1Q14 Highlights. Decline in Net Financial Debt of 16 million euros to 923 million euros in 1Q14, bringing the ratio of Net Debt to EBITDA to 1.7x.

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2 1Q14 Highlights Table 1. 1Q14 Highlights 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Operational Highlights Total RGUs 7, , , % (1.1%) Convergent RGUs % n.a. % 3P&4P Subscribers 64.6% 66.9% 68.0% 1.0pp 3.4pp IRIS Subscribers % 75.2% Financial Highlights Operating Revenues (5.3%) (4.1%) EBITDA % (5.9%) EBITDA Margin 39.2% 33.2% 38.5% 5.3pp (0.7pp) Net Income 27.5 (13.1) 25.3 n.a. (8.2%) Free Cash Flow % (39.2%) Very strong growth in convergent bundles reaching 556 thousand convergent RGUs, with 343 thousand net adds in 1Q14; convergent offers already represent close to 10% of the fixed customer base. Post-paid mobile net adds of 129 thousand led primarily by take-up of ZON 4i; total mobile net adds of 45 thousand driving yoy increase in mobile subscriber base of 0.8%. The best quarter ever for IRIS with net adds of 61 thousand and reaching half a million IRIS subscribers in total, already 62% of the 3&4P customer base. Consolidated Revenues declined by 4.1% and EBITDA by 5.9%. Including international operations Consolidated Revenues posted a decline of 2.9% to million euros and EBITDA fell by 3.9% to million euros, representing an EBITDA margin of 38.5%. Sequential improvement in Net Income to 25 million euros, from negative 13 million euros in 4Q13 with a significantly lower impact from non-recurrent costs related with the integration process. Decline in Net Financial Debt of 16 million euros to 923 million euros in 1Q14, bringing the ratio of Net Debt to EBITDA to 1.7x. 1 First Quarter 2014 Earnings Announcement

3 1 1Q14 Consolidated Results The integration process is now well underway, with teams focused on ramping up commercial deployment and restructuring operations in the new, merged entity. We are still in the early months of our strategy execution and the full benefit of many of the projects underway should only be expected in the medium term, as detailed in our strategy disclosure to the market last February. 2 Very strong take up of convergent bundles The core priority of ZON OPTIMUS strategy is to reinforce competitive position through domestic market share growth with convergence being a strong driver of market dynamics over coming years. ZON OPTIMUS unique set of assets provides a strong platform to leverage growth in market share across both the consumer and enterprise markets. Consumer appetite for convergent mobile and fixed bundles is clearly very strong. Since launch in mid 4Q13 of ZON4i, ZON OPTIMUS has been witnessing consistently stronger month on month growth in convergent subscribers. By the end of 1Q14, ZON OPTIMUS had 556 thousand RGUs within convergent bundles, representing an average pace of growth of over 20 thousand new households per month, and subscribing to an average of 5 RGUs per account. Of the convergent mobile RGUs, just 12% were previous ZON OPTIMUS customers and the balance are coming either from other operators or are new mobile numbers, therefore driving relevant net growth in the total mobile subscriber base. The main anchor of convergent offers is Pay TV, with 90% of ZON4i customers upgrading from existing ZON offers and with just 54% being previous IRIS customers. The promotion of ZON 4i is therefore driving not only an increase in penetration of new mobile RGUs but also a strong take-up of the more sophisticated, premium IRIS interface. As such, ZON OPTIMUS strong position in the Pay TV market, with 48% market share at the end of 2013, is an extremely strong platform to grow in mobile RGUs. As a percentage of the fixed customer base, only 5 months after launch of ZON4i, convergent bundles represent close to 10%. Enthusiasm for these fixed mobile bundles is justified by their very attractive value proposition. ZON4i combines more and better television programming with 116 channels; fixed Internet which gives the highest speeds and most extensive coverage with 100 Mbps to all 3.3 million households covered by ZON OPTIMUS next generation HFC network; an unlimited national and international fixed voice service which also includes free use of the ZON Phone app enabling use of a landline number on mobile devices, benefiting from normal landline tariffs and integrated billing; free access to the largest network of WiFi hotspots giving instant access to 600 thousand hotspots in Portugal and over 12 million worldwide; unlimited mobile phone use, offering the best 4G solutions available, for up to four users, mobile Internet with free 200 MB per SIM card which accommodates a flexible top-up facility for those who occasionally go over their data limit; First Quarter 2014 Earnings Announcement 2

4 priority access to the largest network of cinemas in Portugal, through myzoncard, that also gives one free ticket for every cinema ticket purchased. ZON4i is priced at with two mobile users, and can be adjusted to suit usage profile and requirements. Already a result of the reinforced competitive strengths created by the merger, at the beginning of 2Q14, ZON OPTIMUS launched a convergent offer for DTH coverage geographies based on 4G solutions for broadband and voice, thus mirroring the bundled value proposition provided over the HFC footprint. For the same prices as HFC based offers, customers can subscribe to 3 and 4 Play bundles including 81 TV channels, up to 40 Mbps of Internet, unlimited fixed and mobile voice including 2 mobile SIM cards. Another record quarter for IRIS reaching half a million subscribers A key lever to reinforce our leadership in Pay TV is our next generation, multi-screen TV offer, IRIS, which is the default TV offer for all new triple and quad play packages. This was another record quarter for IRIS with net adds of 61 thousand taking the total number of IRIS subscribers to half a million and already representing 62% of the 3&4P customer base, up from 36% in 1Q13. Levels of satisfaction and customer experience with IRIS are extremely high, with usage of the leading edge, cloud based functionalities completely transforming the way people watch TV. 99% of IRIS customers have used Timewarp and Restart TV and over 75% use them every day, at least twice. IRIS is the centrepiece of our product strategy, with continuous releases and upgrades always exceeding user expectations. The focus for 2014 is on extension and interconnection of the TV experience with the mobile ecosystem, redoubling efforts in research and development in order to continue to respond to the challenges of the Pay TV market and exploiting the opportunity presented by ZON OPTIMUS strong position as a fixed and mobile player. The importance and success of our TV interface is core to our strategy to lead the market in convergence given that choice of operator is anchored on the Pay TV provider. At the beginning of 2014 the IRIS set-top box software underwent a major update, which brought about significant improvements in performance and usage, as well as a new HTML5 browser that will allow the development of a new generation of TV applications, including YouTube Leanback. The improvements include adjustment of the Fast Forward and Rewind speeds in video streaming, which is particularly relevant for the Restart and Timewarp functions. We recently launched our Network-DVR which enables customers to record, pause live TV and rewind live content, fully replicating the experience of a local recorder with the additional advantage of allowing for unlimited simultaneous recording of programmes and sharing of recorded content over all STBs in the household. With this development ZON OPTIMUS has become the first Pay TV operator to initiate the commercial fade-out of DVR centric STBs, generating in the process a much superior user experience. IRIS has accumulated a number of awards as the best TV interface with widespread recognition from customers and industry peers. IRIS was voted Product of the Year in Portugal for the second 3 First Quarter 2014 Earnings Announcement

5 consecutive year and IRIS OTT apps were also recognized internationally having won the Best TV on the Move Service award at London s TV Connect conference. Strong pick-up in mobile net-adds driving yoy growth in subscriber base The growth of convergent bundles is driving an important structural shift in mobile customers with more and more users subscribing to post-paid mobile SIM cards within 4P bundled offers. This trend has been accelerating for ZON OPTIMUS every month since launch of ZON4i at the end of In 1Q14, post-paid mobile subscribers grew by 129 thousand, one of the strongest quarters of the past years. The growth recorded in post-paid voice subscribers was even more significant with net adds of 147 thousand however this was somewhat offset by a net decline in post-paid mobile broadband cards of 18 thousand. In terms of the pre-paid mobile base, net-adds were negative by 84 thousand, impacted by the growing shift towards convergent offers, however the balance is clearly very positive for ZON OPTIMUS with total net adds in mobile of 45 thousand. In the stand-alone mobile segment, marketing efforts remain focused on driving all-net tariffs that provide easy and unlimited plans without any kind of network restrictions. The two main families of all-net tariffs are SMART and LIGA, both launched during SMART is directed at the high-end segment of the market as a post-paid plan that enables customers to communicate to all networks with an almost unlimited monthly allowance and without the hassle of having to remember to top-up. All SMART tariffs include at least 1 Gb of data, providing an excellent 3G and 4G experience. LIGA addresses the need to provide more affordable all-net access to more segments of the market at a very appealing 9.99 euros / month price point. This offer has led to a significant increase in the proportion of pre-paid customers with a fixed monthly recharge. Another lever for growth in personal mobile communication is the push for increased smartphone penetration, which is currently well below European average at around 25% nationwide. OPTIMUS has a relevant lead versus its main competitors in terms of 4G network coverage and in order to exploit this advantage and stimulate mobile data usage, has launched a number of very attractive smartphones incorporated in competitive post-paid mobile tariff plans. We are actively exploring opportunities to reduce the cost and consequent retail prices for equipment and recently launched a 4G enabled own branded smartphone for 99.90, OPTIMUS ZILO. Importantly, OPTIMUS already posts a significantly higher share of mobile data traffic when compared to its total share of mobile traffic, 42% of mobile data traffic versus 13% in total. Over 1 million RGUs in the Enterprise segment By the end of 1Q14, ZON OPTIMUS had over 1 million RGUs in the business segment reflecting a relevant pick-up in quarterly net adds to 23.2 thousand. The majority of the growth was in mobile, with net adds of 18.6 thousand in the quarter, driven by convergence. In the SME and SoHo segments in particular, ramp up of sales channels is now underway, enabling further deployment of cross-sales within the existing footprint of ZON and OPTIMUS customer bases. In the small business segment, timing of revenue growth is still set to lag volume growth given that the market-wide trend towards First Quarter 2014 Earnings Announcement 4

6 convergent offers, initiated at the beginning of 2013, is leading to some repricing of the base. Although representing near term pressure on revenues, increased RGU volume of convergent SME and SOHO customers will help offset that loss in the medium term given that ZON OPTIMUS net growth will come primarily from new RGUs to the company. On the Corporate front, the team has been very successful in addressing important new accounts with a number of important contracts coming to the market for tender in the coming months. ZON OPTIMUS has already won a number of relevant flagship accounts across many sectors of the market however set-up and migration of new corporate accounts is a time demanding process and therefore revenues will take at least a couple of quarters to start showing a material impact. ZON OPTIMUS now stands stronger as a technologically superior and fully integrated fixed and mobile operator, capable of offering relevant and competitive integrated and convergent telecommunications and data services for the enterprise segments in Portugal. The deep coverage, capillarity and high capacity of ZON OPTIMUS network are core differentiating factors for this segment. ZON OPTIMUS is already addressing the market as a single entity, capable of providing tailor made solutions for the largest corporate and public sector customers, and reaching out to SME and SoHo companies with specific solutions adapted to usage profile and geographic spread, leveraging the best national NGN Fixed and Mobile footprint. 5 First Quarter 2014 Earnings Announcement

7 Table 2. Operating Indicators ('000) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Telco (1) Aggregate Indicators Homes Passed 3, , , % 1.7% Total RGUs 7, , , % (1.1%) Mobile 3, , , % 0.8% Pre-Paid 2, , ,166.9 (3.7%) (8.0%) Post-Paid , % 23.9% ARPU / Mobile Subscriber (Euros) (0.7%) (4.7%) Pay TV 1, , ,493.3 (1.6%) (5.7%) Fixed Access (2) 1, , ,189.4 (1.2%) (3.9%) DTH (3.3%) (12.1%) Fixed Voice 1, , ,491.3 (1.6%) (3.3%) Broadband % 3.5% Others and Data % 15.6% 3P&4P Subscribers % 1.1% % 3P&4P 64.6% 66.9% 68.0% 1.0pp 3.4pp Convergent RGUs % n.a. IRIS Subscribers % 75.2% IRIS as % of 3P&4P Subscribers 35.6% 54.3% 61.7% 7.4pp 26.1pp Net Adds Homes Passed % (3.1%) Total RGUs (61.5) (40.6) 2.2 n.a. n.a. Mobile (43.9) n.a. n.a. Pre-Paid (52.3) (53.0) (84.1) 58.8% 60.7% Post-Paid % n.a. Pay TV (10.7) (28.2) (24.7) (12.3%) 131.6% Fixed Access (2) (0.1) (16.0) (14.4) (9.6%) n.a. DTH (10.5) (12.2) (10.3) (15.8%) (2.3%) Fixed Voice (15.2) (24.0) (23.7) (1.5%) 55.7% Broadband (15.8%) (37.2%) Others and Data % 33.1% 3P&4P Subscribers 8.3 (4.1) 2.5 n.a. (69.7%) Convergent RGUs % n.a. IRIS Subscribers % 22.8% (1) Portuguese Operations (2) Fixed Access Subscribers include customers served by the HFC, FTTH and ULL networks. First Quarter 2014 Earnings Announcement 6

8 Table 3. Operating Indicators ('000) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Telco (1) Indicators per Segment Consumer Unique Subscribers With Fixed Access (2) 1, , ,159.1 (2.0%) (5.4%) Pay TV 1, , ,429.2 (1.8%) (5.8%) Fixed Access 1, , ,138.2 (1.4%) (4.1%) DTH (3.4%) (12.2%) IRIS Subscribers % 75.2% Broadband % 3.7% Fixed Voice 1, , ,299.2 (1.9%) (3.8%) Mobile 2, , , % (0.6%) % 1P 17.9% 14.8% 14.4% (0.4pp) (3.4pp) % 2P 17.9% 18.6% 19.2% 0.6pp 1.3pp % 3P&4P 64.3% 66.6% 66.4% (0.3pp) 2.1pp ARPU / Unique Subscriber With Fixed Access (Euros) % 1.1% Net Adds Unique Subscribers With Fixed Access (3.9) (19.1) (24.1) 26.0% n.a. Pay TV (10.7) (27.4) (26.4) (3.7%) n.a. Fixed Access (0.6) (15.6) (16.1) 2.8% n.a. DTH (10.1) (11.8) (10.3) (12.5%) n.a. IRIS Subscribers % 21.0% Broadband (25.5%) (46.3%) Fixed Voice (17.6) (23.2) (25.0) 7.7% n.a. Mobile (57.6) (9.5) 26.5 n.a. n.a. Business Total RGUs , % 4.6% Pay TV % (1.5%) IRIS Subscribers % 75.2% Broadband % 3.4% Fixed Voice % 0.3% Mobile % 6.8% ARPU per RGU (Euros) (3.1%) (4.9%) Net Adds Total RGUs % 35.8% Pay TV 0.0 (0.8) 1.7 n.a. n.a. IRIS Subscribers % 94.4% Broadband % 60.2% Fixed Voice 2.3 (0.8) 1.3 n.a. (43.8%) Mobile % 35.8% (1) Portuguese Operations (2) Fixed Access Subscribers include customers served by the HFC, FTTH and ULL networks. 7 First Quarter 2014 Earnings Announcement

9 Continued impact of remedies on fixed access base Fixed access Pay TV customers posted a decline of 14 thousand in 1Q14, still suffering the impact of remedies imposed by the Competition Authority whereby, upon approval of the merger, ZON OPTIMUS was forced to release OPTIMUS FTTH subscribers of their loyalty contracts and restricted from addressing them with commercial offers, providing a relevant opportunity for competitors to target these customers. As a result of these regulatory constraints, of the 38 thousand OPTIMUS FTTH customers that existed before the merger, a significant number churned to competitors. ULL fixed access customers are progressively being migrated onto own HFC infrastructure however, in some situations, they are outside current network footprint and therefore churn levels in this customer base are higher than normal. Fixed Voice and Broadband customers were equally impacted by the above mentioned one-off effects. The DTH Pay TV base fell by 10.3 thousand subscribers in 1Q14, along the same levels as in the previous quarters. The launch of 3P and 4P offers for the DTH market as from 2Q14 should help to reduce the relative network disadvantage that ZON OPTIMUS has in areas where it competes against a fixed infrastructure. Support in Fixed residential ARPU led by increase of convergent penetration ARPU per unique subscriber with fixed access posted a marginal increase of 1.1% with increased penetration of convergent offers that generated higher average revenues and the continued upsell of IRIS bundles offsetting some of the market driven pricing pressure. Mobile ARPU recorded a 4.7% yoy decline to 9.2 euros however remained flat in comparison with 4Q13, showing that the substantial growth in convergent post paid contract customers is helping to mitigate the underlying revenue pressure felt in stand-alone mobile consumption. On the business front, ARPU per RGU also posted a decline in 1Q14 of 4.9% to 25.2 euros, a reflection primarily of the repricing of the SME and SOHO customer base due to the increased shift to convergent solutions, as explained above. Cinemas and Audiovisuals Table 4. Operating Indicators ('000) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Cinema (1) Revenue per Ticket (Euros) (1.2%) 1.5% Tickets Sold 1, , ,595.7 (18.1%) (10.6%) Screens (units) % (0.5%) (1) Portuguese Operations First Quarter 2014 Earnings Announcement 8

10 In 1Q14, ZON OPTIMUS Cinema ticket sales posted a decline of 10.6% to million tickets, which compares with a decline in like-for-like, total market ticket sales of 12.5% 1, adjusted for the reopening of several screens by another operator. The ticket sales decline is explained mainly by the Easter holiday period which took place in 1Q13 whereas in 2014 it fell in 2Q14. Ticket sales in April already compensated for this effect and YTD April 2014 numbers are up by 2.3%, when compared to The most successful films shown in 1Q14 were The Wolf of Wall Street, 12 Years a Slave, The Lego Movie, The Monuments Men and American Hustle. ZON OPTIMUS opened the first IMAX DMR - Digital 3D screen in Lisbon in June This premium cinema experience is proving very successful, having already achieved a total of around 100 thousand spectators so far. Average revenue per ticket sold improved yoy, with an increase of 1.5%, to 4.7 euros. Sales of 3D movie tickets were lower yoy in 1Q14, representing close to 8% of ZON OPTIMUS ticket sales which compares with around 11% in 1Q13, due primarily to the lower number of movies in 3D and to customers choosing more lower-cost 2D alternatives than in the past. As a result of the lower ticket sales, Cinema revenues decreased by 9.1% yoy in 1Q14. Despite the yoy 9.2% decrease in gross box-office revenues in 1Q14, ZON OPTIMUS continues to maintain its leading market position, with a market share of 59.2% in terms of gross revenues in 1Q14. In 1Q14, revenues in the Audiovisuals division declined by 4.7% to 14.2 million euros impacted primarily by lower homevideo and VoD sales. Of the top 10 cinema box-office hits in 1Q14, ZON OPTIMUS distributed 7, The Wolf of Wall Street, 12 Years a Slave, American Hustle, Frozen, Robocop, 47 Ronin and August: Osage County, maintaining its strong leading position with a 68.2% market share in terms of gross revenues, having outperformed the market with yoy growth of 16.1%, which compares with a decline of 5.2% of the market as a whole. Already in 2014, the Audiovisuals division signed a contract for theatrical distribution of the Warner catalogue for Portugal, with effect on 1 April, 2014, from which some relevant contribution is therefore expected for the remainder of Source ICA Portuguese Institute for Cinema and Audiovisuals 9 First Quarter 2014 Earnings Announcement

11 ZAP ZAP continues its success story in the Angolan and Mozambican Pay-TV markets and it is today a reference operator in these countries, in Africa and in the industry. As a local operator, ZAP is focused on increasing its presence in these territories and it is, therefore, still expanding its sales channels, namely its own stores that are now 28 in Angola and 7 in Mozambique. Last additions were Soyo (Zaire province) and Dundo (Lunda Norte) in Angola and Beira and Nampula in Mozambique. Other sales channels are also still expanding and becoming more effective. ZAP continues to improve its products and services in order to meet the highest expectations from its customers and differentiate from competition in these countries. During this quarter ZAP added two new channels to its packages, STV Notícias (a Mozambican news channel produced by STV, one of the free-to-air broadcasters in Mozambique) and Cubavision. First Quarter 2014 Earnings Announcement 10

12 3 PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS The following Consolidated Financial Statements have been subject to limited review. As standard practice, only the annual accounts are audited; the quarterly results are not audited separately. CONSOLIDATED INCOME STATEMENT Table 5. Pro-Forma Profit and Loss Statement * (Millions of Euros) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Operating Revenues (5.3%) (4.1%) Telco (4.1%) (3.9%) Consumer Revenues (1.1%) (6.5%) Business Revenues (1.9%) 2.4% Equipment Sales (28.8%) 30.8% Others and Eliminations (34.8%) (19.6%) Audiovisuals (18.5%) (4.7%) Cinema (1) (19.0%) (9.1%) Others and Eliminations (11.4) (11.6) (11.0) (5.0%) (2.7%) Operating Costs Excluding D&A (213.8) (238.0) (207.5) (12.8%) (3.0%) W&S (23.3) (25.2) (21.0) (16.4%) (9.5%) Direct Costs (97.7) (105.0) (96.7) (7.9%) (1.0%) Commercial Costs (2) (19.3) (33.2) (22.7) (31.6%) 17.6% Other Operating Costs (73.6) (74.6) (67.0) (10.2%) (9.0%) EBITDA % (5.9%) EBITDA Margin 39.2% 33.2% 38.5% 5.3pp (0.7pp) Telco % (8.1%) EBITDA Margin 38.9% 31.8% 37.2% 5.4pp (1.7pp) Cinema Exhibition and Audiovisuals (12.8%) 36.3% EBITDA Margin 28.6% 39.3% 42.4% 3.1pp 13.8pp Share of results of associates and joint ventures % 277.5% EBITDA including results of associates and joint ventures % (3.3%) Depreciation and Amortization (87.1) (83.6) (83.9) 0.3% (3.7%) (Other Expenses) / Income (0.3) (26.8) (2.8) (89.4%) n.a. Operating Profit (EBIT) (3) n.a. (7.5%) (Financial Expenses) / Income (16.7) (13.5) (15.2) 12.1% (9.1%) Income Before Income Taxes 35.3 (4.1) 32.9 n.a. (6.8%) Income Taxes (7.6) (9.1) (7.3) (19.5%) (3.2%) Income From Continued Operations 27.7 (13.2) 25.6 n.a. (7.8%) o.w. Attributable to Non-Controlling Interests (0.2) 0.1 (0.3) n.a. 50.6% Net Income 27.5 (13.1) 25.3 n.a. (8.2%) (1) Includes operations in Mozambique. (2) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold. (3) EBIT = Income Before Financials and Income Taxes. * The merger by incorporation of OPTIMUS into ZON that led to the creation of ZON OPTIMUS was completed on 27 August Resulting primarily from the merger, in 3Q13 a number of accounting policies, practices and estimates have had to be aligned. The primary changes to accounting policies, with the correspondent restatement of the prior period accounts were the capitalization of customer acquisition costs at ZON in order to align with OPTIMUS policy also followed by other telecom operators and capitalization of certain movie rights in the audiovisuals division following IAS 38, which were restated since 1Q12 in the statutory accounts. In addition and in anticipation of the mandatory implementation of IFRS 11 as from 1Q14, whereby joint ventures may no longer be consolidated proportionately, ZON OPTIMUS has proceeded to deconsolidate the three joint ventures in which it holds stakes, ZAP (30%), Sport TV (50%) and Dreamia (50%) and has restated prior period financial statements to reflect their recognition through the equity method. To facilitate comparison between current and prior period results for the new ZON OPTIMUS, the current proforma consolidated financial statements have been prepared, reflecting not only the statutory accounts restatement due to the changes to accounting policies, but also the consolidation of 12 months of OPTIMUS results in 2013 (3 months in 1Q13). The financial statements reflect the impact, since September 2013, in depreciation and amortization of the provisional calculation of the fair value of OPTIMUS assets and liabilities which was used for the purposes of purchase price allocation resulting from the consolidation of OPTIMUS. The present financial review is based on these pro-forma financial statements. Appendix III to this report includes the statutory income statement for ZON OPTIMUS. 11 First Quarter 2014 Earnings Announcement

13 3.1 Operating Revenues Consolidated Operating Revenues were million euros in 1Q14, representing a decline of 4.1% in comparison with 1Q13. Adding back the contribution from the 30% stake in ZAP, Consolidated Revenues posted a decline of 2.9% to million euros. Combined Revenues for the Telco business declined by 3.9% to million euros, albeit posting a marginal sequential recovery in yoy growth in comparison with 4Q13. Consumer Revenues, down by 6.5% yoy, were primarily impacted by negative yoy growth in personal mobile revenues due to lower average subscriber numbers yoy, led by the market wide trend towards convergent offers and a reduction in mobile ARPU and by continued decline in revenues from the DTH business. The trend in fixed residential revenues was significantly more positive benefitting from the above mentioned growth in convergent RGUs and cross-selling initiatives together with the positive incremental ARPU achieved, which are more than offsetting the temporarily higher churn due to merger remedies imposed on the FTTH base. The growth recorded in Business revenues to 96.2 million euros was the result of good yoy trends in RGUs, which surpassed the 1 million milestone in 1Q14, and by the positive performance in wholesale revenues, which together helped to offset a yoy decline in ARPU per business RGU of 5%. Revenues from the Audiovisuals business fell by 4.7% yoy to 14.2 million euros and Cinema Exhibition revenues fell by 9.1% to 10.7 million euros. In the case of the Cinema Exhibition Business, the negative yoy performance in revenues is a direct result of a poor quarter for cinema sales due to the previously mentioned Easter holiday impact, while the decline in the Audiovisuals business was mostly due to lower homevideo and VoD revenues yoy. ZAP continued to post strong operational and financial momentum with contribution to revenues of ZON OPTIMUS 30% stake increasing by 38.9% to 13.9 million euros in 1Q EBITDA Consolidated EBITDA fell by 5.9% in 1Q14 to million euros generating a margin of 38.5%. Including the contribution from ZON OPTIMUS 30% stake in ZAP, Consolidated EBITDA would have posted a lower decline of 3.9% to million euros. Telco EBITDA fell by 8.1% in 1Q14 to million euros and EBITDA from the Audiovisuals and Cinema operations increased by 36.3% yoy to 9.5 million euros. 3.3 Consolidated Operating Costs Excluding D&A Consolidated Operating Costs fell by 3% yoy to million euros and posted a decline of 12.8% in comparison with 4Q13. First Quarter 2014 Earnings Announcement 12

14 Wages and Salaries fell by 9.5% to 21.0 million euros in 1Q14 as a result mainly of a lower average level of headcount at the telco division in comparison with 1Q13, down by 11%. The majority of the projected headcount optimization resulting from the merger process has already occurred and this will continue to be reflected in yoy savings in this cost line. Direct Costs recorded a 1% decline to 96.7 million euros, which reflects a combination of significantly lower yoy programming and capacity related costs of 8% and 18% respectively due to savings already achieved with the merger, namely the integration of previous OPTIMUS Pay TV and fixed customers onto the ZON OPTIMUS fixed network and an increase in traffic costs of 16% due to the greater level of mass calling services and increased payments related with advertising revenue sharing models in place. Commercial Costs increased by 17.6% in 1Q14 to 22.7 million euros although they were 31.6% lower than in 4Q13 which is always a period of strong commercial activity in the build-up to Christmas. The yoy increase was mainly driven by a higher level of handset sales and commissions due to the increased commercial push. Other Operating Costs fell by 9% yoy to 67 million euros due to a combination of effects with the most relevant impacts due to a decline in Supplies and External Services and a reduction in the level of provisions. License related costs, included in this aggregate, increased by 22.5% in 1Q14 to 5.7 million euros which is mostly explained by a 0.75 million euros increase in spectrum fee and a 0.6 million euros quarterly charge related with the cinema tax imposed on television operators. 3.4 Net Income Net Income reached 25.3 million euros in 1Q14, compared with 27.5 million euros in 1Q13 and increased from negative 13.1 million euros in the previous quarter due to significantly lower nonrecurrent expenses in the period. Equity in affiliate companies posted another very positive increase in contribution growing to 4.9 million euros in 1Q14 compared with 1.3 million in 1Q13, on the back of the very strong financial contribution of the international JV, ZAP, and also of the contribution of SportTV which recovered from a negative Net Income in 1Q13. Depreciation and Amortization posted a yoy decline of 3.7% to 83.9 million euros, with no material change compared with previous periods. Other Expenses * of 2.8 million euros were significantly lower in 1Q14 than in 4Q13 and a significant part relates to non-recurrent merger related costs. * In accordance with IAS 1, the caption Other expenses reflects material and unusual expenses that should be disclosed separately from usual line items, to avoid distortion of the financial information from regular operations, namely restructuring costs resulting from the merger (including curtailment costs) as well as one-off non-cash items that result from alignment of estimates between the two companies. 13 First Quarter 2014 Earnings Announcement

15 Net Financial Expenses fell by 9.1% to 15.2 million euros in 1Q14 compared with 16.7 million euros in 1Q13 as a result of the lower average level of gross debt and the lower average cost of the new debt contracted in 4Q13. Income Tax provision amounted to 7.3 million euros in 1Q14, representing a 3.2% decline in comparison with 1Q13. 4 CAPEX AND CASH FLOW 4.1 CAPEX Table 6. Pro-Forma CAPEX (Millions of Euros) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 Telco (34.6%) (11.1%) Infrastructure (59.1%) (29.3%) Customer Related CAPEX (17.2%) (5.5%) Other % 62.5% Audiovisuals and Cinema Exhibition (5.5%) (3.1%) Recurrent CAPEX (31.5%) (10.0%) Non-Recurrent CAPEX % 98.3% Total CAPEX (29.8%) (6.4%) Recurrent Telco CAPEX in 1Q14 was 45.1 million euros, down by 11.1% yoy and representing 13.9% of Telco Operating Revenues. Total CAPEX posted a decline of 6.4% to 56.7 million euros. As announced at ZON OPTIMUS strategy presentation on 28 February, CAPEX in 2014 and 2015 will increase to accommodate the planned network expansion, CAPEX needed for integration projects and additional customer related CAPEX associated with the commercial push needed to achieve targeted growth in share of domestic market revenues. However, much of the investment planned will only be reflected in coming quarters as the new network deployment and integration projects start to materialize in a meaningful way. Audiovisuals and Cinemas recorded CAPEX of 7.6 million euros in 1Q14, 3.1% lower yoy and reflecting the capitalization of certain movie rights in the Audiovisuals division. First Quarter 2014 Earnings Announcement 14

16 4.2 Cash Flow Table 7. Pro-Forma Cash Flow (Millions of Euros) 1Q13 4Q13 1Q14 1Q14 / 4Q13 1Q14 / 1Q13 EBITDA % (5.9%) Recurrent CAPEX (58.6) (77.1) (52.7) (31.5%) (10.0%) EBITDA - Recurrent CAPEX % (2.9%) Non-Cash Items Included in EBITDA - Recurrent CAPEX (1) and Change in Working Capital (34.6) 36.5 (35.7) n.a. 3.0% Operating Cash Flow After Investment (46.7%) (7.5%) Long Term Contracts (5.4) (5.4) (3.9) (27.4%) (26.8%) Net Interest Paid and Other Financial Charges (6.5) (18.0) (13.8) (23.5%) 110.8% Income Taxes Paid (1.4) (7.1) (1.1) (83.9%) (20.2%) Other Cash Movements (0.0) (96.7%) n.a. Recurrent Free Cash-Flow (54.4%) (28.0%) LTE Payments (6.0) (22.0) 0.0 (100.0%) n.a. Taxes Paid 0.0 (7.7) 0.0 (100.0%) n.a. Non-Recurrent CAPEX (2.0) (3.6) (0.4) (88.7%) (79.2%) Cash Restructuring Payments (0.0) (5.0) (8.0) 60.4% n.a. Free Cash Flow Before Dividends % (39.2%) Foreign Currency Debt Exchange Effect 0.0 (0.0) 0.0 n.a. (33.8%) Total Free Cash Flow % (39.2%) Debt Variation Through Accruals & Deferrals & Others (2) (8.1) (68.4%) n.a. Change in Net Financial Debt (7.2%) 5.7% (1) This caption includes non-cash provisions included in EBITDA. (2) Accruals of interest payments were reclassified to below Total Free Cash Flow in 4Q13 and prior period cash flow statements were restated to adjust for this reclassification. Operating Cash Flow after Investment posted a 7.5% decline to 41.4 million euros as a result of the previously explained decline in EBITDA of 5.9% which was in part offset by lower yoy CAPEX. Recurrent FCF fell by 28% in 1Q14 to 22.6 million euros, reflecting the lower level of Operating cash flow after investment. The improvement in long term contract payments is due to the forecast savings achieved with the renegotiation of transponder contracts at the end of Non-recurrent FCF impacts in 1Q14 were mainly related with cash payments within the context of the restructuring/merger process and amounted to 8 million euros in the quarter. More than half of this cash payment was related with indemnities and the balance related with non-recurrent consultancy projects and other third party services provided. Free Cash Flow before Dividends was 14.3 million euros in the quarter. 15 First Quarter 2014 Earnings Announcement

17 5 PRO FORMA CONSOLIDATED BALANCE SHEET Table 8. Pro-Forma Balance Sheet (Millions of Euros) Q14 Current Assets Cash and Equivalents Accounts Receivable, Net Inventories, Net Taxes Receivable Prepaid Expenses and Other Current Assets Non-current Assets 2, ,408.3 Investments in Group Companies Intangible Assets, Net 1, ,128.3 Fixed Assets, Net 1, ,078.5 Deferred Taxes Other Non-current Assets Total Assets 2, ,827.7 Current Liabilities Short Term Debt Accounts Payable Accrued Expenses Deferred Income Taxes Payable Current Provisions and Other Liabilities Non-current Liabilities 1, Medium and Long Term Debt Non-current Provisions and Other Liabilities Total Liabilities 1, ,752.1 Equity Before Non-Controlling Interests 1, ,065.6 Share Capital Issue Premium Own Shares (2.0) (3.9) Reserves, Retained Earnings and Other Net Income Non-Controlling Interests Total Shareholders' Equity 1, ,075.6 Total Liabilities and Shareholders' Equity 2, ,827.7 First Quarter 2014 Earnings Announcement 16

18 5.1 Capital Structure At the end of 1Q14, Net Financial Debt stood at million euros, representing a decline of 1.7% in comparison with the end of Total financial debt at the end of 1Q14 amounted to 950 million euros, which was offset with a cash and short-term investments position on the balance sheet of 26.6 million euros. At the end of 1Q14, ZON OPTIMUS also had 320 million euros of non-issued commercial paper programs. The all-in average cost of ZON OPTIMUS Net Financial Debt was 5.37% at the end of 1Q14. Net Financial Gearing reduced to 46.2% at the end of 1Q14 compared with 47.0% at the end of 2013, and Net Financial Debt / EBITDA (last 4 quarters) now stands at 1.7x. The total interest rate hedging operations in place at the end of 1Q14 amounted to million euros. Taking into account the retail bonds issued in June million euros bearing interest at a fixed rate of 6.85% - the proportion of ZON OPTIMUS Net Financial Debt that is protected against variations in interest rates is 58%. ZON OPTIMUS is now financed until 1Q15 and the average maturity of its Net Financial Debt is 1.8 years. Table 9. Pro-Forma Net Financial Debt (Millions of Euros) Q14 1Q14 / 2013 Short Term % Bank and Other Loans % Financial Leases (20.8%) Medium and Long Term (23.8%) Bank and Other Loans (23.9%) Financial Leases (10.1%) Total Debt 1, (6.6%) Cash, Short Term Investments and Intercompany Loans (65.9%) Net Financial Debt (1.7%) Net Financial Gearing (1) 47.0% 46.2% (0.8pp) Net Financial Debt / EBITDA 1.8x 1.7x n.a. (1) Net Financial Gearing = Net Financial Debt / (Net Financial Debt + Total Shareholders' Equity). 17 First Quarter 2014 Earnings Announcement

19 6 APPENDIX 6.1 Appendix I Table 10. Operating Indicators ('000) 1Q13 2Q13 3Q13 4Q13 1Q14 Telco (1) Aggregate Indicators Homes Passed 3, , , , ,255.5 Total RGUs 7, , , , ,215.2 Mobile 3, , , , ,288.4 Pre-Paid 2, , , , ,166.9 Post-Paid ,121.6 ARPU / Mobile Subscriber (Euros) Pay TV 1, , , , ,493.3 Fixed Access (2) 1, , , , ,189.4 DTH Fixed Voice 1, , , , ,491.3 Broadband Others and Data P&4P Subscribers % 3P&4P 64.6% 65.3% 66.4% 66.9% 68.0% Convergent RGUs IRIS Subscribers IRIS as % of 3P&4P Subscribers 35.6% 42.0% 48.2% 54.3% 61.7% Net Adds Homes Passed Total RGUs (61.5) (54.5) 12.7 (40.6) 2.2 Mobile (43.9) (57.6) Pre-Paid (52.3) (71.9) 19.8 (53.0) (84.1) Post-Paid Pay TV (10.7) (13.8) (22.9) (28.2) (24.7) Fixed Access (0.1) (3.9) (13.7) (16.0) (14.4) DTH (10.5) (9.9) (9.2) (12.2) (10.3) Fixed Voice (15.2) 6.8 (10.4) (24.0) (23.7) Broadband Others and Data P&4P Subscribers (4.1) 2.5 Convergent RGUs IRIS Subscribers (1) Portuguese Operations (2) Fixed Access Subscribers include customers served by the HFC, FTTH and ULL networks. First Quarter 2014 Earnings Announcement 18

20 Table 11. Operating Indicators ('000) 1Q13 2Q13 3Q13 4Q13 1Q14 Telco (1) Indicators per Segment Consumer Unique Subscribers With Fixed Access (2) 1, , , , ,159.1 Pay TV 1, , , , ,429.2 Fixed Access 1, , , , ,138.2 DTH # IRIS Subscribers Broadband Fixed Voice 1, , , , ,299.2 Mobile 2, , , , ,632.5 % 1P 17.9% 16.9% 15.5% 14.8% 14.4% % 2P 17.9% 18.1% 18.4% 18.6% 19.2% % 3P&4P 64.3% 65.0% 66.1% 66.6% 66.4% ARPU / Unique Subscriber With Fixed Access (Euros) Net Adds Unique Subscribers With Fixed Access (3.9) (6.5) (16.5) (19.1) (24.1) Pay TV (10.7) (12.8) (22.1) (27.4) (26.4) Fixed Access (0.6) (3.2) (13.4) (15.6) (16.1) DTH (10.1) (9.7) (8.7) (11.8) (10.3) IRIS Subscribers Broadband Fixed Voice (17.6) 5.8 (9.4) (23.2) (25.0) Mobile (57.6) (59.9) 28.3 (9.5) 26.5 Business Total RGUs ,000.5 Pay TV IRIS Subscribers Broadband Fixed Voice Mobile ARPU per RGU (Euros) Net Adds Total RGUs Pay TV 0.0 (1.0) (0.8) (0.8) 1.7 IRIS Subscribers Broadband Fixed Voice (1.0) (0.8) 1.3 Mobile Cinema (1) Revenue per Ticket (Euros) Tickets Sold 1, , , , ,595.7 Screens (units) (1) Portuguese Operations (2) Fixed Access Subscribers include customers served by the HFC, FTTH and ULL networks. 19 First Quarter 2014 Earnings Announcement

21 6.2 Appendix II Table 12. Pro-Forma Profit and Loss Statement * (Millions of Euros) 1Q13 2Q13 3Q13 4Q Q14 Operating Revenues , Telco , Consumer Revenues Business Revenues Equipment Sales Others and Eliminations Audiovisuals Cinema (1) Others and Eliminations (11.4) (11.4) (11.0) (11.6) (45.4) (11.0) Operating Costs Excluding D&A (213.8) (216.7) (221.7) (238.0) (890.3) (207.5) W&S (23.3) (23.7) (24.5) (25.2) (96.6) (21.0) Direct Costs (97.7) (101.8) (106.4) (105.0) (410.9) (96.7) Commercial Costs (2) (19.3) (22.9) (24.0) (33.2) (99.4) (22.7) Other Operating Costs (73.6) (68.3) (66.8) (74.6) (283.3) (67.0) EBITDA EBITDA Margin 39.2% 39.3% 38.7% 33.2% 37.6% 38.5% Telco EBITDA Margin 38.9% 38.5% 37.7% 31.8% 36.8% 37.2% Cinema Exhibition and Audiovisuals EBITDA Margin 28.6% 37.3% 39.0% 39.3% 36.1% 42.4% Share of results of associates and joint ventures EBITDA including results of associates and joint ventures Depreciation and Amortization (87.1) (82.0) (83.5) (83.6) (336.2) (83.9) (Other Expenses) / Income (0.3) (1.0) (32.8) (26.8) (60.9) (2.8) Operating Profit (EBIT) (3) (Financial Expenses) / Income (16.7) (17.9) (18.3) (13.5) (66.4) (15.2) Income Before Income Taxes (4.1) Income Taxes (7.6) (9.0) 12.5 (9.1) (13.1) (7.3) Income From Continued Operations (13.2) o.w. Attributable to Non-Controlling Interests (0.2) (0.2) (0.2) 0.1 (0.4) (0.3) Net Income (13.1) Recurrent CAPEX (58.6) (65.6) (60.1) (77.1) (261.4) (52.7) Total CAPEX (60.5) (66.7) (61.6) (80.7) (269.5) (56.7) EBITDA - Recurrent CAPEX Non-Cash Items Included in EBITDA - Recurrent CAPEX (4) and Change in Working Capital (34.6) (26.6) (4.9) 36.5 (29.6) (35.7) Operating Cash Flow After Investment Long Term Contracts (5.4) (6.2) (6.7) (5.4) (23.7) (3.9) Net Interest Paid and Other Financial Charges (6.5) (17.7) (17.0) (18.0) (59.2) (13.8) Income Taxes Paid (1.4) (2.2) (7.5) (7.1) (18.2) (1.1) Other Cash Movements (0.0) (0.6) Recurrent Free Cash Flow (5) Net Financial Debt (1) Includes operations in Mozambique. (2) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold. (3) EBIT = Income Before Financials and Income Taxes. (4) This caption includes non-cash provisions included in EBITDA. (5) Accruals of interest payments were reclassified to below Total Free Cash Flow in 4Q13 and prior period cash flow statements were restated to adjust for this reclassification. * The merger by incorporation of OPTIMUS into ZON that led to the creation of ZON OPTIMUS was completed on 27 August Resulting primarily from the merger, in 3Q13 a number of accounting policies, practices and estimates have had to be aligned. The primary changes to accounting policies, with the correspondent restatement of the prior period accounts were the capitalization of customer acquisition costs at ZON in order to align with OPTIMUS policy also followed by other telecom operators and capitalization of certain movie rights in the audiovisuals division following IAS 38, which were restated since 1Q12 in the statutory accounts. In addition and in anticipation of the mandatory implementation of IFRS 11 as from 1Q14, whereby joint ventures may no longer be consolidated proportionately, ZON OPTIMUS has proceeded to deconsolidate the three joint ventures in which it holds stakes, ZAP (30%), Sport TV (50%) and Dreamia (50%) and has restated prior period financial statements to reflect their recognition through the equity method. To facilitate comparison between current and prior period results for the new ZON OPTIMUS, the current pro-forma consolidated financial statements have been prepared, reflecting not only the statutory accounts restatement due to the changes to accounting policies, but also the consolidation of 12 months of OPTIMUS results in 2013 (3 months in 1Q13). The financial statements reflect the impact, since September 2013, in depreciation and amortization of the provisional calculation of the fair value of OPTIMUS assets and liabilities which was used for the purposes of purchase price allocation resulting from the consolidation of OPTIMUS. The present financial review is based on these pro-forma financial statements. Appendix III to this report includes the statutory income statement for ZON OPTIMUS. First Quarter 2014 Earnings Announcement 20

22 6.3 Appendix III Table 13. Statutory Profit and Loss Statement (Millions of Euros) 1Q13 2Q13 3Q13 4Q Q14 Operating Revenues Telco Audiovisuals Cinema (1) Others and Eliminations (11.3) (11.3) (11.0) (11.6) (45.3) (11.0) Operating Costs Excluding D&A (115.0) (113.1) (150.3) (235.6) (614.1) (207.5) W&S (11.9) (12.3) (16.9) (25.2) (66.2) (21.0) Direct Costs (53.9) (54.0) (75.2) (102.7) (285.8) (96.7) Commercial Costs (2) (7.0) (6.6) (10.9) (33.2) (57.8) (22.7) Other Operating Costs (42.2) (40.2) (47.3) (74.6) (204.3) (67.0) EBITDA EBITDA Margin 40.8% 40.6% 40.3% 33.4% 38.0% 38.5% Share of results of associates and joint ventures EBITDA including results of associates and joint ventures Depreciation and Amortization (52.6) (47.0) (59.8) (83.6) (243.1) (83.9) (Other Expenses) / Income (0.1) 0.6 (32.3) (26.8) (58.5) (2.8) Operating Profit (EBIT) (3) (Financial Expenses) / Income (10.8) (12.1) (14.3) (13.5) (50.8) (15.2) Income Before Income Taxes (4.5) (4.1) Income Taxes (4.5) (6.1) 3.3 (9.1) (16.4) (7.3) Income From Continued Operations (1.2) (13.2) o.w. Attributable to Non-Controlling Interests (0.2) (0.2) (0.2) 0.1 (0.4) (0.3) Net Income (1.4) (13.1) (1) Includes operations in Mozambique. (2) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold. (3) EBIT = Income Before Financials and Income Taxes. 21 First Quarter 2014 Earnings Announcement

23 6.4 Appendix IV Table 14. Statutory Balance Sheet (Millions of Euros) 2013 restated 1Q14 Current Assets Cash and Equivalents Accounts Receivable, Net Inventories, Net Taxes Receivable Prepaid Expenses and Other Current Assets Non-current Assets 2, ,408.3 Investments in Group Companies Intangible Assets, Net 1, ,128.3 Fixed Assets, Net 1, ,078.5 Deferred Taxes Other Non-current Assets Total Assets 2, ,827.7 Current Liabilities Short Term Debt Accounts Payable Accrued Expenses Deferred Income Taxes Payable Current Provisions and Other Liabilities Non-current Liabilities 1, Medium and Long Term Debt Non-current Provisions and Other Liabilities Total Liabilities 1, ,752.1 Equity Before Non-Controlling Interests 1, ,065.6 Share Capital Issue Premium Own Shares (2.0) (3.9) Reserves, Retained Earnings and Other Net Income Non-Controlling Interests Total Shareholders' Equity 1, ,075.6 Total Liabilities and Shareholders' Equity 2, ,827.7 Note: Balance Sheet prepared considering the results corresponding to the consolidation of 12 months of ZON and 4 months of OPTIMUS for The merger of ZON and OPTIMUS implied a capital increase of 206,064,552 new shares, issued at market close on the merger registry date, 27 August The nominal value of the shares is 0.01 euros each, and as such, a share issue premium of 854 million euros was generated. Goodwill of 404 million euros was recorded as a result of the fair value calculation of OPTIMUS assets and liabilities, adjusted in 1Q14 to 430 million euros, and may be revised over the 12 months following the merger (until August 2014). Due to this GW adjustment, 2013 Statutory Balance sheet was restated. First Quarter 2014 Earnings Announcement 22