Portugal Telecom adds 72 thousand 'meo' subscribers in 1Q09

LISBON, Portugal — Portugal Telecom (Lisbon: PTC; NYSE: PT) has announced results for the quarter ended March 31, 2009. In 1Q09 consolidated operating revenues amounted to Euro 1,604 million, an increase of 2.1% y.o.y.

Operating Review – Wireline

As in 2008, during 1Q09, PT continued to focus its marketing efforts in the promotion of Meo, which is being offered through IPTV and satellite.

Meo provides access to a comprehensive content offering, with more than 110 TV channels and over 2,000 real video-on-demand (VoD) titles. The VoD offer, which includes blockbusters from five Hollywood studios, continues to be a successful and differentiating feature, as circa 50% of Meo’s IPTV customers have already used it on a paid basis (+3pp, as compared to 4Q08), consuming on average 2.8 movies per month. “Mamma Mia” and “Batman” were a success, driving this strong performance. In only four days, more than 5 thousand customers rented these two movies.

PT has been strengthening the Meo offer with new features and content, namely through the development of partnerships with key content producers and suppliers. On 2 April 2009, PT launched Meo Kids, a new children’s interactive service with unique content, karaoke, videos and news. Meo Kids is available for all PT’s pay-TV customers with an interface designed for two distinctive groups: children between four and seven years and children between seven and ten, providing them an improved and targeted experience of next generation television.

Furthermore, and as part of the investment in innovation in pay-TV, PT launched “My Meo”, thus making available, through internet, the TV guide, suggestions lists, VOD offer and premieres.

In 1Q09, net additions in the pay-TV service reached 72 thousand bringing the total customers to 384 thousand. Pay-TV subscribers already represent 14.5% of traffic-generating lines and 51.1% of the ADSL customer base, a solid performance considering that the TV service was launched, on a nationwide basis, in April 2008.

                     1Q09  1Q08
                     ----  ----
TV customers ('000)   384    47

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