Greetings, and welcome to the Portugal Telecom 2013 Nine Months Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Luis Pacheco de Melo, Chief Financial Officer for Portugal Telecom. Thank you Pacheco de Melo, you may begin.

Thank you. Good afternoon ladies and gentlemen, thank you very much for being on this call. I am here with my IR Director, Nuno Vieira; the CFO team and we have the pleasure of being joined by Zeinal Bava in Brazil. I’m going to walk you through the third quarter numbers and the nine months numbers. Then Zeinal, will take you through the operations both in Portugal and in Brazil. And then we’ll open the floor for some Q&A. As we start on our Slide number 1, I just would like to draw your attention to the usual Safe Harbor notice and that will be effective throughout the presentation and the Q&A. If we turn to Slide 3, on the highlight year-to-date consolidated operating revenues amounted to €4.5 billion down 8.8% from the same period last year. This quarter and the following months we had some effects from the – effects of FX movement and in particular the ones related to the Brazilian Real. If we were to exclude those, our revenues would be down by 1.7% year-on-year and the growth of [indiscernible] and across the other international operations were basically affected by the decline on the Portuguese and also on the context business in Brazil. On the consolidated EBITDA front, year-to-date EBITDA was down 12.4% or to €1.5 billion and EBITDA performance reflected mainly a 10% decline in Portugal and a 14% decline in OI. Of course, the OI in our account was affected by the FX impact as well. So if we were to exclude the FX impact the EBITDA would have been down by 6.6% year-on-year. On the net income front, year-to-date, net income stood at €305 million and this will include the capital gain on the sale of Macau. I will take you through more details,…

Okay, thank you very much, Luis. Allow me now to take you through operations in Portugal before I give you perhaps a very quick review of what’s going on Brazil, and the early results that we represents at this morning. Starting in Portugal in the consumer segment of the market, and perhaps 4% first and foremost from residential, Portugal now has a pay-TV market share which is pretty high 78.6% penetration. Portugal Telecom from that standpoint has enabled to build a market share of roughly 40.9%. It is worth mentioning that Portugal Telecom is not in the business of selling pay-TV, all our offers tend to be triple-play or quadruple-play. So we have made a substantial program, since we launched this service in 2008. End of third quarter 2013 we had 1.294 million customers, which is a growth of about 8% compared to the same period last year. Not withstanding the fact that the penetration is high, we still believe that there is potential for us to up sell to existing customers. So if we look at, for example the 3P penetration right now, in terms of households that do by services, fixed line services on Portugal Telecom, expenses about 47.9%. 3P the triple-play rate in terms of any customers as well, it’s 44.1%. So clearly these where to be down in terms of penetrating further with double and triple-play particularly triple-play, our existing customer base and that’s why we continue to believe that not withstanding the high penetration, that pay-TV has already achieved in Portugal the fact that we do have with total customer base that we can migrate to triple-play, there is clearly work to be done. Now as we know in terms of differentiation of the product and services of Portugal Telecom is down on the back…

Thank you, Zeinal. Very quickly to open the floor then to Q&A. On Slide 53 Africa and the rest of the world, I just like to say that all our international operations are number one player in their respective market. They all generate very strong cash flow. They are all very well funded, apart from Timor where we saw two new entrant to the market. We continue to gain market share. On mobile, in some of the markets we’ve seen slower growth given the penetration in some of the main – some of those main markets, and also because of some competitive pressures and regulatory pressures that we see in some of those markets. From a financial point of view, our results on a proportional basis from some of the international assets of course, we are affected by especially the devaluation of the Namibian dollar. But as I said all of them are – have pretty strong cash flows and are very well funded. So as final remarks, I will follow same quarter results. I would say that the early investment in technology and innovation in Portugal are enabling boost operational and financial performance. Our Convergent offer is gaining even more traction and which just proves that we took the right strategic decisions. We are continuing and we will continue the focus on efficiency improvement. Going forward, our CapEx will be more and more demand driven as we have done all the main investments in new technology and innovation. In Brazil, as Zeinal explained in greater detail we have seen early signs of operational and financial improvement. We see better quality of sales improving churn rates, we see investments being done and deployed in the smarter way. We see financial discipline supporting the change of the cash flow profile. And as a result we are also seeing, or we saw flat net debt evolution in the third quarter of this year. And last, as you’ve seen also our results were impacted by FX and non-recurring items as I’ve detailed or explained in great details throughout the presentation. And now let me open the floor for the Q&A. Thank you.

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our question is from Frederick Boulan of Nomura. Please go ahead.

Hi good afternoon. Firstly, to fill up on Brazil, you talked to us a little bit about the level of turn of margins at Oi in the call earlier this afternoon. I just want to know, staying for the first nine months you had about 26% on a clean basis. So where can we see this level evolving next year? Can we think about levels closer to 28% as realistic levels, or the improvements in profitability is going to be more gradual. And secondly, question on Portugal, if you could comment a bit on your expectations for a mid-term competitive environments, the light if is [indiscernible] intangibles, so Vodafone decision to accelerate fiber rollouts to $1.5 million homed by the end of 2015. So how do you see competition there? And specific on where your residential segment, is it bound to contract going forward as say the pay-TV penetration is speaking or you see further potential for rebounding this business in the medium term? Thank you very much.

Okay thank you. With regards to the margin performance, in Oi in the third quarter, if you like, we have 30%, nine months 28.7%. And we decided not to give the guidance other than what could consensus out there. What I can tell you, however, is that, we are putting a lot of pressure on the cost side, so we’ve made productivity gain at something like a mantra in our company, something that we would like to aspire to do as a single day. So we can position ourselves as one of the best managed operator here in Brazil and become even a reference which you like in our sector. So difficult to say, but I would 30% was a good performance in the context of the sector, when you look at the peer group companies here. Their margins oscillated between 22% and 27%. So I think that considering if you like, the investments that need to be undertaken in this market in Brazil, we need rational behavior, we need to generate cash flows, because it’s a pretty sizable country and we need to if you like continue to invest and increase in coverage, improving our capacity and so on and so forth. So and what concerns Oi, we will always look to be rational in the way that we approach the market, and if anything we will continue to differentiate based on technology, innovation, quality of service. Now for those of know OEM equally, they know that it’s an aspiration. There is a lot of work to be done, it’s not going to happen overnight. But that’s how we see the market? We see the market as companies focusing a lot more in their own productivity and being rational out there. So that we can generate enough cash flow…

Thank you, very much.

Thank you. The next question is from John Keith of Sanford Bernstein. Please go ahead.

Thank you, a couple of questions, please. Firstly, you obviously have made pay-TV a domestic service. How important do you think that TV can be for Oi in Brazil and from what else can you do and are you doing to improve that experience for the consumers. And then just secondly, can we expect further working capital improvements for Oi for the rest of this year and throughout next year as well and what do you think the main drivers of that could be. Thank you?

We’ll come back to – with regard to our strategy in Brazil double and triple-play of course, we benefit often the fact we’ve been a lot of investment [ph]. We have huge amounts of activities and now we can if you like, change of stores in how we can bring the bad business inside operating target if you like, if that make sense in targeting. The are very different market and if you like the transport network that we have in Portugal at the moment, we can carry data at speeds of 100 gigabits per second. Okay, and we have FTTH in 1.6 million homes, but in other places we have ADSL 2+. We have 90% of the population with 4G already. So it’s very difficult for you to extrapolate one market versus the other at least in the short-term, but if you think about the business principle they remain valid. We should be moving customers from single to double, double to triple-play why? Because it increases my share of wallet and it reduces my ARPU. So and also it reduces churn. So we are doing exactly the same as we did in Portugal Telecom. We have a slide in the Oi presentation, which is our Page 41, I think in this presentation already Page 41, but you will see is that we are looking at those customers that have just one service and we want to be moving those customers from one service alone to more than one service. So I think of course, when I look at the Portuguese number then we are clearly at a very, very different stage of our development because in the Portuguese market, what we have been able to do, in terms of triple-play penetration, it’s unique in not just for Portugal, but…

Thank you.

Thank you. The next question is from Guy Peddy of Macquarie. Please go ahead.

Hi and just a quick one, more for Luis, perhaps could you just give us a sense of how powerfully funded you’re through to now, and secondly by the way we should expect so the asset sales to accelerate your deleveraging process domestically, thank you?

Okay, currently we are fully funded into basically end of 2017, 2016, 2017 so mid 2017 I would say and therefore that’s why we say that we are in a pretty comfortable liquidity and financial position. In terms of asset sales, as you know and as we have said in the past, the remaining assets for three add of course Oi, we are of course engaged in this transaction that we announced. The other assets, the African assets, with regards to African assets, what we said is that we like the assets. They are well funded, they generate good cash flow, but as we have said also in the past, our main focus on the merged entity will be Brazil and Portugal, but at these ranges, we have said also, in the past we are pretty well funded and so we don’t have anything on the table at this stage.

Perfect, thank you.

Thank you. The next question is from Giles Thorne of Jefferies. Please go ahead.

Hi, there, I had a couple of questions, please. I just wanted to pickup on the Vodafone question, the first question, and I think it’s perfectly fair to respond. Vodafone doesn’t have a pedigree in TV, but as everyone knows and you have been going on for a couple of quarters now. The way to acquisition and selecting the market currently with the full play product is on price and you previously said very sadly that this is the price point that’s uneconomic for them. But as we look forward and see the projects spring investment coming through that, that’s going to legitimate the economics of that existing price points. So while they don’t have the pedigree in TV, they are going to have the better economics to remain at that price point. So I wanted to gain revisit how do you see mid-term pricing pressure for your fixed – for your quadruple-play products? And secondly, just staying on the scene with pricing, but at this time, in terms of domestic mobile, we’ve obviously seeing again Vodafone being fairly disruptive around this time last year and they work through with that repricing has been a drag to service revenue throughout the year 2013. It will be interesting to hear how the pricing environment has evolved recently and should we expect to further repricing drag as we go into next year or is it a case that really the cyclical usage time factor will start to come through and perhaps think about some growth? Thanks.

Okay, thank you. Vodafone is a very good company and I am sure with the resources they have, they will still be able to catch up very quickly. I wonder what’s the main issue and just specifically statically would do on analysis if I guess scale that can make the economics work under current offers that they have. I don’t think that scale will have the economics of the current offer stack up, because that price is obviously if you take into account the data [indiscernible] with the investment that are required and then that’s an issue that’s not always showed. We look at our own P&L, we look at our cash flow statement, we have great amounts of pack for our competitors and we think they all are very good and what we’re trying today is to be slightly better than them. So as far as we are concerned, quadruple-play is a unique opportunity for this sector in here, not just in Portugal to mobility. And we thereby feel free that approve that as a result we produced in Europe in mobile right now. And people have taken mobility for granted, most of them made huge investments to beef up the quality of service. So it is our gross market wise, it is very difficult to differentiate pricing based on quality, just from other markets. And from that standpoint, either we bring that innovation, a different value proposition. It is very difficult, okay, for you to actually drive a higher ARPU. Now as seen so far in quadruple-play is that, if we price the product well, we position it well, we market it well, people want it and we have been so incredibly well in less than a year and what you are seeing is now posting quarter-after-quarter better…

Thanks. Thank you very much.

Thank you. The next question is from Georgios Ierodiaconou of Citi. Please go ahead.

Yes, good afternoon and thank you for taking my questions, I have two please. The first one is around the 700 megahertz Spectrum auction in Brazil, there was some news out today that published in the official concert its plan for 700 megahertz Spectrum with a view to have on auction in the first half of next year. So I wanted to get your thoughts firstly around the allocation that you chose to make and the timeframe that you are looking at whether you think in terms of what to expect it as early as first half of next year and any comments on you have any concerns around that? And secondly, we’ve discussed a lot about the consumer mostly and there were commerce during the presentation around enterprise being competitive. Obviously, you do very well on KPIs partly down to M4Os in fixed KPIs of enterprise. Do you see any moves from you competitors or have you seen any moves recently that would worry you going forward and do you believe with the re-pricing we’ve seen recently in enterprise, we should see a fairly confident revenues can recover next year? Thank you.

Okay Georgios, with regards to the 700 megahertz, recently we are also seeing question and we need to see the details before we take a public view on that. So I don’t think enough details have been made available for us to apply. Theoretically speaking, it is clearly one of those frequencies that all the operators will want, simply because with 700 megahertz you can get the kind of coverage that’s required for you to pick 4G as far as we can and furthermore against the backdrop where 4G handset prices are coming down, it’s a great opportunity for us to actually migrate this market faster than people expect to go deep, but to comment specifically on 700 megahertz, not enough details has been made available for me to be able to do that. With regards to the corporate segment beware that we are moving people to be IT world. So some times when we look at some of the lend wise KPIs we are cannibalizing ourselves, but all I can say to you is that one of the major impacts right now is simply the fact that no big projects are being allocated. So people are very sensitive to price yes but we all know this but of course people need to feel confident about the future so that they can invest and that’s why examples like one that was mentioned that Vodafone wants to build fiber in Portugal. That’s great news for the country because its show how confident they are with the economy and they want to create jobs and all that different processes. So I think what we need is we need to get that consumer confidence and business confidence levels up and as the economy starts to develop, I have no doubts in my mind that some of these very larger contracts or projects will be looked at again. I think for example the cloud, it makes a hell of a lot of sense for SMEs and large corporates to work toward consolidating data center and adopting the cloud. Do you want to move away from variable fixed cost to variable cost and you of course would want to take advantage of this new infrastructure we put in place in [indiscernible] that new data center that has a high use of efficiency 1.2 in addition to all the safety and security issues and so on and so forth. In order for me to engage in that project where you virtualise your own data center, its’ a journey, it requires investments on both sides. So some of these projects, I think they will start gathering momentum as and when people feel more confident about the economy. A good news is that it seems that the news coming out of the Portuguese economy tends to be getting better. So let’s hope the next year a business in general and consumers will feel more confident and hopeful we’ll get uplift from that. Thank you.

Thank you. the next question is from Madeleine King of Credit Suisse. Please go ahead.

Oh, hi. I wonder if you would provide us with an update on your fund liability management following the merger, and specifically we’ve had some comments from the rating agencies about one exchanges or buyback. So if you could just tell us what you kind of thinking that would be great.

Okay. Thank you. You would have to excuse us because basically we would like to as usually today’s call to be focused on the third quarter results. All I can say at this stage regarding the transaction is that we have indicated that it will take about five to six months. We are working out in order to execute in that timeframe. Of course in the meantime we just referred you to our previous public statements and our publically available filing with CBM, CMGM and SEC. And so if you excuse us on this call, we’d like to focus at this stage on the third quarter results.

Thank you. We have time for one final question that comes from the line of Giovanni Montalti of UBS. Please go ahead.

Hello good afternoon, thanks for the question. If I may can I ask you to share with us some thoughts about the market consolidation scenarios in Brazil. Do you think the market is say mature enough for such scenarios? And do you think you are sufficiently capitalized to take part for these processes? Thank you.

Okay. Thank you. As you can imagine very difficult comment on market rumors what I can say to you is well I said earlier in call which was at – we need to work the margins in the Brazil market to a higher level, significant investments are required therefore it is important that we maintain a rational behavior which is a big thing in this market which I think is a good news from standpoint. With regards to voice clearly the challenge for us is the merger that we announced Portugal Telecom and that’s what keeping us busy at this time and that’s what’s actually going to allow us to simplify one that biggest advantage of actually executing in that’s right, so I think, that’s the transaction if you like, that will position Oi so that in the future it can continue to develop itself in the Brazilian market and we are hopefully with it, even higher ambition than that. But so I think right now, we don’t like to comment on rumors and so on and so forth other than to say that we are working to get transaction values we set and we Portugal Telecom and that’s going to keep us busy from next five to six months, thank you.

Sorry, just a very quick follow-up, when you say 5 to 6 months starting from now and from when you have announced the deal?

When we announced we said when we announced the deal we said 5 to 6 months which means, we probably talk about April, okay from the time of announcement.

Thank you so much.

Thank you.

We have no further questions in queue at this time. I return call back over to management for any closing remarks.

Okay thank you very much, ladies and gentleman for being on this call as usual my team and I will be available to further clarify any questions that you may have, offline of course. Next week myself, Zeinal Bava and Nuno Vieira will be in Barcelona. And we’ll most likely have the pleasure to meet most of you. And therefore we can further elaborate some of the issues that were raised today, as we’ll see you in Barcelona and thank you very much once again for being on the call and bye, bye. Thank you.

Thank you, ladies and gentleman this concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.