PORTUGAL TELECOM : Supplemental information to the documents relating to the consoli...

Pursuant to a request of the Portuguese Securities Commission (Comissão do Mercado de Valores Mobiliários) pursuant to Article 245, number 5, of the Portuguese Securities Code (Código dos Valores Mobiliários), Portugal Telecom is providing to the market supplemental information with respect to its Report and Consolidated Financial Statements for the fiscal year ended December 31,
2013, as approved by its Board of Directors on February 18, 2014 (the "Report and Consolidated Financial Statements"), which information, in light of subsequent events, has become more relevant.
With respect to Note 24 - Short-term investments of the Notes to the Consolidated Financial Statements as of December 31, 2013, and particularly the caption "Debt securities," Portugal Telecom provides the following clarifications, which should be viewed as supplemental information in addition to the information required to be disclosed under IFRS 7 and IAS 24:

• As of December 31, 2013, the caption "Debt securities," in the total amount of Euro 750 million, includes debt securities issued by Espírito Santo International ("ESI," a non-financial holding company, governed by the laws of Luxembourg, that is part of the Espírito Santo Group) in the following amounts: (a) Euro 500 million subscribed by PT Finance on November 8,

2013, which were settled on their maturity date of February 10, 2014 for their principal amount plus accrued interest; (b) Euro 200 million subscribed by Portugal Telecom on October 29, 2013, which were settled on their maturity date of January
29, 2014 for their principal amount plus accrued interest; and (c) Euro 50 million subscribed by PT Finance on November 20,
2013, which were settled for their principal amount plus accrued interest on their maturity date of February 20, 2014, which date was after the approval of the Report and Consolidated Financial Statements by the Board of Directors (on February 18,
2014) and the issuance of the Legal Certification of the Consolidated Financial Statements and the Auditors' Report (on
February 19, 2014).

• As of December 31, 2012, this caption includes debt securities issued by ESI in the following amounts: (a) Euro 250 million subscribed by PT Finance on August 2, 2012, which were settled on their maturity date of February 1, 2013 for their principal amount plus accrued interest; (b) Euro 200 million subscribed by PT Finance on October 15, 2012, which were settled on their maturity date of January 14, 2013 for their principal amount plus accrued interest; and (c) Euro 60 million subscribed by PT Finance on October 17, 2012, which were settled on their maturity date of January 17, 2013 for their principal amount

plus accrued interest.

Avenida Fontes Pereira de Melo, 40

1069-300 Lisboa

Portugal

Public company

Share capital Euro 26,895,375

Registered in the Commercial

Registry Office of Lisbon

and Corporation no. 503 215 058

Portugal Telecom is listed on the Euronext and New York Stock Exchange. Information may be accessed on the Reuters under the symbols PTC.LS and PT and on Bloomberg under the symbol PTC PL.

Nuno Vieira

Investor Relations Director nuno.t.vieira@telecom.pt Tel.: +351 21 500 1701

Fax: +351 21 500 0800

www.telecom.pt

With respect to Note 45.1.3 - Financial instruments - Credit risk of the Notes to the Consolidated Financial Statements as of December 31, 2013, and particularly the caption "Debt securities," Portugal Telecom provides the following clarifications, which should be viewed as supplemental information in addition to the information required to be disclosed under IFRS 7:

• As of December 31, 2013 and 2012, investments in short-term securities issued by ESI, a Espírito Santo Group entity, in the total amounts of Euro 750 million and Euro 510 million, respectively, represented the following percentages of the captions

set forth below:

• With respect to the information on our policy on investments in cash and short-term investments, as presented in general terms in the Report and Consolidated Financial Statements in the same note of the Notes to the Consolidated Financial Statements as of December 31, 2013, in Item 10 - Main Risks and Uncertainties - Financial Risks - Credit of our Consolidated Annual Report 2013 and in Item 03.III - Internal Organization - Internal Control and Risk Management - Main economic, financial and legal risks - Financial Risks - Credit of our Corporate Governance Report 2013, and in particular the criterion for investments in diversified financial institutions that are reputable in the market, it should be mentioned that, given the concentration in deposits and treasury applications in BES/GES, as of December 31, 2013, the Company was not implementing an effective diversification.
With respect to Note 48.b) - Related Parties - Shareholders of the Notes to the Consolidated Financial Statements as of December
31, 2013, Portugal Telecom provides the following clarifications, which constitute supplemental information and more extensive information than that required under IAS 24:

• For purposes of this note, PT took into consideration its principal shareholders holding a qualified interest in its share capital equal to or in excess of 2%, based on the ownership information communicated by such shareholders to the company, even though those shareholders should not be deemed to be related parties as defined by IAS 24 as they do not meet the requirements set forth in such accounting standard.

• Taking into account the matters described above, in the table setting forth information about related party transactions, references to the shareholder Banco Espírito Santo ("BES") should be considered references to Grupo Espírito Santo ("GES"),

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which includes BES and all entities that, according to information provided by BES, could be considered related parties of
BES, including ESI (See Annex I).

• In footnote (i) to the table, Portugal Telecom informs that interest payments received by PT include amounts relating to interest received on bank deposits and on the short-term investments in ESI referred to in Note 24 to the Notes to the Consolidated Financial Statements as of December 31, 2013.

• As of December 31, 2013 and 2012, the balances relating to bank deposits, short-term investments and other financing transactions with our principal shareholders were as follows:

(i)It should be further noted that Banco Espírito Santo and Caixa Geral de Depósitos both acted as placement agents for commercial paper issued by Portugal Telecom, and in that regard, Portugal Telecom had outstanding amounts of Euro 200 million as of December 31, 2013, placed by BES, and Euro 50,750,000 as of December 31, 2012, placed by Caixa Geral de Depósitos. Portugal Telecom is not informed as to the investors who subscribe for these investments.

• The transactions that occurred during the fiscal year ended December 31, 2012 and the balances at such date, but excluding outstanding balances relating to bank deposits, short-term investments and other financing transactions with our principal shareholders, are as follows (value-added tax included):

(i)Revenues and gains include sales and services rendered by Portugal Telecom and interest received on bank deposits and short-term investments, while costs and losses include supplies and external services provided to Portugal Telecom and interest paid on financing agreements and equity swaps.

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Annex I - List of entities with which transactions or balances have been identified

Banco Espírito Santo Angola, SARL Besaactif (Angola)

Banco Espírito Santo, SA

Banco Espírito Santo de Investimento, S.A.

ESAF - Espirito Santo Fundos de Investimento Mobiliario, S.A. Espírito Santo Capital - Sociedade de Capital De Risco, SA ESAF- Espírito Santo Fundos de Pensões, SA

Locarent

Esaf - Espírito Santo Fundos de Investimento Imobiliário S.A. ESAF - Espírito Santo Activos Financeiros, SGPS, SA

BES-Vida - Ccompanhia de Seguros, S.A. ES Recuperação de Crédito, ACE

BEST - Banco Electrónico de Serviço Total, SA Espirito Santo Informática

Banco Espírito Santo dos Açores, SA Esconcessões, SGPS

Espirito Santo Gestão de Património, SA Fundo Gestão Património Imobiliário

Fungere - Fundo de Gestão De Património Imobiliário

Oblog - Consulting, SA

Orey Reabilitação Urbana - FEIIF

Praça do Marquês - Serviços Auxiliares, SA Quinta dos Cónegos - Sociedade Imobiliária, SA

Espírito Santo International, SA

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