During the first half of 2006 Portugal Telecom registered a net result of Euro 402 million - a 41.6% increase on equal period last year. This result which was considered well over the analysts’ forecasts also indicated a 2.0% improvement in operational gains, attaining Euro 3.089 million.

Portugal Telecom registered, in the first half of 2006 a positive result on the same period in 2005. In addition to the 2.0% increase in operational gains and an increase of over 40% in the net result on same period last year, the EBITDA minus Capex totalled Euro 734 million (ME). Net debt attained Euro 4.338 million at the end of June 2006, whilst non-financed responsibilities pertaining to retirement benefits dropped to Euro 1.990 million.

EBITDA registered Euro 1.090 million – a 7.4% drop on equal period last year. This fall is mainly due to the negative impact of interconnection tariff reduction on the fixed network and in TMN, to the reversion of a provision pertaining to an amount to be received from Angola Telecom in 2005, and the recognition in June 2006 of a provision at VIVO due to invoicing problems relative to the migration of systems to one single platform.

Pertaining to the client base, fixed network accesses registered a 0.3% drop in the second quarter of 2006 to 4,433 thousand, in comparison to equal period last year resulting from the loss of lines. PT mobile service clients increased 1.0%, to 33.887 thousand. Excluding the impact of the adjustment of the VIVO data base, mobile clients increased 6.4% during this period. In relation to subscription TV, the total number of clients totalled 1.451 thousand in the second quarter of 2006, equivalent to a penetration of around 40% of the homes with television in Portugal. Broadband clients attained 980 thousand, equivalent to a 21.1% penetration rate of retail accesses.

In the mobile segment in Portugal, highlight goes to the second quarter of 2006, where 44 thousand clients were added in comparison to the 21 thousand in the second quarter of 2006. The strong performance within the corporate segment, in which TMN is winning the market share, boosted the level of net additions of post paid clients within the period, that mounted to 31 thousand 31 mil, representing over 70% of the total net addition within said period. At the end of June 2006, TMN registered 5,362 thousand clients, a 5.0% increase on equal period last year.

The expansion of 3G continues to motivate a very strong growth, having already surpassed 500 thousand clients at the end of June.

In the mobile service in Brazil, at the end of June 2006, Vivo registered 28,525 thousand clients, a 0.3% increase on equal period last year. At the end of June 2006, Vivo’s market share  was 40.6% in the operations area and 31.1% in the whole of Brazil. In the second quarter of 2006, data proceeds represented 7.7%  of service proceeds, constituting around 35% generated by data service proceeds other than the SMS’s.

Pertaining to Multimedia, the total number of subscription TV clients attained 1,444 thousand at the end of June 2006, with 28 thousand net disconnections in the second quarter of 2006, mainly due to the unfavourable macroeconomic frame and the increase in competition. At the end of June 2006, the number of cable and satellite clients stood at 1,072 thousand and 371 thousand respectively. Total ARPU of subscription TV in the second quarter of 2006 increased 4.1% to Euro 29,2, reflecting the success of the digital “Cable TV Funtastic Life” pack, offering 65 channels. The number of broadband clients via cable rose to 344 thousand at the end of June 2006, a 3.4% increase on equal period last year. The penetration rate of the Internet service amongst cable clients attained 32.1%, registering an increase of 1,2pp in the second quarter of 2006, in comparison to the same period last year.

In the first half of 2006, all other international businesses of the group registered a solid performance, both pertaining to gains and to the EBITDA. In the first half of 2006, operational gains of Médi Télécom increased 8.2%, in comparison to equal period last year, to 2,229 million Moroccan dirham, whilst the EBITDA rose 22.4% to 961 million dirham. The total client base increased 21.2% when compared to the first half of 2005, to 4,180 thousand clients, representing a market share of approximately 33%, with net additions in the first half of 2006 totalling 146 thousand.
The operational gains and the EBITDA of Unitel registered a growth in the first half of 2006 of 52.9% and 48.4%, respectively, due to the strong growth in the client base within the market. It is estimated that mobile penetration in Angola currently amounts to over 20%.  Operational gains of CTM rose 9.1% in the first half of 2006.

In Cape Verde, operational gains and the of CVT in the first half of 2006 rose 18.1% and 23.9%, respectively when compared to equal period last year.
In East-Timor, the operational gains and the EBITDA of Timor Telecom registered, in the first half of 2006 growth of 25.9% and 49.8%, respectively, o the first half of 2005, mainly due to the increase of mobile clients.

Within the mobile segment, Timor Telecom added 4 thousand new clients in the first half of 2006, attaining a total of 37 thousand clients at the end of June 2006.
In São Tomé and Príncipe, operational gains of CST increased 25.1%, when compared to the first half of 2005, to 63.407 million dobra in the first half of 2006, and the EBITDA registered a 32.9% rise to 21.413 million dobra.
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