Pedro Pinheiro TMN October 19 th , 2001

1. INSTITUTO SUPERIOR TÉCNICO M. Sc in Engineering and Management of Technology Pedro Pinheiro TMN October 19th, 2001

2. Agenda • The Mobile Business of Group Portugal Telecom • Mobile Telecommunications in Portugal: a market near saturation • TMN’s strategy for the new economy: myTMN • Challenges to mobile operators imposed by the new economy

3. PT Móveis 9,6 million clients (1H2001) Móveis CRT Celular 41,2% 83% 7,3% 30,5% 66,4% 100% Brasil Brasil Brasil Portugal Marrocos Botswana Paraná e Santa Catarina Rio Grande Sao Paulo Do Sul # 1 # 1 # 2 # 1 # 2 # 1 Market share Market share Market share Market share Market share Market share 50% 64% 29% 76% 33% 65%

4. Clear Leadership in Portugal TMN Market leader in Portugal Clients: 3.5 Million (October 2001) Market share: 49% (Source: Marktest) Mimo: Pre-paid card with the highest brand awareness Best Company of the Year 1998, 1999, 2000 (Diários de Notícias) 9th in the Best Companies to Work For 2000 (Exame) (highest ranking among Portuguese companies) Telecommunications Company of the Year 2000 (Exame) TMN’s Milestones 3/1991: Birth of TMN 9/1995: Launch of MIMO (1st pre-paid mobile service in the world) 5/1998: 1 Million clients 11/1999: 2 Million clients 3/2000: WAP launch 11/2000: GPRS launch (1st in Portugal) 12/2000: UMTS License 3/2001: 3 Million clients 10/2001: 3.5 Million clients

5. Leadership in Brazil Telesp Celular (são Paulo) Largest mobile operator in South America Clients: 5 Millions (October 2001) Market Share: 64% Penetration rate SP: 21% (15% Brazil) WAP clients: 1,4 millions (30%) Global Telecom (Paraná, Stª Catarina) Clients: 628 thousand Market share: 29% First operator to launch WAP in Brazil Telesp Celular and Global Telecom reach a population above 51 million people and 45% of Brazilian's GDP

6. Joint Venture PT/Telefonica in Brasil Current Presence PT- Telefonica Joint Venture Largest operator in South America More than 9.3 million clients, representing 42% of the total Brazilian mobile market Market potential of 94 million people, representing 72% of Brazil’s GDP Opportunities to create value based on synergies Significant savings and risk reduction regarding auctions for new licenses Joint management between PT and Telefonica, being all important decisions taken in agreement. Each shareholder detains 50% of the JV. CEO appointed by PT and CFO appointed by TEF Teleleste (Bahía e Sergipe) TeleSudeste Rio J.e E.Santo Telesp Celular São Paulo Global Telecom Paraná e Santa Catarina CRT Celular Rio Grande do Sul

7. Agenda • The Mobile Business of Group Portugal Telecom • Mobile Telecommunications in Portugal: a market near saturation • TMN’s strategy for the new economy: myTMN • Challenges to mobile operators imposed by the new economy

8. Penetration Rate in Portugal More mobile than fixed line phones Source: ICP

9. Mobile Penetration Rate in Portugal It’s getting harder to grow more... Source: Marktest, June 2001

10. Mobile Penetration Rate in Europe Portugal has one of the highest penetration rates in Europe Portugal: 7.2 Million Clients Source: ICP, June 2001

11. Market Share TMN is the clear leader in Portugal Base(000): Owners/users of a mobile phone Source: Marktest, June 2001

12. Mobile Phone Acquisition Plans A market near saturation Base (000): People that do not own/use a mobile phone Source: Marktest, June 2001

13. Type of Current Contract Less and less ownership of the client Base(000): Owners/users of a mobile phone Source: Marktest, June 2001

14. Type of Future Contract Less and less ownership of the client Base (000): Potential owners/users of a mobile phone

15. Profile of the Future Mobile User Only the low end of the market is still up for grabs… Base (000): Potential owners/users of a mobile phone Source: Marktest, June 2001

16. New Focus for Operators Operators don’t want to be just pipes High penetration rates Voice and access are becoming commodities (low prices and margins) Stabilization of Market shares Pressure on growth rates and ARPU Broaden the offer to more profitable services Focus on growing ARPU and less on growing customer base Migrate from being a capacity provider to a full-scale service provider

17. Agenda • The Mobile Business of Group Portugal Telecom • Mobile Telecommunications in Portugal: a market near saturation • TMN’s strategy for the new economy: myTMN • Challenges to mobile operators imposed by the new economy

18. TMN’s Strategy Aggregate all value added/content based services under a strong brand associated to TMN Partner with the best content providers Provide multi-channels (SMS, WAP, WEB, voice) to access the same content Focus on personalization/customization Open access policy Learn with the mistakes of Internet based business models: make money is still the goal; grow in a sustainable way

19. myTMN- WAP Fora de Casa 1 Cinema 2 Cultura 3 Noite 4 Gastronomia 5 Viagens Favoritos Destaques Gestão Pessoal 1 Easy Messaging 2 Microsoft Outlook 3 E-mail Sapo 4 E-mail TMNnet Informação 1 Notícias 2 Desporto 3 Social 4 Economia 5 Trânsito 6 Tempo 7 Transportes 8 Listas Telef 9 Saúde 10 Serviços Chat Mania 1 Chat City 2 Chat Brasil Lazer 1 Melodias e Imagens 2 Jogos 3 Anedotas 4 Horóscopo 5 TV 6 Música e Livros 7 Curiosidades Finanças 1 Bolsa 2 Bancos 3 Telemultibanco 4 Serviços Aqui Perto 1 Farmácias 2 Postos GALP 3 Restaurantes 4 Bares 5 Discotecas 6 Clínicas 7 Galerias de Arte 8 Museus TMN Apoio myTMN Apoio Clientes TMN Online Activ. Automát. Serv Número Amarelo Guia Telemóvel SOS Telemóvel Navegação 1 Portais 2 Directório de sites 3 Por palavra 4 Por endereço Votações

20. myTMN- SMS SMS PUSH (Mensageiro Confort) SMS PULL (Mensageiro Expresso) SMS PUSH (Mensageiro Confort) • INFORDESPORTO • Futebol: Golos, resultados, classificações, melhores marcadores, notícias, directos TV (I Liga, II Liga, Taça de Portugal, Competições europeias), Futebol internacional • Basquetebol: Resultados, classificações • Andebol: Resultados, classificações • Hóquei em Patins: Resultados, classificações • Futebol salão: Resultados, classificações • Golfe: Resultados, rankings • Ténis: Resultados, rankings • Automobilismo; Motociclismo • Totojogos • LANETRO • Música: concertos da semana; Teatro: estreias da semana; Cinema: estreias da semana; Arte: estreias da semana; Destaques do dia • SPACE VIAGENS • Cursos de inglês; estadias/autoférias; futebol europeu; golf; neve/promoções; pacotes de férias/promoções; sugestões de fim-de-semana; voos promoções • NEGÓCIOS • Notícias por palavra chave; Notícias por empresa PSI20; Notícias de última hora; Price Target acções; Sessão • SAPO • Câmbios; Destaques TV; Top 5 VoxPop; Estreias de cinema; espectáculos; previsão do Tempo; previsões da Maya; Mensagem dos Anjos; Provérbio do dia; Notícias jogos • DIÁRIO DIGITAL • Títulos Diário Digital; Títulos imprensa do dia; múltimédia; cultura; outros temas; Notícias muito urgentes • DINHEIRO DIGITAL • DESPORTO DIGITAL • Notícias principais clubes; Notícias futebol nacional; Notícias futebol internacional; Notícias motores; Notícias outras modalidades • SUPER ELITE • Notícias • TSF • Crise EUA INFORDESPORTO Futebol: Directos TV, resultados, classificações, melhores marcadores Totojogos a pedido TELEMULTIBANCO Consultas; pagamentos de serviços; transferência entre contas; outras operações BOLSA ON-LINE Consultas; personalizar carteira de títulos; notificação de eventos (alarmes); recepção automática de informações;

21. myTMN- Voice IVR (Voz Online) TMN Notícias Informações de última hora 24h por dia Bolsa On-Line Informações sobre índices e acções Telemultibanco Acesso a operações de Multibanco InfoMadeira Informações de interesse turístico, cultural, desportivo, de lazer e de carácter geral, sobre a ilha da Madeira InfoAçores Informações sobre o Arquipélago dos Açores SOS Lar Serviços domésticos de canalização, electricidade, desentupimentos, refrigeração, chaves e fechaduras, baby sitting, vidros, assistência médica, envio de flores, etc 22 Euro Conversões de valores em Escudos para valores em Euros e vice-versa 22 Mar Informações sobre as principais praias Portuguesas

22. myTMN- WEB

23. myTMN- WEB

24. myTMN Partnerships

25. myTMN Total WAP cards- 460.000 % from total TMN cards- 14% Daily mobile originated SMS- 2,2 M % distinct SMS users- 50% % data revenue from total TMN revenue- 7% Most popular services- Amusement and Entertainment (Ring tones, icons, Chat, SMS Push)

26. Agenda • The Mobile Business of Group Portugal Telecom • Mobile Telecommunications in Portugal: a market near saturation • TMN’s strategy for the new economy: myTMN • Challenges to mobile operators imposed by the new economy

27. New challenges for mobile operators • Changes in corporate culture • More flexibility to react to a fast changing market, very competitive, difficult to predict and much less stable than voice • Migrate from a culture focused on selling cards and voice minutes to a full-scale service provider • Attract a different type of human resources • Changes in its core infrastructure and high investments requirements • More flexible billing systems • UMTS investments • New type of partners and business models • Depend on good content and applications • Manage non traditional partners • Share revenue with partners • Identify the right killer applications/ bet on the right services • Retain current customers is the highest priority

28. Moving Forward… GPRS UMTS MMS EMS Bluetooth Wi-Fi