Lisbon, Portugal, April 23rd, 1998 - In the April 21st, 1998 Annual General Shareholder's Meeting of Portugal Telecom (NYSE: PT), the Portuguese telecommunications company, all the proposals in the agenda were approved.

Following the approvals of Portugal Telecom's management report and financial statements for 1997 and of Portugal Telecom Group's consolidated management report and consolidated financial statement for 1997, the shareholders approved the use of PTE 38,461,117,000 of Free Reserves to cover the negative balance existing in the Retained Earnings as a result of the past liabilities recorded in respect of health care for retired employees as at 1st January 1997, and the appropriation of net income of which:

• PTE 33,630 million for dividends, representing a payout ratio of approximately 47.5%, corresponding to a gross dividend of PTE 177 per share (or ADS), to be paid on May 21st, 1998;
• PTE 1,820 million for distribution of Profit to Employees.

Also approved were the co-option of Mr. Norberto Veiga de Sousa Fernandes, as a Member of the Board of Directors, and the election of the following four officers, again to the Board of Directors:

• Mr. Fernando Xavier Ferreira (Telebrás)
• Mr. Guillermo Fernández Vidal (Telefónica de España)
• Mr. Hugh Merrill (British Telecom)
• Mr. Eduardo da Costa Monteiro Consiglieri Pedroso (Banco Comercial Português)

The representatives of Telebrás, Telefónica and British Telecom were elected under the scope of the Alignment or Strategic Partnership Agreements entered into with these telecommunications operators, since April 1997.

Also approved in the Shareholders' Meeting were:

• Acquisition and sale of own shares (up to a limit of 5% of PT's share capital, without prejudice to any lower limit owing to the effect of imperative law);
• Acquisition and sale of bonds and other PT securities;
• Setting a limit up to PTE 150,000 million for the issue of bonds and other securities by the Board of Directors.

These approvals are part of Portugal Telecom's business development strategy, in terms of ensuring flexibility in the management framework of PT funds and taking into account the opportunities associated with future international investments.

Also approved was the creation of a Portugal Telecom, S.A. shares purchase option plan ("the Plan") for Officers and Senior Employees of PT and its subsidiaries which the Board of Directors considers to include. The options shall be staged over a period of 5 years, and subordinated to the Participant's individual performance. The Plan for all the beneficiaries has a limit, in the aggregate, of 0.3% of PT shares.

The objectives of this Plan shall be essentially: to create value for shareholders, to retain the loyalty of key employees and stimulate their continuous performance over the medium and long term.

Shareholders also approved:

• A vote of condolence for the Brazilian Minister for Telecommunications, Sérgio Motta, who passed away in April 20th;
• A vote of confidence for all members of the Board of Directors and the Statutory Audit Board, in light of their achievements in terms of performance and results, as well as in the Partnership/Strategic Alignments and PT3;
• A vote of honors to the Board of Directors, for the way the Pricing Convention 1998/2000 has been developed and put in place.

Portugal Telecom, privatized in 1995, is the principal telecommunications provider offering local, domestic long distance and international telephone service throughout Portugal. Additionally, PT and its subsidiaries, the Group, offer domestic mobile services, data communications and related services, cable television, transmission of broadcasting signals, telex and a miscellaneous of other telecommunication services. A secondary offering occurred in July 1996, and a third offering took place in October 1997. Portugal Telecom's common shares trade on the Lisbon Stock Exchange, and its ADSs, each equal to one ordinary share, trade on the New York Stock Exchange, as well as on London SEAQ International, both ordinary shares and ADSs. As of May 21, 1998, Portugal telecom had a market capitalization of approximately US$11 billion. Information may be accessed on Bloomberg under the symbol PT, on the Reuters 2000 Service under the symbol PT.N and on Quotron under the symbol PT.