P.TELECOM : Reduction of Holding and Long Position of Telefónica

Portugal Telecom, SGPS S.A. ("PT") informs that Telefónica, S.A. ("Telefónica") has reduced its holding to less than 2% of the voting rights corresponding to the share capital of PT and its long position to less than 5% of PT's share capital, as follows:

i) On 20 January 2012, Telefónica disposed, on regulated market, of 150,000 PT shares. As a result of such transaction, Telefónica held 17,912,661 shares representing 1.998% of PT's share capital and corresponding voting rights;
ii) On 19 January 2012, within an equity-linked swap Telefónica partially disposed of a long economic position corresponding to 175,000 PT shares;
iii) As a result of the transactions described in (i) and (ii) above, Telefónica held a long position in PT corresponding to 44,640,099 shares representing 4.979% of PT's share capital.

Additionally, PT was informed that such holding and long position were attributed to Telefónica as follows: (the table is availale on the PDF attached)

This statement is pursuant to the terms and for the purposes of article 17 of the Portuguese Securities Code and articles 2 and 2-A of the Portuguese Securities Commission Regulation no. 5/2008, following a communication received from Telefónica, with registered office at Gran Vía 28, 28013 Madrid, Spain, with a share capital of Euro 4,563,996,485.00, registered in the commercial registry office of Madrid, Tomo 12,534, Folio 21, hoja M-6164, inscription 1359, with the number C.I.F. A-28/015865.