Lisbon, Portugal, April 20th, 1999 - The Annual General Shareholders' Meeting of Portugal Telecom (NYSE: PT; BVL: PTCO.IN), held yesterday afternoon, approved all the proposals in the agenda.

After approving Portugal Telecom's management report and the consolidated and unconsolidated financial statements for 1998, shareholders approved the appropriation of net income as follows:

• PTE 4,412,621.5 thousand as legal reserve;
• PTE 38,380,000 thousand as dividends, corresponding to a gross dividend of PTE 202 per share (or ADS), to be paid on May 19th, 1999;
  The distributable net income of around PTE 76.68 billion was obtained by deducting the amount of PTE 4.41 billion, to be paid into the legal reserve, and the amount of PTE 7.16 billion, which represents Portugal Telecom's share in the increased share capital of TV Cabo Portugal;
• PTE 39,881,031.8 thousand as retained earnings, which reflects the positive effect of the equity method of accounting on net income for the year, plus the increased net worth of TV Cabo Portugal as previously mentioned;
• PTE 1,250,000 thousand for profit distribution to Employees, according to the proposal of the Portuguese State;
• PTE 4,328,772.7 thousand as free reserves.

The shareholders' meeting approved the re-denomination of the company's share capital into Euros, at an initial par value of Euro 5 per share, funded through the incorporation of free reserves in the amount of PTE 457,900 thousand. The shareholders' meeting also approved a proposed five-for-one share split, to be effected by December 31, 1999, and the proposed changes of the company's by-laws.

Shareholders also authorized the Board of Directors to increase share capital by up to 15% through the issue of new ordinary shares, as well as convertible bonds. Preference rights were suspended for any convertible bond issue.

Power was given to the Board of Directors to approve issues of bonds and other securities up to PTE 480 billion.

The following items were also approved: the election of Mr. Moura Calhão as Secretary of the Shareholders' Meeting Board, the ratification of co-option of Mr. Manuel Serzedelo and of Mr. Fernando Ulrich as non-executive members of the Board of Directors, as well as authorization for Portugal Telecom to purchase or sell its own shares (up to 5% of the share capital), bonds and other securities.

The Board of Directors said it might propose changing Portugal Telecom, S.A. into a holding company, in a near future.

"With these approvals, shareholders have endorsed the business development strategy of Portugal Telecom, assuring adequate flexibility in management and contributing to two main goals: preparing successfully for the liberalization challenge in Portugal and consolidating the group's international operations", management said.

Finally, the shareholders approved a vote of confidence in all the members of the Board of Directors and the Statutory Audit Board, and a vote of condolence for Ms. Maria José Fonseca e Costa, previous Secretary of the Company and Secretary of the Shareholders' Meeting Board.

Contact:
Pedro Dias
Portugal Telecom
+351-1-500 8739

Richard Taylor
Taylor Rafferty Associates
+44-171-606 1149