PORTUGAL TELECOM : Qualified holding – Morgan Stanley

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Portugal Telecom, SGPS S.A. ("PT") hereby informs that Morgan Stanley now holds more than 2% of the share capital of PT.

This change is due to Morgan Stanley & Co. International plc increasing, on 2 September 2014, borrowed positions in the amount of 3,623,035 PT ordinary shares. As a result, Morgan Stanley now holds a qualified holding corresponding to 2.38% of PT's share capital and corresponding voting rights.

Additionally, PT was informed that this qualified holding is held as follows:

Holdings in PT ordinary shares:

> Morgan Stanley & Co. International plc: 17,037,114 ordinary shares representing 1.900% of the share capital and voting rights in PT;
> Morgan Stanley & Co. LLC: 4,105,558 ordinary shares representing 0.458% of the share capital and voting rights in PT;
> Morgan Stanley Capital Services LLC: 52,957 ordinary shares representing 0.006% of the share capital and voting rights in PT;
> Morgan Stanley Smith Barney LLC: 170,041 ordinary shares representing 0.019% of the share capital and voting rights in PT.

PT was further informed that the parent company Morgan Stanley controls Morgan Stanley & Co. International plc, Morgan Stanley & Co. LLC, Morgan Stanley Capital Services LLC and Morgan Stanley Smith Barney LLC, through the following chains of companies:

> Morgan Stanley & Co. International plc: Morgan Stanley International Holdings Inc., Morgan Stanley International Limited, Morgan Stanley Group (Europe), Morgan Stanley UK Group and Morgan Stanley Investments (UK);
> Morgan Stanley & Co. LLC: Morgan Stanley Capital Management LLC and Morgan Stanley Domestic Holdings Inc;
> Morgan Stanley Capital Services LLC: Morgan Stanley Capital Management LLC and Morgan Stanley Domestic Holdings Inc;
> Morgan Stanley Smith Barney LLC: Morgan Stanley Capital Management LLC, Morgan Stanley Domestic Holdings Inc and Morgan Stanley Smith Barney Holdings LLC.

This statement is pursuant to the terms and for the purposes of articles 17 of the Portuguese Securities Code and 2 of the Portuguese Securities Commission Regulation no. 5/2008, following a communication received from Morgan Stanley & Co. International plc, with registered office at 25 Cabot Square, Canary Wharf, London E14 4QA, United Kingdom.

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