Luís AlveirinhoEngineering and Network OperationsPortugal Telecom

Montpellier, November 16th, 2016

Portugal TelecomAn All-Fiber Company In An All-Fiber Country

THE ROAD TO ALL-FIBER

PORTUGAL: ALL-FIBER COUNTRY

YE2015 PT ANNOUNCED

+3M HP UNTIL 2020

2015 2017 2020

2,3

3,5

5,3

500 M€CAPEX 2016 - 2020

>90%PENETRATION 2020

FTTH AND NETWORK STRATEGY ALIGNED WITH EC STRATEGICAL AND DIGITAL AGENDA FOR EUROPE (DAE) OBJECTIVES

• Universal availability at 30 Mbps• 100 Mbps subscription by at least 50%

of European households

2020 • Internet connectivity 100 Mbps, upgradable to Gigabit speed

• Gigabit connectivity for all main socio-economic drivers (schools, digitally intensive enterprises, etc)

2025

PT IN THE FOREFRONT OF FTTH DEPLOYMENT

2006 2008 2010 2011 2015

*5.9M Total Homes in Portugal**5.3M Total Primary andSecondary Occupied Homes in Portugal

FTTH Council Europe’s

innovation prize for “Deployment and Operation of FTTH Networks”

1.0 Million

HP

20202016

Trials and pilot tests

2007

1st

Comercialconnected customer

(November2007)

NGPON2 demo by Altice Labs

40kHP

3.0Million

HP

5.3Million

HP

> 90%> 50%

PT FIBER INVESTMENT MODELS IN PORTUGAL

PT IS ACTIVE AND TAKES ADVANTAGE OF ALL FIBER DEVELOPMENT MODELS FOR ITS BUSINESS

PT FIBER NETWORK COINVESTMENT

SHARING AGREEMENTS

(PRIVATE)

Network sharing agreementbetween PT and VDF involving900 kHP (450 kHP built by each

partner)

PT FIBER NETWORK WHOLESALE

COMMERCIAL OFFERS(PRIVATE)

Wholesale commercial offer for passive access with splitting to

PON PT Network (+3.0 MHP until2020)

FIBER OPEN ACCESS NETWORK

WHOLESALE COMMERCIAL OFFERS

FOR RURAL AREAS (PUBLIC)

RURALNGA

Wholesale commercial offer for passive access with splitting to Rural Networks in 50% of 136 municipalities (DST and FBG)

PT FIBER NETWORK STANDALONE INVESTMENTS

(PRIVATE)

FTTH/PON PT Network coverageof 5.3 MHP until 2020

FTTH SUCCESS FACTORS - THE DIAMOND OPPORTUNITY (D7)

01 02

03

040506

07

Service PotentialLean and Cost

Effective Deployment

Operational Savings

Monetizing the Fiber Investment

Future-Proof Network

Innovation, R&D Developments and

Partnerships

New Business Models (3P, 4P,

5P, IoT, 5G, M2M)

MONETIZING THE FIBER INVESTMENT

From FTTH to Fiber To Everywhere (FTTE)

FIBER NETWORK

HOME3.0M of homes passed

BUSINESS/

ENTERPRISENew low budget offers are

increasing the fiber share

SCHOOLS, POLICE

STATIONS, …More than 56% (and growing) of

schools connected with fiber

(GPON+Ethernet)

MOBILE BACKHAUL>95% of PT cell sites

already have fiber for

backhauling

WIFI BACKHAULMigration to fiber in

progress

FIBER COMMERCIAL

OFFERSNew fiber offers for third

parties

NEW AND BETTER SERVICES

100 Mbps(10/50/100 up)

200 Mbps(100 up)

400 Mbps(100 up) 1000 Mbps

(100 up)

30 Mbps(3 up)

Fixed Net Speed

MOVING FORWARD … BUT FAST

Clear vision on the besttechnologies for theportuguese market

Leapfrogging new copperflavours and moving fast onfiber

Leveraging internalinnovation on processes, materials and equipments

VDSL AND 10GPON Leapfrog

PTSN ADSL ADSL2+

Copper

VDSL G.Fast XG-Fast

X

BPON EPON GPON 10GPON NGPON2 NGPONx

Fiber-Step I

X

NGPON2 NGPONx

Fiber-Step II

REDUCTION OF

4:1 CO SITES

Simplifying the network and

Preparing the end of the Copper era

Aggressive Fibre Rollout Plan

PSTN transformation Plan

Product portfolio update to an all-IP environment

Network PoPs reorganization

Regulatory constraints being solved

Freeze on copper investment

Prepare copper removal and monetization

SERVICE PORTFOLIO AND NETWORK TRANSFORMATION

END OF GAME FOR COPPER

THE RESULT OF THE FTTH STRATEGY - MARKET FIGURES

0

200

400

600

800

1.000

1.200

1.400

1.600

2008 2010 2012 2014 2016

Number of subscribers (thousands)

Cable

FTTH

DSL

DTH

0

200

400

600

800

1.000

1.200

2008 2010 2012 2014 2016

Number of accesses (thousands)

Cable

FTTH

DSL

LTE

HSI subscription serviceTV subscription service

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2008 2016

Market size and market share (subscribers)

Total

MEO

0

500

1.000

1.500

2.000

2.500

3.000

3.500

2008 2016

Market size and market share (accesses)

Total

MEO

1.5M new subscribers (+70% growth)

MEO market share growth from 6% to 40%

1.6M new accesses (+90% growth)

MEO market share growth from 40% to 43%Source: ANACOM

2,6

3,5

4,2

4,8

4,1 4,14,2

2,5

3

3,5

4

4,5

5

2013 2014 2015 2016

Total Homes Passed in Portugal (millions)

FTTH/B

HFC (DOCSIS 3.0)

INVESTING IN FIBER IS KEY

The existing regulatory environment promotes free competition and investment on infrastructures and services

Solid commitments in fiberdeployment leverage innovation and increase the development of new services, materials and equipments by the industry and in-house (Altice Labs)

Fiber investments are the best future-proof choice to evolve into the Gigabit Society and the chosen business and network strategy for PT

Montpellier, November 16th, 2016

THANK YOU

Portugal Telecom