March 2005

“Creating value for the Future”

[2] | Portugal Telecom | March 2005

Summary

>Why betting in the corporate sustainability?

>Sustainability goals

>Basis of the corporate sustainability for the PT Group

>Strategic guidelines

>Action methodology

>Work done so far

>The future

>Achievements

[3] | Portugal Telecom | March 2005

Why betting in the corporate sustainability?

“To keep creating value within the next 100 years”

> create value for the “stakeholders” in the long-term

> involve the “stakeholders” confidence in the PT Group

[4] | Portugal Telecom | March 2005

Sustainability goals General

To make Sustainability a core issue in the PT Group strategy, transversal to all its companies

To reinforce PT’s action whilst a sustainable company

To make it known.

Specific

> To create Added Value to the Shareholders

> To support and promote the economic development in countries where PT is present, namely in the context of IS

> To act effectively in the triple bottom line: economic, environmental and social dimensions

[5] | Portugal Telecom | March 2005

> The Sustainability Strategy is supported in the “triple bottom

line” approach

Basis of the corporate sustainability for the PT Group

SocialCorporate Citizenship

Digital inclusion/ ISHuman Resources

Management

EnvironmentalEnergy Efficiency

Environmental CertificationEnvironment Report

Resource Management Policy

Environmental impact reduction

EconomicGovernance model

Ethic CodeStakeholders relationships

[6] | Portugal Telecom | March 2005

Strategic Guidelines

>The Corporate Sustainability as a part of the business strategy and consistent with the core business

>Creation, divulgation and implementation of Transversal Policies on the “Triple Bottom Line” dimensions

>Transversal Strategy for Quality >Centralization of the Corporate Sustainability management >Monitoring and evaluation of the Sustainability strategy

implementation >Sustainability commitments should be assumed towards

stakeholders

[7] | Portugal Telecom | March 2005

Action methodology

Assumed the commitments, a plan of actions was defined for each target, according to 4 vectors:

Commitments Communication

Information

Training

Financial Community

Clients Society

Media Employees

Partners

Dialogue

[8] | Portugal Telecom | March 2005

Work done so far

[9] | Portugal Telecom | March 2005

Ethic Code >Set of principles, values and code of conduct applicable to all

employees and social bodies

>Available in the intranet & internet

>Environmental Chart, October 1996

>Sustainability Chart, March 2004

>PT joined, January 2004Signatory of ETNO Charts

Signatory of The Global Compact

[10] | Portugal Telecom | March 2005

Relation with stakeholders (feedback)

Financial Community

Clients

Employees

Media

> Investors Relations Direction> Annual Market and Perception studies > Investor Day and other events

> Quality analyses and Client satisfaction Direction> Inquiries of satisfaction and perception

> Inquiries of satisfaction> Events, general meetings > Feedback meetings> Employee Portal

Press cabinet

[11] | Portugal Telecom | March 2005

Relation with stakeholders (feedback) II

Regulator Bodies

ONG’s

Community

>Regulatory Affairs Dept.>Competition Policy Dept.

>Conferences - Participation and Support >PT Foundation

>Image studies (Perception)

[12] | Portugal Telecom | March 2005

Sustainability Report

>Goals: Communication and Transparency

>To be published soon (2Q 2005)

>Based in the GRI (Global Reporting Initiative) guidelines

>Target: All stakeholders

[13] | Portugal Telecom | March 2005

Environmental Responsibility

[14] | Portugal Telecom | March 2005

>PT promotes a culture of respect and pro-activity towards environment

Energy Efficiency

Use of more efficient technologies

Pollution prevention and reduction

CO2 emission reduction

Reduction of consumption: electricity, water and fuel

Other good practices

Use of recycled paper

Reduction of color prints

Promotion of formation and communication

Environmental management systemInternational norm ISO 14001

Building up of the environmental responsibility

Antennas impact

Electromagnetic radiations below the established limits

Control of the produced impacts

Efficient management of the residues

Selective collecting – “Ecopontos”

Mobile and cordless phones’ batteries handled in the shops

Certification of the Environmental management system

Our Environmental Commitment

We communicate smiles!

Social responsibility

A better quality of life for everyone

[16] | Portugal Telecom | March 2005

Commitments with the community

>Strong intervention in the following areas:

- Social

- Cultural

- Information Society

>Creation of the PT Foundation, with the aim to coordinate and foster the social intervention and support to development

[17] | Portugal Telecom | March 2005

Social involvement

>Products & Services:

– Technological solutions for clients with special needs

>Donations:

– Support to social institutions

>Social volunteer initiatives:

– Aurora Project, Mão na Mão…

[18] | Portugal Telecom | March 2005

Cultural involvement

> PT has a continued Maecenas policy

– Portugal Telecom prize “Brazilian Literature”

– Exclusive maecenas, Teatro Nacional D. Maria II

– Involved in all big national projects: Expo 98, Porto2001 and

Euro 2004

[19] | Portugal Telecom | March 2005

Information Society

Adult training on use of info-communication technologies.

[20] | Portugal Telecom | March 2005

Our employees

[21] | Portugal Telecom | March 2005

PT values Merit

To retain and

develop the

existing talent

High qualitytalent

selectivelycaption

Talent caption and retention as a lever to increase performance!

[22] | Portugal Telecom | March 2005

Market-oriented and best practices

PT promotes competences

personal and professional development

communication, impact and influence

strategic viewInnovation & creativity

analysis capability

organizational knowledgeclient-oriented

team and group spirit ethic and values [integrity]

leadership and development of teams

results-orientedleading change

courage, acerbity and credibility

[23] | Portugal Telecom | March 2005

PT’s HR management strategic model

recruit

fit

identify

evaluate

training

move

reward

fidelize

communicate

Social participation

Best company to work Top students recruitment (best universities) Cherry picking (talent)

Responsibility | know-how

Population segmentation

1 x year | Feed-back 2 x yearAnnual follow up, Executive Board [holding]

World class training E-learning | Technical training | Universities

International

MOVE | SWAP | International consulting

Fixed + variable

JEP program [Youth with High Potential]

Internal communication

Volunteer actions

[24] | Portugal Telecom | March 2005

The Future

> To keep working in the triple bottom line

> To swiftly adapt the strategies and management models

Competitive advantage

Shareholders value creation

[25] | Portugal Telecom | March 2005

Achievements

Some examples:

> PT Group’s Governance model considered one of the best in Europe

- Heidrick & Struggles

> Quality certification ISO 9001

> Environmental certification ISO 14001

>  IR Magazine & IR Awards (Diário Económico/ Semanário Económico

      Grand Prix for Best Overall Investor Relations

   Best Use of the Internet for Investor Relations

>  PricewaterhouseCoopers/ Financial Times

The most respected company in Portugal

               

[26] | Portugal Telecom | March 2005

Thank you!