PORTUGAL TELECOM : Qualified holding – Morgan Stanley

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Portugal Telecom, SGPS S.A. ("PT SGPS") hereby informs that it was notified of the following regarding a qualified holding of Morgan Stanley:

A) Position fell below 2% threshold (27 October 2014)

This change occurred on 27 October 2014 and is due to Morgan Stanley & Co. International plc decreasing borrowed positions by 979,971 PT SGPS ordinary shares and disposing of 209,969 PT SGPS ordinary shares. As a result, Morgan Stanley's holding now corresponds to 16,762,557 ordinary shares representing 1.87% of PT SGPS' share capital and corresponding voting rights.

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

• Morgan Stanley & Co. International plc: 12,566,508 ordinary shares representing 1.40% of the share capital and voting rights in PT SGPS;
• Morgan Stanley & Co. LLC: 4,042,066 ordinary shares representing 0.45% of the share capital and voting rights in PT SGPS;
• Morgan Stanley Smith Barney LLC: 153,983 ordinary shares representing 0.02% of the share capital and voting rights in PT SGPS.

B) 2% threshold exceeded (29 October 2014)

This change occurred on 29 October 2014 and is due to Morgan Stanley & Co. International plc increasing borrowed positions by 231,116 PT SGPS ordinary shares and acquiring of 989,902 PT SGPS ordinary shares. As a result, Morgan Stanley's qualified holding now corresponds to 18,913,593 ordinary shares representing 2.11% of PT SGPS' share capital and corresponding voting rights.

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

• Morgan Stanley & Co. International plc: 14,719,722 ordinary shares representing 1.64% of the share capital and voting rights in PT SGPS;
• Morgan Stanley & Co. LLC: 4,042,066 ordinary shares representing 0.45% of the share capital and voting rights in PT SGPS;
• Morgan Stanley Smith Barney LLC: 153,805 ordinary shares representing 0.02% of the share capital and voting rights in PT SGPS.

PT SGPS was further informed that the parent company Morgan Stanley controls Morgan Stanley & Co. International plc, Morgan Stanley & Co. 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 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 communications received from Morgan Stanley UK Limited and Morgan Stanley & Co. International plc, with offices at The Cerium Building, 55 Douglas Street, Glasgow G2 7NP, Scotland.

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