Creating value for the Future March 2005

“Creating value for the Future” 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 [2] | 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 [3] | Portugal Telecom | March 2005

Sustainability goals General Ø To make Sustainability a core issue in the PT Group strategy, transversal to all its companies Ø To reinforce PT’s action whilst a sustainable company Ø 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 [4] | Portugal Telecom | March 2005

Basis of the corporate sustainability for the PT Group > The Sustainability Strategy is supported in the “triple bottom line” approach Environmental Economic Governance model Ethic Code Stakeholders relationships [5] | Portugal Telecom | March 2005 Energy Efficiency Environmental Certification Environment Report Resource Management Policy Environmental impact reduction Social Corporate Citizenship Digital inclusion/ IS Human Resources Management

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 [6] | Portugal Telecom | March 2005

Action methodology Assumed the commitments, a plan of actions was defined for each target, according to 4 vectors: Partners Information Training Financial Community Commitments Communication Society Clients Dialogue Media [7] | Portugal Telecom | March 2005 Employees

Work done so far [8] | 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 Signatory of ETNO Charts > Environmental Chart, October 1996 > Sustainability Chart, March 2004 Signatory of The Global Compact > PT joined, January 2004 [9] | Portugal Telecom | March 2005

Relation with stakeholders (feedback) Financial Community > Investors Relations Direction > Annual Market and Perception studies > Investor Day and other events Clients > Quality analyses and Client satisfaction Direction > Inquiries of satisfaction and perception Employees > > Media Press cabinet [10] | Portugal Telecom | March 2005 Inquiries of satisfaction Events, general meetings Feedback meetings Employee Portal

Relation with stakeholders (feedback) II Regulator Bodies > Regulatory Affairs Dept. > Competition Policy Dept. ONG’s > Conferences - Participation and Support > PT Foundation Community > Image studies (Perception) [11] | Portugal Telecom | March 2005

Sustainability Report > Goals: Communication and Transparency > To be published soon (2 Q 2005) > Based in the GRI (Global Reporting Initiative) guidelines > Target: All stakeholders [12] | Portugal Telecom | March 2005

Environmental Responsibility [13] | Portugal Telecom | March 2005

Our Environmental Commitment >PT promotes a culture of respect and pro-activity towards environment Energy Efficiency Use of more efficient technologies Pollution prevention and reduction CO 2 emission reduction Reduction of consumption: electricity, water and fuel Control of the produced impacts Efficient management of the residues Selective collecting – “Ecopontos” Mobile and cordless phones’ batteries handled in the shops Antennas impact Electromagnetic radiations below the established limits Promotion of formation and communication Other good practices Use of recycled paper Reduction of color prints [14] | Portugal Telecom | March 2005 Building up of the environmental responsibility Certification of the Environmental management system International norm ISO 14001

Social responsibility A better quality of life for everyone We communicate smiles!

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 [16] | 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… [17] | 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, Porto 2001 and Euro 2004 [18] | Portugal Telecom | March 2005

Information Society Adult training on use of info-communication technologies. [19] | Portugal Telecom | March 2005

Our employees [20] | Portugal Telecom | March 2005

PT values Merit Talent caption and retention as a lever to increase performance! High quality talent selectively caption [21] | Portugal Telecom | March 2005 To retain and develop the existing talent

PT promotes competences Market-oriented and best practices organizational knowledge client-oriented analysis capability strategic view communication, impact and influence Innovation & creativity ethic and values [integrity] team and group spirit leadership and development of teams results-oriented leading change courage, acerbity and credibility personal and professional development [22] | Portugal Telecom | March 2005

PT’s HR management strategic model recruit Best company to work Top students recruitment (best universities) Cherry picking (talent) fit Responsibility | know-how identify Population segmentation evaluate 1 x year | Feed-back 2 x year Annual follow up, Executive Board [holding] training World class training E-learning | Technical training | Universities move International reward MOVE | SWAP | International consulting fidelize Fixed + variable communicate JEP program [Youth with High Potential] Social participation [23] | Portugal Telecom | March 2005 Internal communication Volunteer actions

The Future > To keep working in the triple bottom line > To swiftly adapt the strategies and management models Shareholders value creation [24] | Portugal Telecom | March 2005 Competitive advantage

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 > Pricewaterhouse. Coopers/ Financial Times The most respected company in Portugal [25] | Portugal Telecom | March 2005

Thank you! [26] | Portugal Telecom | March 2005