporary promotions, such as “Try and Buy” promotions

Pay TV

Pay TV subscribers reached 1.547 millions in 2007, with net additions of 26 thousand in 4Q07. This solid performance reflects a very strong quarter in terms of gross adds on the back of a very attractive content offer and a more comprehensive triple play offer after the launch of Voice services.

ZON significantly broadened the range and quality of channels included in its main offers during 2007. A number of new channels were launched during the year: (i) FX and Fox crime on TV Cabo’s “Funtastic Life” digital offer in September; (ii) 10 additional international generalist and news channels included in TV Cabo’s basic Pay TV packages in October; (iii) extremely successful launch in October of two new Brazilian premium channels: TV Globo and PFC – a generalist and Brazilian football channel respectively and; (iv) MOV, a movie and series channel for its Funtastic Life subscribers, with promotional viewing for a month on all basic offers, exclusive to TV Cabo subscribers. In addition to these new channel launches, ZON TV Cabo rebranded and repositioned the programming of its 4 premium TVCine movie channels (TVC1, TVC2, TVC3, TVC4).

The digital extended basic package (“Funtastic Life”) reached 382 thousand subscribers in 2007, with 112 thousand net additions during this period. This package continues to be a key driver of RGU growth and increased ARPU.

Premium subscriptions continued to grow steadily during 2007 reaching 841 thousand at the end of 2007 with a very strong quarter with net additions of 38 thousand, on the back of a very strong take-up of both TV Globo and PFC Brazilian channels that achieved close to 20 thousand subscribers in the first 3 months. Also Sport TV continued to increase penetration reaching 514 thousand customers at the end of 2007.

Pay TV ARPU reached 25.2 euros in 4Q07, an increase of 3.6% y.o.y, supported by the takeup of the digital extended package, the increase in premium channel penetration, and a 2007 price increase.

Business Indicators ('000) - Pay-TV         4Q06   4Q07   y.o.y.  2006   2007   y.o.y.

Homes Passed (1)                           2,651  2,753    3.8%  2,651  2,753    3.8%
Basic Subscribers (2) (3)                  1,480  1,547    4.5%  1,480  1,547    4.5%
of which
Digital Extended Basic                       270    382   41.3%    270    382   41.3%
Premium Pay-TV                               780    841    7.8%    780    841    7.8%

(1) In 2Q07, TV Cabo undertook an internal audit to its database, reducing the number of recorded homes passed by 230 thousand. Considering the impact of this database cleanup, the number of Homes-passed would have reduced to approximately 2.676 thousand at the end of 1Q07 and to approximately 2.651 thousand at the end of 2006;
(2) These figures are related to the total number of Pay-TV basic customers, including the cable and sattelite platforms. ZON Multimedia offers several basic services, based on different technologies, directed to different market segments (residential, real estate and hotels), with a distinct geographical scope (mainland Portugal and the Azores and Madeira
islands) and with a variable number of channels;
(3) These figures include products in temporary promotions, such as “Try and Buy” promotions.

ZON Multimédia

On 7 November 2007, PT Multimédia was spun-off from the Portugal Telecom Group, leading to a significant change in ownership structure. Prior to the spin-off, on 21 September, the new Executive Management Team was appointed and the organization entered a new phase of development as an independent company, clarified in the announcement in December of the Strategic Plan for the 2008-2010 period and that was further detailed at our Investor Day in January 2008.

To mark the birth of our new independent business strategy and identity, on 31 January 2008, our shareholders approved a change of corporate name to ZON (ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A.).