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Portugal Telecom comments recent declarations by the National Competition Authority
Friday, February 17, 2006

Following the recent declaration by the National Competition Authority (“AdC”), Portugal Telecom deems opportune to clarify the following:

♦ Pertaining to concentration as to the access network, PT has fully respected the complete range of prior obligations it was subject to, under the auspices of the European and national regulatory framework with the aim of assuring that all operators can compete in equal conditions;

♦ As to entrance barriers to the local access network, PT has prices for local loop unbundling that featured amongst the lowest in Europe and the number of unbundled local loops increased 720% in 2005 according to ICP-ANACOM;

♦ As to access to contents, the PT group already offers other entities non-discriminating access to its premium sports and film contents as well as to the main channels of subscription TV of local interest;

♦ In relation to what AdC refers to as “monopoly rents”, note that these proceeds are limited due to the imposition, by ICP-ANACOM, of price control directed towards costs at wholesale and retail level and due to the growing level of competition; PT also invests highly in innovation and in the development of the information society in Portugal and in Portuguese speaking countries.

PT has thus been creating since October 2005  a strategy for its activities, bearing in mind the current technological and regulatory scope.  One of the options to be analysed is the autonomization of a wholesale company in PT Comunicações, S.A.

The advantages of a wholesale company within the group include: the creation of conditions for the dinamization of investment and the migration of new generation networks; the increase in the level of competition and the investment within the telecommunications sector in Portugal; a better offer to consumers in terms of alternative products and services; greater flexibility for PT in the management of its retail businesses; and to afford opportunities of monetization able to create shareholder value.

Within this context, PT will consider the competent authorities, consumer organisations and the other telecommunications operators in Portugal. 

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