ZON OPTIMUS, SGPS, S.A

Table of Contents

1 - ZON OPTIMUS in Numbers 2

2 - Highlights 5

3 - Governing Bodies 6

4 - Corporate Developments 8

5 - Subsequent Events 9

6 - Management Report 11

7 - Consolidated Financial Statements 28

1 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

1 ZON OPTIMUS in Numbers

Financial Indicators (in millions of Euros):

The Statutory Accounts reflect the financial consolidation of 9 months of ZON and just 1 month of OPTIMUS given that the merger by incorporation of OPTIMUS into ZON, that led to the creation of ZON OPTIMUS, was completed on 27 August 2013.

Operating Revenues: EBITDA (EBITDA margin as % of Revenues):

+7.8% +11.5%

300 100%

636.4 257.9 90%

590.5 250

231.2 80%

70%

200

60%

150 50%

40.5% 40%

100 39.2%

30%

20%

50

10%

0 0% 9M12 9M13 9M12 9M13

Consolidated Net Income: Net Financial Debt:

(23.7)% +62.3%

31.3 1,200 05x

05x

1,000 957.2

04x 23.9

04x

800 589.9 03x

600 03x

02x

400

02x

01x

200

01x

0 00x 9M12 9M13 9M12 9M13

9M13 Consolidated Management report 2 ZON OPTIMUS, SGPS, S.A

Business Indicators (in thousands):

3&4P Subscribers, Ex-ZON: 3&4P Penetration in Cable Customer Base (%),Ex-ZON:

+5.4% +4.1pp

65.3% 66.5% 792 63.9% 64.6% 773 781 786 62.4% 752

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13

Basic Subscribers, Ex-ZON: Broadband Subscribers, Ex-ZON:

(3.3)% +5.9%

812 1,574 1,570 1,559 1,543 790 800 805 1,523 766

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13

Fixed Voice Subscribers, Ex-ZON: Blended ARPU, Ex-ZON:

+3.7% +0.5%

986 990 995 35.4 34.9 960 976 34.7 34.4 34.7

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13

3 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Mobile Customers, Ex-OPTIMUS: Mobile ARPU, Ex-OPTIMUS:

(3.5)% (7.7)%

11.7 3,566 3,569 3,507 3,435 3,443 10.8 10.8 10.4 10.8

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13

Wireline Total Accesses, Ex-OPTIMUS: Wireline ARPU Per Access, Retail, Ex-OPTIMUS:

(1.9)% (2.1)%

344.6 339.3 21.4 21.6 334.9 330.0 338.0 20.9 21.0 20.5

3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13

9M13 Consolidated Management report 4 ZON OPTIMUS, SGPS, S.A

2 Highlights

Highlights of 9M13Results 9M12 9M13 9M13 / 9M12

Operating Highlights (000')

Ex-ZON (1)

RGUs 3,438.7 3,485.7 1.4% IRIS Subscribers 193.0 390.3 102.2% 3&4P Customers 751.7 792.5 5.4% Fixed Broadband Subscribers 766.2 811.7 5.9% Fixed Voice Subscribers 960.2 995.4 3.7% Blended ARPU (euros) 35.1 35.0 (0.2%) Ex-OPTIMUS - Mobile

Customers (EOP) 3,566.3 3,442.6 (3.5%) ARPU (euros) 11.6 10.6 (8.2%) Ex-OPTIMUS - Wireline

Total Accesses (EOP) 344.6 338.0 (1.9%) ARPU per Access - Retail (euros) 21.8 21.2 (2.9%) ZON OPTIMUS Pro-Forma Financial Highlights (Millions of Euros)

Operating Revenues 1,114.9 1,083.9 (2.8%) EBITDA 413.5 418.3 1.2% CAPEX 216.5 188.8 (12.8%) EBITDA - Recurrent CAPEX 197.0 234.0 18.8% (1) Portuguese Operations.

 Completion of Merger on 27 August and election of new Management team on 1 October;

 Creation of a larger, stronger and more competitive Telco group with a state-of-the-art NGN and 4G network and coverage in Portugal:

. 7.3 million RGUs . Pro-forma Consolidated Revenues of 1.1 billion euros in 9M13 . Pro-forma Consolidated EBITDA margin over 38% in 9M13

 The integration project is well underway and on track to capture synergies. The launch of ZON4i on 22 October, the first integrated communications and entertainment offer by ZON OPTIMUS, only a few weeks after the merger was completed, is already a reflection of how the new teams are well integrated and working together as a single company.

 Continued strong operating and financial performance with growth in convergent solutions, resilience in Telco revenues despite the still challenging macro environment and continuing focus on efficiency and cost control with margins in excess of 38%;

 Increase in Pro-Forma Operating Cash Flow of 11.2% to 167,8 million euros and increase in Pro- Forma Recurrent FCF to 92.4 million euros.

5 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

3 Governing Bodies

As of 30 September 2013, the Governing Bodies of ZON OPTIMUS had the following composition:

Board of Directors

Chairman of the Board of Directors Daniel Proença de Carvalho

Chairman of the Executive Committee Rodrigo Jorge de Araújo Costa

Members of the Executive Committee José Pedro Faria Pereira da Costa

Luís Miguel Gonçalves Lopes

Duarte Maria de Almeida e Vasconcelos Calheiros

Members Fernando Fortuny Martorell

António Domingues

Joaquim Francisco Alves Ferreira de Oliveira

Mário Filipe Moreira Leite da Silva

Isabel dos Santos

Catarina Eufémia Amorim da Luz Tavira

László Istvan Hubay Cebrian

Miguel Filipe Veiga Martins

André Palmeiro Ribeiro

Chairman of the Audit Committee Vitor Fernando da Conceição Gonçalves

Members of the Audit Committee Nuno João Francisco Soares de Oliveira Sílvério Marques

Paulo Cardoso Correia da Mota Pinto

Officials of the General Meeting of Shareholders

President Júlio de Castro Caldas

Secretary Maria Fernanda Carqueija Alves de Ribeirinho Beato

9M13 Consolidated Management report 6 ZON OPTIMUS, SGPS, S.A

Statutory Auditor

In Office Oliveira, Reis & Associados, SROC, Lda., representada por José Vieira dos Reis

Alternate Fernando Marques Oliveira

7 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

4 Corporate Developments

On 26 August, the Competition Authority announced their non-opposition to the merger process between ZON and OPTIMUS and, on 27 August, all legal and administrative procedures were implemented to conclude the process.

The Merger assumed the form of a merger by incorporation, which implied the transfer of all of OPTIMUS’ assets and liabilities, as the as the absorbed company, into ZON – now ZON OPTIMUS – as the absorbing company.

Following the merger, the corresponding share capital increase of ZON OPTIMUS took place. Its share capital is now 5,151,613.80 euros, represented by a total of 515,161,380 shares, with a nominal value of 0.01 euros each (206,064,552 new shares were issued as a result of the share capital increase). A request was submitted to Euronext Lisbon – Sociedade Gestora de Mercados Regulamentados, S.A.for these New Shares to be listed on the Euronext Lisbon regulated market, which happened on 9 September 2013.

9M13 Consolidated Management report 8 ZON OPTIMUS, SGPS, S.A

5 Subsequent Events

An Extraordinary General Shareholders’ Meeting of ZON OPTIMUS, SGPS, SA was held on 1 October 2013.

The proposals concerning the items of the agenda were all approved as follows:

 Approval of the change, by modification, suppression, and / or supplement of all the articles of ZON Optimus’ Articles of Association, except for articles nr. 1, 5, 6 and 8;

 Approval of the election of the company’s Corporate Bodies, including the Statutory Auditor, for the term of office of 2013/2015, as follows:

Board of Directors

Chairman of the Board of Directors Jorge Manuel de Brito Pereira

Chairman of the Executive Committee Miguel Nuno Santos Almeida

Vice-Chairman of the Executive Committee Luís Miguel Gonçalves Lopes

Members of the Executive Committee Ana Paula Garrido de Pina Marques

André Nuno Malheiro dos Santos Almeida

José Pedro Faria Pereira da Costa

Manuel Ramalho Eanes

Miguel Filipe Veiga Martins

Members Ângelo Gabriel Ribeirinho dos Santos Paupério

António Bernardo Aranha da Gama Lobo Xavier

António Domingues

Catarina Eufémia Amorim da Luz Tavira

Fernando Fortuny Martorell

Isabel dos Santos

Joaquim Francisco Alves Ferreira de Oliveira

Lorena Solange Fernandes da Silva Fernandes

Maria Cláudia Teixeira de Azevedo

Mário Filipe Moreira Leite da Silva

Rodrigo Jorge de Araújo Costa

9 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Chairman of the Fiscal Board Paulo Cardoso Correia da Mota Pinto

Members of the Fiscal Board Eugénio Luís Lopes Franco Ferreira

Nuno Tiago Bandeira de Sousa Pereira

Luís Filipe da Silva Ferreira (Alternate)

Officials of the General Meeting of Shareholders

President Pedro Canastra de Azevedo Maia

Secretary Tiago Antunes da Cunha Ferreira de Lemos

Statutory Auditor

In Office PriceWaterhouseCoopers & Associados, SROC, Lda., representada por (i) Abdul Nasser Abdul Sattar, ou (ii) Paulo Alexandre Martins Quintas Paixão

Alternate José Manuel Henriques Bernardo

 Approval of the appointment of the Remuneration Committee for the term of office 2013/2015, as follows:

Chairman: Ângelo Gabriel Ribeirinho dos Santos Paupério Member: Mário Filipe Moreira Leite da Silva

9M13 Consolidated Management report 10 ZON OPTIMUS, SGPS, S.A

6 Management Report

6.1 Business Review

Business Indicators ('000) 9M12 9M13 9M13 / 9M12

Ex-ZON (1)

Homes Passed 3,224.5 3,286.1 1.9% RGUs (2) 3,438.7 3,485.7 1.4% Cable RGUs per Subscriber (units) (3) 2.42 2.51 3.5% Basic Subscribers (4) 1,574.4 1,522.6 (3.3%) o.w. Cable Subscribers 1,204.3 1,191.8 (1.0%) IRIS Subscribers 193.0 390.3 102.2% % IRIS 3&4P Subscribers 25.7% 49.2% 23.6pp 3&4P Customers 751.7 792.5 5.4% % 3&4P Cable Customers 62.4% 66.5% 4.1pp o.w. DTH Subscribers 370.1 330.8 (10.6%) Fixed Broadband Subscribers 766.2 811.7 5.9% Fixed Voice Subscribers 960.2 995.4 3.7% Mobile Subscribers 138.0 156.0 13.1% Blended ARPU ( Euros ) 35.1 35.0 (0.2%) Ex-OPTIMUS Mobile

Customers (EOP) 3,566.3 3,442.6 (3.5%) Pre-Paid Customers 2,367.3 2,315.6 (2.2%) Post-Paid Customers 1,199.0 1,127.0 (6.0%) Data as % of Service Revenues 33.3% 33.5% 0.1pp Non SMS Data as % Data Revenues 76.4% 79.5% 3.1pp Total #SMS/month/user 41.5 39.3 (5.1%) MOU (min.) 122.7 122.6 (0.1%) ARPU (euros) 11.6 10.6 (8.2%) Customer Monthly Bill 10.1 9.6 (5.5%) Interconnection 1.5 1.1 (27.0%) ARPM (Euros) 0.0945 0.0868 (8.1%)

Ex-OPTIMUS Wireline

Total Accesses (EOP) 344.6 338.0 (1.9%) Corporates and SMEs 156.9 159.0 1.4% PTSN/RDIS 113.2 114.9 1.5% Broadband 31.7 29.9 (5.5%) Other & Data 12.1 14.2 17.6% Residential 187.7 179.0 (4.7%) PTSN/RDIS 79.5 67.0 (15.7%) Broadband 71.2 75.4 5.9% TV 37.0 36.5 (1.3%) ARPU per access - Retail 21.8 21.2 (2.9%)

Cinema (1)

Revenue per Ticket (Euros) 4.9 4.7 (3.8%) Tickets Sold 5,822.1 5,956.3 2.3% Screens (units) 210 209 (0.5%) (1) Portuguese Operations (2) Total RGUs reported reflect the sum of Pay TV, Fixed Broadband, Fixed Voice and M obile subscribers. (3) Cable RGUs per Subscriber correspond to the sum of Cable Pay TV, Broadband and Voice Subscribers, divided by the number of Cable Pay TV Customers. (4) These figures are related to the total number of Pay TV basic customers, including the cable and satellite platforms. ZON OPTIM US offers several basic services, based on different technologies, directed to different market segments (residential, real estate and corporate), with a distinct geographical scope (mainland Portugal and the Azores and M adeira islands) and with a variable number of channels.

11 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Another very solid nine months for both ZON and OPTIMUS in their respective stand-alone operations and marked by the launch of ZON OPTIMUS’ first integrated residential fixed and mobile offer, leveraging the assets and competences of the combined entity, only 3 weeks after the new organizational structure was put in place.

Operational focus remained very strong in parallel with the transformational corporate developments resulting from the the merger between ZON and OPTIMUS at the end of August.

ZON4i - the best integrated communications and entertainment service in Portugal

Just three weeks after the new management team of ZON OPTIMUS was elected, we launched the first integrated communications and entertainment service in Portugal – ZON4i.

ZON4i combines more and better television programming with 116 channels; fixed Internet which gives the highest speed and most extensive coverage with 100 Mbps to all 3.3 million households covered by ZON OPTIMUS’ next generation cable 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 600,000 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; 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 €79.99 and can be adjusted to suit usage profile and requirements.

Continuing to innovate with new features

We launched “Download to Own” in 3Q13, a feature allowing video content to be downloaded from the ZON videoclub over the PC and TV, to watch whenever and wherever is needed, with no expiry date and accessible for viewing offline. Freedom, ease of use and mobility are the main advantages of the service, which allows customers to create a unique personal video library in the cloud, which can be viewed over multiple platforms and independent of where the purchase was originated.

In April 2013, OPTIMUS launched wOw, an innovative double play product, based on 4G technologyoffering unlimited fixed voice and unlimited broadband traffic.

At the beginning of June 2013, OPTIMUS launched the first own branded 4G smartphone in the Portuguese market, OPTIMUS Boston 4G, an additional step towards increasing the penetration of smartphones and fostering the customers’ data usage.

Recognition from consumers and industry peers

2013 has been an award winning period for ZON OPTIMUS, with widespread recognition from customers and industry peers.

In 2013, consumers voted IRIS the best Triple Play service of the year.

ECSI Portugal (European Customer Satisfaction Index) ranked ZON the best triple play provider in Portugal.

9M13 Consolidated Management report 12 ZON OPTIMUS, SGPS, S.A

For the past three years in a row, consumers have voted ZON the best Pay TV operator and this year, ranked ZON #1 in all three services – Pay TV, BB and Voice. ZON achieved a score of 7.78 in Pay TV, 7.43 in Fixed Internet and 7.61 in Fixed Voice which compares with an average for other operators of 7.23, 7.15 and 7.39 respectively for each service. Aware that customer service is a key driver of satisfaction and retention, these results are proof of the work undertaken to improve operational excellence and continuously innovate in terms of products and service offers.

In May OPTIMUS won, also for the third year in a row, the APCC Portugal Best Awards 2013, reinforcing the ambition to lead in customer satisfaction and trust. In July 2013, OPTIMUS won the award for Best Customer Service EMEA, the most relevant category in the Contact Center World Awards.

In addition, ZON Online was voted the best TV on the move service at Industry awards TV Connect. ZON Online was launched in 2011 and enables IRIS customers to access the features from their ZON IRIS box at home, over a number of different devices such as PC, iPad and iPhone, becoming an extension of the award winning IRIS interface for mobile devices. The ZON Online platform, which replicates the IRIS interface over laptops and tablets, was extended to smartphones, with the launch of its iPhone app in May last year. It has also become a major incentive for customers to upgrade to the IRIS bundle.

The best channel line-up

Continuously striving to provide the best content for subscribers, in 9M13 ZON launched a number of new channels, some of which exclusive to ZON. Globo, Disney Junior and +TVI were launched in 1Q13. Globo is a partnership between ZON and the Brazilian Media company Globo and this exclusive channel to ZON, aggregates a diversified line-up of series, soap-operas, and Brazilian movies amongst other general entertainment shows. +TVI is produced by the Media Capital Group (owner of the leading FTA channel in Portugal, TVI) and targets a young adult audience with a strong bias towards national and TVI produced content, and includes a number of interactive functionalities. Canal Q was launched on the ZON network in March, bringing together national entertainment and comedy shows, starring some of the most well-known and popular comedians in Portugal and also serving as a launch-pad for bright new talent.

In 2Q13, ZON has increased its programming offer with Benfica TV and 24Kitchen HD. As a result, ZON now has 192 channels in its line-up, 49 of which HD and 45 sold as premium add-on subscriptions.

Premium sports channel subscriptions revert trend

The negative trend of the past quarters in premium channel subscriptions was reverted in 3Q13 with a significant sequential reduction in the number of net disconnections of the premium sports package Sport TV influenced by the start of the football season, and a good uptake of the new Benfica TV premium channel, launched in July. “Benfica TV” was a relevant addition to the channel offering as it broadcasts in exclusive both the 15 Portuguese League matches that Benfica plays at home, and the English Premier League matches. The total number of subscribtions to premium sports channels increased by close to 30% compared with the end of 2Q13.

Addressing the youth mobile market with a new brand and value proposition

We launched a new brand in September - “WTF” - targeting the ever more important youth market.

13 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Traditionally, teenagers and young adults are extremely exposed to tribal tariff plans in which they are given unlimited calls and texts within their own “tribe” of contacts, creating a network effect which limits their freedom to make and receive calls and text messages to and from friends on other networks.

WTF is a completely innovative tariff which gives back freedom to contact anyone on any network on any platform, anytime. With a completely new brand and value proposition, WTF is creating a unique relationship with the target market set to progressively break the power of the network-effect by promoting unlimited use of the best communication APPS (What’s APP, Skype, etc) and the Internet (Google, Youtube, Facebook, etc) allowing youngsters to always stay connected using their smartphones, independent of what network they are using or even in which country they are in.

To accommodate the need to still use traditional communication formats, WTF also includes 500 credits for calls, over 8 hours of conversation. Take-up of the service is also supported by the fact that this specific target market has a proportionately higher penetration rate of smartphones than the average of the population – over 55% compared with around 37% respectively.

To establish a unique relationship the marketing campaign sought out key references and communication styles, namely through promotion of well known Youtube personalities who are followed closely online by thousands of youngsters.

All-net tariffs – more freedom, no network restrictions

Conscious of the adverse economic environment and its impacts on available income and spending habits, ZON OPTIMUS focused commercial efforts on providing relevant offers adapted to consumer usage requirements and the recognized need to save money. With the launch of “LIGA” in July, ZON OPTIMUS once again led a step change in the Portuguese market, promoting more straightforward, cheaper tariff plans without any kind of network constraints. LIGA is an all-net, flat-fee mobile tariff plan, designed for the lower end of the market that gives just the right measure of usage at a very competitive price – 100 min / SMS / MMS for just 9.99 euros a month. In addition, subscribers don’t need to worry if they go over their monthly limits as the additional charge outside of the plan is one of the most competitive in the market. An add-on 200 MB data package is also available for 2.90 euro a month, providing a very attractive package at very competitive costs.

Reinforced position in the Corporate, SME and SoHo segments

As a result of the merger, 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.

With a new and fully integrated team, 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.

Teams have already been set-up to address the Corporate, SME and SoHo segments of the market. As an example, an early initiative for the small to medium size segment was the launch of targeted quad play solutions for almost residential-like user profiles that require reliable and cost oriented communication and TV services.

9M13 Consolidated Management report 14 ZON OPTIMUS, SGPS, S.A

In the more demanding larger corporate segment, we have been growing consistently with integrated solutions for an ever more convergent customer base and have been able to deliver high quality, robust and complex voice and data communication services whilst also strengthening the extent of our existing and potential partnerships in this field.

7.3 million RGUs

The combined fixed and mobile businesses of ZON OPTIMUS together have 7.3 million RGUs, of which 3.6 million are mobile subscribers and close to 3.7 million fixed. With the completion of the merger and the implementation of the new organizational structure and strategy, the stand-alone operations are being integrated. An immediate example of this integration process is the migration of mobile customers from ZON, previously provisioned by an MVNO agreement with Vodafone, onto the OPTIMUS network.

IRIS packages still growing strong

IRIS continues to post very strong numbers with an additional 155.4 thousand new subscribers taking these high- end packages in 9M13. In total, we now have 390 thousand IRIS subscribers, 49% of ZON’s 3&4P base, equipped to access this award winning service where leading edge design and usability have made non-linear viewing a key differentiating factor from our competitors.

Initially with the launch of Restart TV in 2011 and then with the pioneering development in 2012 of Timewarp, a 7 day automatic recording feature for over 80 channels in the programming guide, non-linear viewing has become a mainstream experience. Usage statistics show how essential this platform has become, with over 14 thousand programmes available for viewing at any given time. Voted the most innovative TV service by consumers last year, 98% of IRIS customers have used this service at least once, and the large majority use the service every day.

ZON RGUs up by 1.4% to 3,485.7 thousand

In the Pay TV area underlying trends of previous periods were maintained with relatively flat cable customer numbers and negative DTH.

The essential public services law imposed a change to the disconnection policy which was enforced upon all operators, whereby customers that do not pay one month’s bill must be disconnected. In the past, ZON applied a two unpaid bill policy and therefore implementation of the new rule led to a one-off pick-up in churn at the start of the quarter. As a result basic subscriber net adds were impacted by around ten thousand one-off disconnections mostly felt in the cable base.

Broadband and Fixed Voice subscribers continued to post solid yoy performance although lower than in previous periods. Broadband subscribers grew by 5.9% yoy to 811.7 thousand and Fixed Voice subscribers grew by 3.7% to 995.4 thousand, respectively achieving a 68% and 82% penetration of the cable base.

ZON’s total number of RGUs grew by 1.4% yoy to 3,485.7 thousand with cable customers on average subscribing to 2.51 services.

15 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Sequential quarterly increase in mobile subscribers at OPTIMUS

OPTIMUS’ mobile subscriber base posted an improvement at the end of 9M13, with a qoq increase of 8 thousand subscribers in 3Q13 to 3,442.6 thousand impacted by seasonal improvement in the holiday months and revealing signs that the negative impact of the end of the e-schools initiative on subscriber disconnections witnessed in past quarters, is beginning to subside. However, in 9M13 as a whole net adds were still negative in 126 thousand subscribers. Pre-paid customers remain the most significant of mobile subscribers at 67% of the base. Mobile data revenues represented 33.8% of service revenues, up 0.4pp compared with 3Q12 and 79.7% of data revenues were generated by non SMS data revenues, up by 3.4 pp yoy.

OPTIMUS’ previous stand-alone residential and corporate wireline business posted a decline of 1.9% in accesses however this was a combination of a higher number of accesses in the enterprise segment (up by 1.4%) and a decline of 4.7% in the number of residential accesses.

Increase in ZON ARPU of 0.5%, supported by IRIS and premium channels

Despite the difficult macroeconomic environment in Portugal and increased price competition in particular from one of our competitors in the fixed residential market, the continued take-up of higher value fixed TV, Broadband and Voice IRIS bundles, together with initial signs of recovery in premium channel subscription, led to an increase in ARPU for ZON of 0.5% to 34.9 euros in 3Q13, while remaining practically flat in 9M13 at 35.0 euros, a marginal decrease of 0.2% in comparison with 9M12.

At OPTIMUS, mobile ARPU recorded a yoy decline of 7.7% to 10.8 euros however sequential quarterly ARPU actually remained flat in comparison with 2Q13, led by an increase in interconnection related ARPU revenues of 19% to 1.3 euros per subscriber due to higher roaming related revenues in the summer months. In 9M13 OPTIMUS mobile ARPU amounted to 10.6 euros.

The best and most extensive NGN fixed and mobile network in Portugal

ZON OPTIMUS has a clear network and technological advantage given that it is able to provide speeds of up to 360 Mbps to the 3.3 million homes passed by its HFC footprint, by far the largest Next Generation Network coverage in Portugal.

We are well ahead in deploying our 4G network over the 800Mhz and 1.800Mhz bands and have already reached 80% population coverage, over 50% of which can benefit from speeds of up to 150Mbps. 4G is a key driver of future leadership in mobile data, as well as for the continued development of even more sophisticated convergent fixed-mobile solutions and to efficiently take our network architecture into a fully integrated and autonomous all-IP future.

Universal Service

It was announced on 18 July by the Council of Ministers, that ZON was chosen, in a public contest, to provide the Universal Service of connection to a public communications network in a fixed location and telephony services, available to the public, in the South of mainland Portugal and in the Madeira and Azores Archipelagos. OPTIMUS was the winner of the contest for the North and Center regions of Portugal.

9M13 Consolidated Management report 16 ZON OPTIMUS, SGPS, S.A

This decision represents the acknowledgement of ZON OPTIMUS’ technological and commercial capabilities, in providing electronic communications nationwide, at a significantly lower cost and with clear advantages to all consumers, telecommunications operators, and the country.

Cinemas and Audiovisuals

In 9M13, ZON OPTIMUS’ Portuguese Cinema ticket sales posted a positive performance, increasing by 2.3% to 5.956 million tickets which compares with a decline in total market ticket sales of 10.1%1. The most successful films shown in 9M13 were “The Gilded Cage”, “Fast & Furious 6”, “Despicable Me 2”, “The Hangover Part III”, and “The Croods”.

3Q13 was the first full quarter since ZON Lusomundo opened the first IMAX® DMR - Digital 3D screen in Lisbon. This premium cinema experience is proving very successful, having achieved around 40 thousand spectators in this quarter.

Despite the good performance in the number of tickets sold average revenue per ticket decreased by 3.8% from 4.9 to 4.7 euros yoy, albeit posting sequential qoq growth of 1.8%, affected by comparatively lower 3D movie ticket sales. Revenues from the sale of 3D movie tickets represented close to 15% of ZON OPTIMUS’ revenue from ticket sales in 9M13, whereas they had represented around 24% in 9M12 and 36% in 9M11, which is due to the lower number of movies in 3D and to customers choosing lower-cost 2D alternatives more than in the past.

Total Cinema revenues therefore decreased by 0.5% yoy in 9M13, with the 3.8% decline in the average revenue per ticket more than offsetting the 2.3% improvement in the number of tickets sold.

As regards Cinema gross ticket revenues, ZON OPTIMUS’ relative performance was also stronger in comparison with the market as a whole, posting a 1.5% decrease in 9M13 whilst the total market’s gross revenues decreased by 12.6%. This performance has meant that ZON Lusomundo continues to strengthen its market position, with a market share of 64.8% in terms of gross revenues in 9M13.

In 9M13, revenues in the Audiovisuals division improved by 0.1% to 43.3 million euros. ZON Audiovisuais maintained its leading position in the distribution of movies for cinema exhibition, content and VoD distribution and sale of homevideo content in Portugal.

Of the top 10 box-office hits in 3Q13, ZON Lusomundo distributed 7, “The Gilded Cage”, “Fast & Furious 6”, “Despicable Me 2”, “Monsters University”, “Now You See Me”, “The Impossible” and “World War Z”, maintaining its strong leading position with a 60.2% market share in terms of gross revenues.

International Growth - Africa

During 9M13, ZAP continued to expand its distribution network and is now present in most of the Angolan Provinces through its own stores, ensuring a very strong representation across the whole country.

ZAP also continues to strengthen its product and content offering. During this quarter ZAP launched the Benfica TV channel in Angola and Mozambique in exclusive. Benfica TV broadcasts all the live home matches of the main football team of SL Benfica in the Portuguese League and therefore it is a very relevant addition to the portfolio of sports channels.

1 Source ICA – Portuguese Institute for Cinema and Audiovisuals

17 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

6.2 Consolidated Financial Review

The merger by incorporation of OPTIMUS into ZON that led to the creation of ZON OPTIMUS was completed on 27 August 2013. As from this quarter, ZON OPTIMUS’ statutory financial statements reflect the financial consolidation of 9 months of ZON and 1 month of OPTIMUS.

Resulting primarily from the merger, 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 (EBITDA impact of +16.1 million euros in 9M12, +13.6 million euros in 9M13) and capitalization of certain movie rights in the audiovisuals division following IAS 38, which were restated since 1Q12 in the statutory accounts (EBITDA impact of +17.8 million euros in 9M12, +19.4 million euros in 9M13).

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 (EBITDA impact of -40.9 million euros 9M12, -40.6 million euros in 9M13).

The financial statements reflect the impact 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.

9M13 Consolidated Management report 18 ZON OPTIMUS, SGPS, S.A

Statutory Consolidated Financial Statements

Statutory Profit and Loss Statement (Millions of Euros) 9M12 9M13

Operating Revenues 590.5 636.4 ZON Telco 539.7 531.4 OPTIMUS 0.0 56.7 Audiovisuals 43.2 43.3 Cinema (1) 39.9 39.6 Others and Eliminations (32.3) (34.6) Operating Costs Excluding D&A (359.3) (378.4) W&S (40.3) (41.0) Direct Costs (167.5) (183.1) Commercial Costs (2) (23.4) (24.6) Other Operating Costs (128.0) (129.7) EBITDA (3) 231.2 257.9 EBITDA Margin 39.2% 121.7% Depreciation and Amortization (152.2) (159.4) Income From Operations (4) 79.1 98.5 (Other Expenses) / Income (0.5) (31.7) Operating Profit (EBIT) (5) 78.6 66.7 (Financial Expenses) / Income (29.5) (34.9) Income Before Income Taxes 49.0 31.8 Income Taxes (16.8) (7.3) Income From Continued Operations 32.2 24.5 o.w. Attributable to Non-Controlling Interests (0.9) (0.6) Net Income 31.3 23.9 (1) Includes operations in M ozambique. (2) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold. (3) EBITDA = Income From Operations + Depreciation and Amortization. (4) Income From Operations = Income Before Financials and Income Taxes + work force reduction programme costs + impairment of goodwill + Losses/Gains on disposal of fixed assets + Other costs/income. (5) EBIT = Income Before Financials and Income Taxes.

Operating Revenues grew by 7.8% in 9M13 in comparison with 9M12, to 636.4 million euros.

In 9M13 EBITDA was driven by the aforementioned increase in Operating Revenues. Operating Costs grew by 5.3%. Therefore, EBITDA grew by 11.5% to 257.9 million euros in 9M13, representing an EBITDA Margin of 40.5%, which compares with an EBITDA Margin of 39.2% in 9M12.

Net Income posted a yoy decrease of 23.7% in 9M13, amounting to 23.9 million euros, as a result of non-recurrent Other Expenses of 32.3 million euros related with restructuring costs and to the increase in non cash which took place in 3Q13.

It should be noted that the items above mentioned, relative to 9M13, are not directly comparable with 9M12, due to the fact that, as previously mentioned, due to the merger and subsequent incorporation of OPTIMUS into ZON, the statutory financial statements reflect the financial consolidation of 9 months of ZON and 1 month of OPTIMUS

19 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Balance Sheet (Millions of Euros) 2012 9M13

Current Assets 476.1 453.9 Cash and Equivalents 273.2 57.6 Accounts Receivable, Net 158.0 329.1 Inventories, Net 31.6 33.9 Taxes Receivable 2.6 1.9 Prepaid Expenses and Other Current Assets 10.8 31.4 Non-current Assets 1,074.5 2,446.2 Investments in Group Companies 36.8 34.4 Intangible Assets, Net 323.6 1,096.3 Fixed Assets, Net 618.2 1,127.6 Deferred Taxes 52.2 164.2 Other Non-current Assets 43.7 23.7

Total Assets 1,550.6 2,900.1

Current Liabilities 574.3 635.3 Short Term Debt 295.3 85.0 Accounts Payable 210.5 313.0 Accrued Expenses 50.3 183.9 Deferred Income 5.2 27.9 Taxes Payable 12.5 22.5 Current Provisions and Other Liabilities 0.5 3.0 Non-current Liabilities 756.9 1,191.6 Medium and Long Term Debt 712.0 1,064.4 Non-current Provisions and Other Liabilities 44.9 127.3

Total Liabilities 1,331.2 1,826.9

Equity Before Non-Controlling Interests 210.0 1,063.5 Share Capital 3.1 5.2 Issue Premium 0.0 854.2 Own Shares (0.9) (0.9) Reserves, Retained Earnings and Other 168.3 181.1 Net Income 39.5 23.9 Non-Controlling Interests 9.4 9.7

Total Shareholders' Equity 219.4 1,073.2

Total Liabilities and Shareholders' Equity 1,550.6 2,900.1

Note: Balance Sheet prepared considering the results corresponding to the consolidation of 9 months of ZON and 1 month of OPTIMUS. 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 2013. 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 386 million euros was recorded as a result of the fair value calculation of OPTIMUS’ assets and liabilities, and may be revised over the 12 months following the merger.

9M13 Consolidated Management report 20 ZON OPTIMUS, SGPS, S.A

Pro-Forma Consolidated Financial Statements

To facilitate comparison between current and prior period results for the new ZON OPTIMUS, the following 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 9 months of OPTIMUS’ results.

Pro-Forma Profit and Loss Statement 9M12 9M13 9M13 / 9M12 (Millions of Euros)

Operating Revenues 1,114.9 1,083.9 (2.8%) Telco 1,064.3 1,034.7 (2.8%) ZON Telco 548.7 538.0 (1.9%) OPTIMUS 522.0 504.9 (3.3%) Audiovisuals 43.2 43.3 0.1% Cinema (1) 39.9 39.6 (0.5%) Others and Eliminations (38.9) (41.9) 7.9% Operating Revenues Including 30% ZAP Contribution 1,136.3 1,115.1 (1.9%) Operating Costs Excluding D&A (701.4) (665.6) (5.1%) W&S (75.2) (71.5) (5.0%) Direct Costs (316.2) (319.3) 1.0% Commercial Costs (2) (78.9) (66.2) (16.1%) Other Operating Costs (231.0) (208.7) (9.7%) EBITDA (3) 413.5 418.3 1.2% EBITDA Margin 37.1% 38.6% 1.5pp Telco 385.3 392.0 1.7% EBITDA Margin 36.2% 37.9% 1.7pp Cinema Exhibition and Audiovisuals 28.1 26.3 (6.6%) EBITDA Margin 37.5% 35.1% (2.4pp) EBITDA Including 30% ZAP Contribution 416.4 428.6 2.9% EBITDA Margin Including 30% ZAP Contribution 36.6% 38.4% 1.8pp Depreciation and Amortization (254.5) (252.6) (0.7%) Income From Operations (4) 159.0 165.7 4.2% (Other Expenses) / Income (0.8) (34.1) n.a. Operating Profit (EBIT) (5) 158.2 131.6 (16.8%) (Financial Expenses) / Income (43.0) (50.6) 17.7% Income Before Income Taxes 115.3 81.1 (29.7%) Income Taxes (21.7) (4.0) (81.6%) Income From Continued Operations 93.6 77.1 (17.7%) o.w. Attributable to Non-Controlling Interests (0.9) (0.6) (33.8%) Net Income 92.7 76.5 (17.5%) (1) Includes operations in M ozambique. (2) Commercial costs include commissions, marketing and publicity expenses and costs of equipment sold. (3) EBITDA = Income From Operations + Depreciation and Amortization. (4) Income From Operations = Income Before Financials and Income Taxes + work force reduction programme costs + impairment of goodwill + Losses/Gains ondisposal of fixed assets + Other costs/income. (5) EBIT = Income Before Financials and Income Taxes.

21 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Pro-Forma Operating Revenues

Consolidated Operating Revenues reached 1,083.9 million euros in 9M13, a decline of 2.8% in comparison with 9M12. Adding back the contribution from the 30% stake in ZAP, Consolidated revenues posted a decline of 1.9% to 1,115.1 million euros.

Combined Revenues for the Telco business declined by 2.8% to 1,034.7 million euros. ZON Telco Revenues posted a 1.9% yoy reduction to 538 million euros. The pace of decline in 3Q13 (-1.9%) reflected an inflexion in 3Q13 in comparison with 2Q13 (-2.8%). This was driven by an improvement in sequential quarterly performance of premium channel Revenues, and an improving mix of customers due to the increased penetration of higher value packages with IRIS throughout 9M13. However these positive trends were somewhat dampened by increased promotional and retention activity particularly in 3Q13 in response to the aggressive triple play pricing campaign initiated by one of our competitors. Basic ARPU revenues were relatively flat y.o.y. (-0.3%) and premium ARPU revenues posted a yoy decline of 13.7%, however monthly premium ARPU revenues started to improve with the increase in the average premium channel subscriptions throughout 3Q13. At OPTIMUS, Revenues declined by 3.3% yoy to 504.9 million euros, again showing a sequential yoy improvement in 2Q13 (-1.7%) and 3Q13 (-1.6%) in comparison with 1Q13 (-6.6%). Service Revenues fell by 3.9% yoy to 477.7 million euros, resulting from lower customer revenues, down 8.5% yoy due to the still challenging macro environment which was partially compensated by an almost 12% increase in Operator Revenues due to the seasonal boost in roaming in the summer months in 3Q13 and to a good performance of wholesale revenues and mass calling services throughout 9M13.

Revenues from the Audiovisuals business in 9M13 grew by 0.1% yoy to 43.3 million euros also recording a sequential improvement in quarterly yoy trends, with 3Q13 posting yoy growth of 5.0%. In 1Q13 and 2Q13 the yoy growth rates had been 0.1% and -4.2%, respectively. Cinema Exhibition revenue trends posted a yoy decline of 0.5% to 39.6 million euros in 9M13. Despite the fact that the number of tickets sold was 2.3% higher y.o.y. average revenue per ticket fell by 3.8% due primarily to a decline in the proportion of 3D ticket sales. In contrast, when compared with 2Q13, cinema exhibition revenues increased significantly in 3Q13 by 30.5% led by the larger number of box office hits.

ZON OPTIMUS’ 30% stake in ZAP, its international Pay TV operation in Angola and Mozambique, continued to post good growth in revenues and operations are still performing very well with growth in the subscriber base and stable ARPU levels.

Pro-Forma EBITDA

Consolidated EBITDA grew by 1.2% in 9M13 to 418.3 million euros generating an EBITDA margin of 38.6% and representing growth of 1.5pp in margin in comparison with 9M12. Including the contribution from ZON OPTIMUS’ 30% stake in ZAP, Consolidated EBITDA would have posted growth of 2.9%. Telco EBITDA grew by 1.7% in 9M13 to 392 million euros and EBITDA from the Audiovisuals and Cinema operations decreased by 6.6% to 26.3 million euros.

Pro-Forma Consolidated Operating Costs Excluding D&A

Consolidated Operating Costs declined by 5.1% to 665.6 million euros in 9M13, a reflection of the group wide effort to contain and adjust the cost structure to the challenging macroeconomic environment. Important savings were achieved in practically all relevant cost items.

9M13 Consolidated Management report 22 ZON OPTIMUS, SGPS, S.A

Wages and Salaries fell by 5.0% to 71.5 million euros in 9M13 as a result mainly of a lower average level of headcount at the telco division in comparison with 9M12. Where possible ZON OPTIMUS has made efforts to accommodate normal staff attrition levels and this average reduction in salary costs yoy does not yet reflect any material impact of ongoing restructuring measures post-merger.

Direct Costs increased by 1.0% to 319.3 million euros in 9M13 mainly due to a higher level of traffic related costs from mass-calling services and an increase in wholesale activity throughout 9M13 and to increased traffic costs led by the higher yoy MVNO customer base at ZON, in 3Q13.

Commercial Costs fell by 16.1% in 9M13 to 66.2 million euros led mainly by an effort to contain marketing related costs and by a decline in handset equipment sales.

Other Operating Costs reduced by 9.7% to 208.7 million euros in 9M13 with continued strong cost discipline driving savings in areas such as support services, maintenance and repairs and other SGA.

Pro-Forma Net Income

Net Income amounted to 76.5 million euros in 9M13. Despite the positive yoy EBITDA performance, non-recurrent Other Expenses of 32.8 million euros in 3Q13 related with restructuring costs and to the increase in non cash provisions fully explain the decline in Net Income.

Depreciation and Amortization posted a yoy decline of 0.7% to 252.6 million euros.

Other Expenses* incorporate restructuring costs resulting from the merger of approximately 16 million euros in 3Q13 and reflect primarily the cash out and provisions for curtailment costs as well as some other restructuring related charges. The remaining costs are related with one-off non-cash increase in provisions in 3Q13 that result from alignment of estimates between the two companies. In 9M13, Other Expenses amounted to 34.1 million euros.

Net Financial Expenses were 17.7% higher in 9M13 at 50.6 million euros compared with 43.0 million euros in 9M12, although the amount recorded in 3Q13 is in line with 2Q13. The yoy increase is a result of a progressively higher average cost of interest as some of the older and less expensive financing lines matured and with the entrance of the new retail bonds issued in June 2012. This effect is partially compensated by the lower average level of consolidated debt.

Income Taxes amounted to 4.0 million euros in 9M13 mainly on the back of a gain of 12.5 million euros in 3Q13, due primarily to (i) a reduction in EBT of 85% to 6.1 million euros; (ii) recognition of incremental deferred tax assets generated by application of state tax surcharge (approximately 4%) and (iii) recognition of deferred tax assets on investment related tax benefits. The last two impacts are non recurrent and exceptional in nature.

* 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.

23 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Pro-Forma CAPEX

Pro-Forma CAPEX (Millions of Euros) 9M12 9M13 9M13 / 9M12

Telecoms 194.9 162.4 (16.7%) Infrastructure 94.2 67.5 (28.4%) Customer Related CAPEX 94.5 89.2 (5.5%) Other 6.2 5.7 (7.2%) Audiovisuals and Cinema Exhibition 21.6 21.9 1.2% Recurrent CAPEX 216.5 184.3 (14.9%) Non-Recurrent CAPEX 0.0 4.5 n.a. Total CAPEX 216.5 188.8 (12.8%)

Telco CAPEX reduced by 16.7% yoy to 162.4 million euros in 9M13 representing 15.7% of Telco Operating Revenues. This is explained almost entirely by a reduction in network related CAPEX due to lower LTE deployment in comparison with previous years.

The increase in Telco customer related CAPEX was due to a slightly higher level of investment in customer premise equipment driven by the continued increase in penetration of triple play IRIS services.

Audiovisuals and Cinemas recorded CAPEX of 21.9 million euros in 9M13, reflecting the capitalization as from this quarter and restated to 1Q12, of certain movie rights in the Audiovisuals division.

Total CAPEX declined by 12.8% in 9M13 to 188.8 million euros representing 17.4% of Total Operating Revenues.

Pro-Forma Operating Free Cash Flow

Pro-Forma Cash Flow (Millions of Euros) 9M12 9M13 9M13 / 9M12

EBITDA 413.5 418.3 1.2% Recurrent CAPEX (216.5) (184.3) (14.9%) EBITDA - Recurrent CAPEX 197.0 234.0 18.8% Non-Cash Items Included in EBITDA - Recurrent (46.0) (66.1) 43.6% CAPEX(1) and Change in Working Capital Operating Cash Flow After Investment 150.9 167.8 11.2% Long Term Contracts (16.5) (18.2) 10.6% Net Interest Paid and Other Financial Charges (36.6) (46.7) 27.5% Income Taxes Paid (9.2) (11.1) 21.2% Other Cash Movements (0.1) 0.7 n.a. Recurrent Free Cash-Flow 88.5 92.4 4.5% LTE Payments (83.0) (6.0) (92.8%) Non-Recurrent CAPEX 0.0 (4.5) n.a. Cash Restructuring Payments 0.0 (6.5) n.a. Total Free Cash Flow 5.5 75.5 n.a. (1) This caption includes non-cash provisions included in EBITDA.

9M13 Consolidated Management report 24 ZON OPTIMUS, SGPS, S.A

EBITDA – Recurrent CAPEX increased by 18.8% to 234.0 million euros in 9M13 as a result of the solid performance in EBITDA and the 14.9% decline in Recurrent CAPEX.

Operating Cash Flow After Investment recorded an increase of 11.2% to 167.8 million euros in 9M13. For the YTD period, non-cash items in EBITDA – Recurrent CAPEX and Change in Working Capital reflect the impact of an outflow at OPTIMUS in January 2013 related with 2012 ICP-Anacom fees representing around 12 million euros that under normal circumstances would have occurred in 2012.

Pro-Forma Total Free Cash Flow

Recurrent FCF increased by 4.5% in 9M13 to 92.4 million euros, reflecting the continued good FCF momentum in the business. Additional non-recurrent cash outflows occurred in the period as a result of the ongoing restructuring cash payments due to the merger process, to part of the remaining payments related with the LTE licence and to some non-recurrent CAPEX from set-top-box substitution due to the migration to MPEG4 compression technology in the DTH operation, as explained in previous reporting periods.

25 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Pro-Forma Consolidated Balance Sheet

Pro-Forma Balance Sheet (Millions of Euros) 2012 9M13

Current Assets 704.3 453.9 Cash and Equivalents 306.6 57.6 Accounts Receivable, Net 326.3 329.1 Inventories, Net 43.2 33.9 Taxes Receivable 2.7 1.9 Prepaid Expenses and Other Current Assets 25.4 31.4 Non-current Assets 2,532.6 2,446.2 Investments in Group Companies 36.8 34.4 Intangible Assets, Net 1,121.8 1,096.3 Fixed Assets, Net 1,164.5 1,127.6 Deferred Taxes 162.3 164.2 Other Non-current Assets 47.3 23.7

Total Assets 3,236.9 2,900.1

Current Liabilities 1,005.5 635.3 Short Term Debt 424.1 85.0 Accounts Payable 372.7 313.0 Accrued Expenses 166.3 183.9 Deferred Income 23.2 27.9 Taxes Payable 18.8 22.5 Current Provisions and Other Liabilities 0.5 3.0 Non-current Liabilities 1,181.4 1,191.6 Medium and Long Term Debt 1,044.4 1,064.4 Non-current Provisions and Other Liabilities 137.0 127.3

Total Liabilities 2,186.9 1,826.9

Equity Before Non-Controlling Interests 1,040.6 1,063.5 Share Capital 5.2 5.2 Issue Premium 854.2 854.2 Own Shares (0.9) (0.9) Reserves, Retained Earnings and Other 67.9 128.5 Net Income 114.3 76.5 Non-Controlling Interests 9.4 9.7

Total Shareholders' Equity 1,050.0 1,073.2

Total Liabilities and Shareholders' Equity 3,236.9 2,900.1

9M13 Consolidated Management report 26 ZON OPTIMUS, SGPS, S.A

Pro-Forma Capital Structure

At the end of 9M13, Net Financial Debt stood at 957.2 million euros, representing a decline of 1.4% in comparison with the end of 2012.

At the time of the merger, OPTIMUS’ Net Financial Debt was mainly comprised of shareholder loans which were repaid using (i) credit facilities pushed down from Sonaecom to ZON OPTIMUS, (ii) liquidity position available at ZON and (iii) two new commercial paper lines with 4-year maturity, therefore increasing the average maturity of ZON OPTIMUS’ Net Financial Debt to 1.9 years. ZON OPTIMUS is now financed until 1H15.

The total interest rate hedging operations in place at the end of 9M13 amounted to 257.5 million euros. Taking into account the bonds issued in June 2012 - 200 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 48%.

Total financial debt at the end of 9M13 amounted to 1,021.3 million euros, which was offset with a cash and short- term investments position on the balance sheet of 64.1 million euros. The all-in average cost of ZON OPTIMUS’ Net Financial Debt at the end of 9M13 was 5.15%. Pro-forma cost of debt for 9M13 was 5.61%.

The change in Net Financial Debt in 9M13 is explained by FCF generation of 75.5 million euros deducted of the 2012 dividend payment of 62 million euros.

Net Financial Gearing reduced to 47.1% at the end of 9M13 compared with 48.0% at the end of 2012, and Net Financial Debt / EBITDA (last 4 quarters) stands at 1.7x.

Pro-Forma Net Financial Debt (Millions of Euros) 2012 9M13 9M13 / 2012

Short Term 404.6 68.1 (83.2%) Bank and Other Loans 395.0 58.3 (85.2%) Financial Leases 9.6 9.9 2.8% Medium and Long Term 927.7 953.2 2.8% Bank and Other Loans 916.6 943.6 2.9% Financial Leases 11.1 9.6 (13.5%) Total Debt 1,332.3 1,021.3 (23.3%) Cash, Short Term Investments and Intercompany Loans 361.6 64.1 (82.3%) Net Financial Debt 970.7 957.2 (1.4%) Net Financial Gearing (1) 48.0% 47.1% (0.9pp) Net Financial Debt / EBITDA 1.8x 1.7x n.a. (1) Net Financial Gearing = Net Financial Debt / (Net Financial Debt + Total Shareholders' Equity).

27 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

7 Consolidated Financial Statements

ZON OPTIMUS, SGPS, S.A. Consolidated Statement of Comprehensive Income for the nine and three months ended 30 September 2013 and 2012 and 30 September 2012 restated (Amounts stated in thousands of euros)

Notes 3º Quarter 12 9M 12 3º Quarter 12 9M 12 3º Quarter 13 9M 13 Reported Reported Restated Restated (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) REVENUES: Services rendered 205,100 615,154 189,848 569,121 240,586 611,733 Sales 8,987 24,651 6,737 18,440 8,678 19,925 Other operating revenues 4 1,221 4,098 792 2,963 2,329 4,694 4 and 5 215,308 643,903 197,377 590,524 251,594 636,351 COSTS, LOSSES AND GAINS: Wages and salaries 4 14,899 44,288 13,511 40,284 16,892 41,028 Direct costs 4 and 6 62,296 180,021 55,276 167,544 75,188 183,116 Costs of products sold 4,560 12,739 1,911 5,496 4,407 6,860 Marketing and advertising 5,590 17,080 4,945 14,962 4,125 13,614 Support services 7 14,144 44,833 13,926 44,175 15,522 42,138 Supplies and external services 4 and 7 30,436 95,005 24,583 75,938 31,644 79,291 Other operational costs 159 743 133 339 338 422 Taxes 1,836 4,722 1,690 4,301 2,400 4,731 Provisions and adjustments 4 and 8 1,659 6,238 1,699 6,238 (198) 7,220 Depreciation, amortisation and impairment losses 4 and 9 52,620 160,076 51,057 152,175 59,845 159,445 Reestructuring costs 21 (4) 977 (4) 977 15,926 16,133 Losses/(gains) on sale of assets, net (400) (629) (397) (626) 156 (667) Other losses/(gains) non-recurring, net 21 42 213 42 161 16,193 16,275 187,836 566,305 168,372 511,963 242,438 569,607 Income before financial results and taxes 27,472 77,598 29,005 78,561 9,156 66,744

Financial costs 10 8,024 19,744 6,845 16,059 8,629 22,263 Net foreign exchange losses/(gains), net (173) (301) (142) (175) 51 93 Net losses/(gains) on financial assets, net 27 628 10 628 805 1,330 Equity in earnings of affiliated companies, net 11 33 198 1,666 974 (681) (2,335) Net other financial expenses/(income) 10 3,973 10,636 4,290 12,040 4,823 13,586 11,885 30,905 12,670 29,525 13,627 34,936 Income before taxes 15,588 46,693 16,336 49,037 (4,471) 31,808

Income taxes 4 and 12 5,751 16,202 5,991 16,835 (3,290) 7,335

Net consolidated income 9,837 30,490 10,344 32,200 (1,181) 24,474

Attributable to: Non-controlled interests 245 860 245 860 211 570 ZON Optimus Group shareholders 9,592 29,630 10,099 31,340 (1,393) 23,904

Earnings per share Basic - euros 13 0.03 0.10 0.03 0.10 (0.00) 0.07 Diluted - euros 13 0.03 0.10 0.03 0.10 (0.00) 0.07

(a) As standard practice, only annual accounts are audited; quarterly results are not audited separately.

The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the nine months ended 30 September 2013.

Chartered Accountant Board of Directors

9M13 Consolidated Management report 28 ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Consolidated Statement of Comprehensive Income for the nine and three months ended 30 September 2013 and 2012 and 30 September 2012 restated (Amounts stated in thousands of euros)

3º Quarter 12 9M 12 3º Quarter 12 9M 12 3º Quarter 13 9M 13 Reported Reported Restated Restated

(Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a)

Net income for the year 9,837 30,490 10,344 32,200 (1,181) 24,474

Other Income Itens that may be reclassified subsequently to the income statement Fair value of interest rate swap (Note 23) (1,548) (3,732) (1,548) (3,732) (725) 1,336 Deferred income tax - interest rate swap (Note 23) 411 989 411 989 205 (354) Fair value of exchange rate forward (Note 23) (187) (528) (187) (528) (176) (87) Deferred income tax -exchange rate forward (Note 23) 54 153 54 153 38 25 Currency translation differences (129) (271) (129) (271) 103 84 Other comprehensive income (1,399) (3,389) (1,399) (3,389) (556) 1,003

Total comprehensive income for the year 8,438 27,101 8,945 28,811 (1,737) 25,477

Attributable to: Share owners of ZON Optimus Group 8,193 26,241 8,700 27,951 (1,949) 24,907 Non-controlling interests 245 860 245 860 211 570

8,438 27,101 8,945 28,811 (1,737) 25,477

(a) As standard practice, only annual accounts are audited; quarterly results are not audited separately.

The Notes to the Financial Statements form an integral part of the statement of comprehensive income for the nine months ended September 30, 2013.

Chartered Accountant Board of Directors

29 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Consolidated Statement of Financial Position as of 30 September 2013, 31 December 2012 and 30 September 2012 and 30 September 2012 and 31 December 2012 restated (Amounts stated in thousands of euros)

Notes 30-09-2012 31-12-2012 30-09-2012 31-12-2012 30-09-2013 Reported Reported Restated Restated

(Unaudit) (a) (Unaudit) (a) (Unaudit) (a) (Unaudit) (a) Assets Current assets: Cash and cash equivalents 4 and 15 324,525 308,251 300,110 273,179 57,586 Accounts receivable - trade 16 123,113 130,522 113,351 119,147 290,229 Accounts receivable - other 53,802 41,901 59,800 38,826 38,830 Inventories 4 51,210 44,317 37,573 31,581 33,913 Taxes receivable 4,301 4,669 1,555 2,556 7,576 Non-current assets held-for-sale 678 678 678 678 678 Prepaid expenses 15,706 11,930 10,976 9,886 30,618 Other current assets - - 461 242 129 Derivative financial instruments 23 3 - 3 - - Total current assets 573,338 542,269 524,508 476,094 459,560 Non-current assets: Accounts receivable - other 32,573 25,455 1,624 1,700 5,400 Tax receivable - - 17 1 - Investments in participated companies 234 222 35,089 35,079 32,489 Investments held-to-matutrity 21,444 22,187 21,444 22,187 - Available-for-sale financial assets 20,629 20,629 20,629 20,629 19,329 Intangible assets 4 and 17 309,277 319,155 298,454 323,621 1,115,286 Tangible assets 4 and 18 629,789 632,047 615,652 618,238 1,108,653 Investment property 853 842 853 842 812 Deferred income tax assets 4 and 12 50,153 48,146 55,379 52,193 164,219 Total non-current assets 1,064,951 1,068,685 1,049,140 1,074,490 2,446,187

Total assets 1,638,289 1,610,953 1,573,647 1,550,584 2,905,747

Liabilities Current liabilities: Borrowings 19 442,958 363,254 373,128 295,328 84,988 Accounts payable-trade 20 139,671 157,052 138,711 158,133 245,764 Accounts payable-other 38,190 57,076 35,617 52,350 67,273 Accrued expenses 4 60,233 51,628 56,119 50,274 183,882 Deferred income 7,783 9,514 5,227 5,232 27,909 Taxes payable 24,031 12,800 22,308 12,525 28,141 Provisions for other liabilities and charges 4 and 21 20 420 20 420 2,850 Derivative financial instruments 23 - 45 - 45 132 Total current liabilities 712,885 651,788 631,131 574,307 640,939 Non-current liabilities: Borrowings 4 and 19 691,931 721,219 686,239 711,994 1,064,350 Accounts payable-other - 90 - - - Accrued expenses 4 - - - - 16,887 Defered income 1,485 1,385 1,485 1,385 2,206 Provisions for other liabilities and charges 4 and 21 9,197 8,411 29,009 29,951 94,820 Deferred income tax liabilities 4 and 12 3,468 2,776 8,052 7,488 8,623 Derivative financial instruments 23 6,308 6,051 6,308 6,051 4,715 Total non-current liabilities 712,390 739,931 731,093 756,869 1,191,602 Total liabilities 1,425,275 1,391,719 1,362,224 1,331,175 1,832,541

Shareholder's equity Share capital 22.1 3,091 3,091 3,091 3,091 5,152 Capital issued premium 22.2 - - - - 854,219 Treasury shares 22.3 (916) (914) (916) (914) (896) Legal reserve 22.4 3,556 3,556 3,556 3,556 3,556 Other reserves 22.4 163,843 164,381 163,843 164,382 173,311 Retained earnings 32,925 39,723 31,334 39,898 28,129 Equity before non-controlled interests 202,499 209,838 200,908 210,013 1,063,470 Non-controlled interests 10,515 9,396 10,515 9,396 9,736 Total equity 213,014 219,234 211,423 219,409 1,073,207

Total liabilities and shareholder's equity 1,638,289 1,610,953 1,573,647 1,550,584 2,905,747

(a) As standard practice, only annual accounts are audited; quarterly results are not audited separately.

The Notes to the Financial Statements form an integral part of the consolidated statement of financial position as of 30 September 2013.

Chartered Accountant Board of Directors

9M13 Consolidated Management report 30 ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Consolidated Statement of Changes in Shareholders' Equity for the nine months ended 30 September 2013 and 2012 (restated) (Amounts stated in thousands of euros)

Premium for issue of Own shares Legal Other Retained Non-controlled Notes Share capital shares Premium Own shares reserve reserves earnings interests Total Balance as at 1 January 2012 (Reported) 3,091 - (552) (3) 3,556 162,919 56,019 9,984 235,013 Changes in accounting policies 2 ------(3,302) - (3,302) Balance as at 1 January 2012 (Restated) (a) 3,091 - (552) (3) 3,556 162,919 52,717 9,984 231,713 Dividends attributed to non-controlled interests ------(329) (329) Dividends paid 14 - - - - - (14,730) (34,708) - (49,438) Undistributed profit - - - - - 18,016 (18,016) - (0) Aquisition of own shares 22.3 - - (902) (4) - - - - (906) Distribuition of own shares 22.3 - - 542 3 - (544) - - - Share Plan 27 - - - - - 1,540 - - 1,540 Comprehensive income for the period - - - - - (3,389) 31,340 860 28,811 Consolidation differences - - - - - 31 - - 31

Balance as at 30 September 2012 (Restated) (a) 3,091 - (912) (4) 3,556 163,843 31,334 10,515 211,423

Balance as at 1 January 2013 (Reported) 3,091 - (910) (4) 3,556 164,381 39,723 9,396 219,234 Changes in accounting policies 2 ------175 - 175 Balance as at 1 January 2013 (Restated) (a) 3,091 - (910) (4) 3,556 164,381 39,898 9,396 219,407 Dividends attributed to minority interests ------(229) (229) Dividends paid 14 - - - - - (1,371) (35,673) - (37,045) Capital increase by incorporation of Optimus SGPS in ZON 22.2 2,061 854,344 ------856,404 Costs related to the capital increase 22.2 - (125) ------(125) Aquisition of own shares 22.3 - - (1,486) (4) - - - - (1,490) Distribuition of own shares 22.3 - - 1,502 6 - (1,508) - - - Share Plan 4 and 27 - - - - - 1,223 - - 1,223 Comprehensive income for the period - - - - - 1,003 23,904 570 25,477 Consolidation differences - - - - - 1,037 - - 1,037 Balance as at 30 September 2013 (a) 5,152 854,219 (895) (2) 3,556 173,311 28,129 9,736 1,073,207

(a) As standard practice, only annual accounts are audited; quarterly results are not audited separately.

The Notes to the Financial Statements form an integral part of the consolidated statement of changes in shareholders' equity for the nine months ended 30 September, 2013.

Chartered Accountant Board of Directors

31 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Statements of Cash Flows for the nine months ended 30 September 2013 and 2012 and 30 September 2012 restated (Amounts stated in thousands of euros)

Notes 9M 12 9M 12 9M 13 Reported Restated

(Unaudit) (a) (Unaudit) (a) (Unaudit) (a) OPERATING ACTIVITIES Collections from clients 796,934 737,417 766,709 Payments to suppliers (480,512) (452,959) (453,795) Payments to employees (43,473) (39,492) (47,889) Payments relating to income taxes (13,213) (12,725) (8,560) Other cash receipts / payments related with operating activities (70,010) (60,989) (46,569) Cash flow from operating activities (1) 189,726 171,252 209,896

INVESTING ACTIVITIES Cash receipts resulting from Financial investments - - 35 Tangible fixed assets 1,267 1,263 2,222 Loans granted 2,415 3,450 27,316 Financial aplications - - 24,343 Interest and related income 13,285 11,571 2,903 16,968 16,285 56 821 Payments resulting from Financial investments (6) (6) - Tangible fixed assets (72,827) (70,651) (68,001) Intangible assets (3,005) (22,479) (21,240) Loans granted (6,313) (9,018) (21) (82,152) (102,154) (89,262) Cash flow from investing activities (2) (65,183) (85,869) (32,442)

FINANCING ACTIVITIES Cash receipts resulting from Loans obtained 1,989,562 1,965,000 1,157,525 Subsidies - - 47 1,989,562 1,965,000 1 157 572 Payments resulting from Loans obtained (2,075,386) (2,044,802) (1,481,050) Lease rentals (principal) (27,950) (18,323) (16,824) Interest and related expenses (45,340) (42,692) (31,258) Dividends 14 (49,767) (49,767) (37,273) Acquisition of own shares 22 (906) (906) (1,490) Other financial activities (116) (116) (692) (2,199,466) (2,156,605) (1,568,587) Cash flow from financing activities (3) (209,903) (191,605) (411,015)

Change in cash and cash equivalents (4)=(1)+(2)+(3) (85,359) (106,222) (233,561) Effect of exchange differences 95 95 (19) Cash and cash equivalents at the beginning of the period 15 407,362 406,237 273,179 Changes in the consolidated scope 4 2,427 - 17,987 Cash and cash equivalents at the end of the period 324,525 300,110 57,586 15

(a) As standard practice, only annual accounts are audited; quarterly results are not audited separately.

The Notes to the Financial Statements form an integral part of the consolidated statement of cash flows for the nine months ended 30 September 2013.

Chartered Accountant Board of Directors

9M13 Consolidated Management report 32 ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Notes to the Consolidated Financial Statements as of 30 September 2013

Index of notes to the consolidated financial statements

1. Introductory note 34 2. Accounting Policies 35 3. Judgments and estimates . 38 4. Changes in the consolidation perimeter 38 5. Segment Reporting 41 6. Direct Costs 43 7. Support services and provision of external services 43 8. Provisions and adjustments 44 9. Depreciation, amortisation and impairment losses 44 10. Financing costs and other costs / (income), net 45 11. Losses / (gains) of affiliated companies 45 12. Income tax expense 45 13. Earnings per share 47 14. Dividends 47 15. Cash and cash equivalents 48 16. Accounts receivable – customers 48 17. Intangible assets 48 18. Tangible Assets 50 19. Borrowings 50 20. Accounts payable - suppliers 52 21. Provisions 53 22. Shareholder’s equity 55 23. Derivatives 57 24. Guarantees and financial undertakings 59 25. Related Parties 61 26. Ongoing litigation and contingent assets and liabilities 64 27. Shares incentive scheme 66 28. Subsequent Events 68

33 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

ZON OPTIMUS, SGPS, S.A. Notes to Consolidated Financial Statements as of 30 September 2013 (Amounts stated in thousands of euros)

1. Introductory note

ZON Optimus, SGPS, SA ("Zon Optimus" or "Company"), formerly named of Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A., with Company headquartes registered at Rua Actor Antonio Silva, 9, Campo Grande, was established by Portugal Telecom, SGPS, SA ("Portugal Telecom") on July 15, 1999 for the purpose of implementing its multimedia business strategy.

During the 2007 financial year, Portugal Telecom proceeded with the spin-off of ZON through the attribution of its shares in the company to its shareholders, resulting in it becoming fully independent from Portugal Telecom.

During the 2013 financial year, Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A., ("ZON") and Optimus, SGPS, S.A. ("Optimus SGPS") have merged through the incorporation of Optimus SGPS into ZON. Thereafter, the Company adopted the current designation of ZON Optimus, SGPS, S.A..

The business operated by ZON Optimus and its associated companies, which together form the "ZON Optimus Group" or "Group", includes cable and satellite television services, voice and Internet access services, video production and sale, advertising on Pay TV channels, cinema exhibition and distribution, and the production of channels for Pay TV.

ZON Optimus shares are listed on the Euronext Lisbon market.

Cable and satellite television in Portugal is mainly provided by ZON TV Cabo Portugal , S.A. ("ZON TV Cabo") and its subsidiaries, ZON TV Cabo Açoreana, S.A. ("ZON TV Cabo Açoreana") and ZON TV Cabo Madeira, S.A. ("ZON TV Cabo Madeira") . These companies carry out: a) cable and satellite television distribution; b) the operation of electronic communications services, including data and multimedia communication services in general; c) IP voice services ("VOIP" - Voice over IP); d) Mobile Virtual Network Operator (“MVNO”), and e) the provision of consultancy and similar services directly or indirectly related to the above mentioned activities and services. The business of ZON TV Cabo, ZON TV Cabo Açoreana and ZON TV Cabo Madeira is regulated by Law no . 5/2004 (Electronic Communications Law) , which establishes the legal regime governing electronic communications networks and services.

ZON Conteúdos – Atividade de Televisão e de Produção de Conteúdos, S.A. (“ZON Conteúdos”) and ZON Lusomundo TV, Lda. (“ZON Lusomundo TV”) operate in the television and content production business, and currently produce films and series, which are distributed, among other operators, by ZON TV Cabo and its affiliates. ZON Conteúdos also manages the advertising space on Pay TV channels and in the cinemas of ZON Lusomundo Cinemas, S.A. (“ZON LM Cinemas”).

ZON Lusomundo Audiovisuais, S.A. (“ZON LM Audiovisuais”) and ZON LM Cinemas together with their associated companies operate in the audiovisual sector, which includes video production and sale, cinema exhibition and distribution, and the acquisition/negotiation of Pay TV and VOD (video-on-demand) rights.

On 27 August 2013, the Company completed a merger operation by incorporation of Optimus SGPS into ZON. Optimus SGPS was a parent company of a group of companies which includes Optimus - Comunicações S.A. which operates a next generation mobile communication networks, GSM/UMTS/LTE, with extensive coverage in the national territory, as well as latest next generation wireline network, which includes a transmission component, a backbone component and local access fiber components. As a result of the merger, all Optimus SGPS subsidiaries were included in the consolidation scope: Be Artis – Concepção, Construção e Gestão de Redes de Comunicação, S.A. (“Be Artis”), which operates in the design, construction, management and exploitation of electronic communications networks and their equipment and infrastructure, management of technologic assets

9M13 Consolidated Management report 34 ZON OPTIMUS, SGPS, S.A and rendering of related services; Be Towering – Gestão de Torres de Telecomunicações, S.A. (“Be Towering”), which operates in the implementation, installation and exploitation of towers and other sites for the installation of telecommunications equipment; Optimus - Communications , SA ("Optimus") , which operates in the implementation, operation, exploitation and offer of networks and rendering services of electronic communications and related resources; offer and commercialization of products and equipments of electronic communications; Per- mar – Sociedade de Construções, S.A. (“Per-mar”), which operates in the purchase, sale, renting and operation of property and commercial establishments, and Sontária – Empreendimentos Imobiliários, S.A. (“Sontária”), which operates in the undertaking of urbanization and building construction, planning, urban management, studies, construction and property management, purchase and sale of properties and resale of properties purchased for that purpose.

These Notes to the Consolidated Financial Statements follow the order in which the items are shown in the consolidated financial statements.

The consolidated financial statements for the nine month period ended 30 September 2013 were approved by the Board of Directors and their publication authorized on 13 November 2013.

2. Accounting Policies

2.1. Basis of presentation

The consolidated financial statements were prepared on a going concern basis from the books and accounting records of the companies included in the consolidation (Annex I), using the historical cost convention, adjusted where applicable by the valuation of financial assets and liabilities (including derivatives) at fair value.

The consolidated financial statements of ZON Optimus have been prepared using accounting policies consistent with International Financial Reporting Standards ("IAS / IFRS") as adopted in the European Union on 1 January 2013, and in accordance with IAS 34 - Interim Financial Reporting.

Changes in accounting policies

During the period of nine months ended 30 September 2013, the Group has anticipated the impact of IFRS 11 - Joint Arrangements (issued by IASB and endorsed by the European Union with mandatory application for annual periods beginning on or after 1 January 2014, however early adoption is permitted), starting to record jointly controlled companies according to the equity method. Jointly controlled entities are disclosed in the Annex I.

Additionally, during the period of nine months ended 30 September 2013, the Group, in line with best practices in the sector and, particularly, considering the necessary standardization of policies with Optimus SGPS subsidiaries, changed its accounting criteria for costs related to customers’ loyalty contracts. To date, these were recorded as an expense in the year they occurred.

From 1 January 2013, the costs incurred for customers’ loyalty contracts, which include compensation clauses in the event of early termination, are capitalized as "Intangible assets" and amortized over the period of their contracts, since it is possible to apply a reliable cost allocation to the respective contracts, as well as the revenue generated by each contract, thus fulfilling the criteria for capitalization required by IAS 38 - Intangible Assets. When a contract is terminated, the net value of intangible assets associated with that contract is immediately recognized as an expense in the consolidated statement of comprehensive income. This accounting policy allows a more true, fair and reliable presentation of the financial position and the financial performance of the Group, as it allows the alignment between costs incurred with customer’s loyalty contracts and the revenue generated.

Additionally, at the date of each statement of financial position and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable, impairment tests are carried out to ensure

35 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

that the current value of the estimated revenues associated with each contract is greater than the amount that is capitalized.

During the period of nine months ended 30 September 2013, the Group changed the accounting policy regarding the future rights of use of movies and series. To date, these were recorded as an expense in the year they occurred. The costs are capitalized as "Intangible assets" once it is possible to measure, reliably, the costs incurred with each contract as well as the revenue generated, meeting the criteria for capitalization as required by IAS 38 - Intangible assets. Additionally, the model of amortization and impairment of those rights has been adjusted, reflecting the business and how the rights are used more reliably.

Additionally, at the date of each statement of financial position and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable, impairment tests are carried out to ensure that the current value of the estimated revenues associated with each right is greater than the amount that is capitalized.

As provided under IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, these policy changes were applied retrospectively. Therefore changes were made to the consolidated statement of financial position of 1 January 2012, 30 September 2012 and 31 December 2012, to the consolidated statements of comprehensive income for the period of nine months ended 30 September 2012 and for the year ended 31 December 2012 and to the consolidated statement of cash flows for the period of nine months ended 30 September 2012 .

The effects of these changes on the consolidated statement of financial position are presented in the tables below.

Joint Subscriber Rights on 1 JANUARY 2012 Reported arrangements acquisition costs movies and series Restated Assets Intangible assets 314,666 (29,848) 12,338 18,518 315,675 Tangible assets 647,126 (8,524) - - 638,602 Deferred income tax assets 49,895 (141) - 5,047 54,801 Inventories 46,741 (6,034) - (2,345) 38,362 Investments in participated companies 470 34,554 - - 35,024 Accounts receivable and other assets 319,349 (62,680) - (33,281) 223,388 Cash and cash equivalents 407,362 (1,125) - - 406,237 Total assets 1,785,611 (73,799) 12,338 (12,061) 1,712,089

Liabilities Provisions for other liabilities and charges 27,240 (76) - - 27,164 Deferred income tax liabilities 4,207 - 3,578 - 7,785 Borrowings 1,229,385 (69,407) - - 1,159,978 Accounts payable and other liabilities 289,766 (4,316) - - 285,450 Total liabilities 1,550,597 (73,799) 3,578 - 1,480,376

Shareholder's equity Equity before non-controlled interests 225,030 - 8,760 (12,061) 221,730 Non-controlled interests 9,984 - - - 9,984 Total equity 235,014 - 8,760 (12,061) 231,713

Total liabilities and shareholder's equity 1,785,611 (73,799) 12,338 (12,061) 1,712,089

Joint Subscriber Rights on 30 SEPTEMBER 2012 Reported arrangements acquisition costs movies and series Restated Assets Intangible assets 309,277 (45,979) 15,808 19,348 298,454 Tangible assets 629,789 (14,138) - - 615,651 Deferred income tax assets 50,153 (136) - 5,362 55,379 Inventories 51,210 (10,637) - (3,000) 37,573 Investments in participated companies 234 34,855 - - 35,089 Accounts receivable and other assets 273,100 (7,185) - (34,524) 231,391 Cash and cash equivalents 324,525 (24,415) - - 300,110 Total assets 1,638,289 (67,635) 15,808 (12,814) 1,573,647

Liabilities Provisions for other liabilities and charges 9,217 19,812 - - 29,029 Deferred income tax liabilities 3,468 - 4,584 - 8,052 Borrowings 1,134,889 (75,522) - - 1,059,367 Accounts payable and other liabilities 277,701 (11,924) - - 265,776 Total liabilities 1,425,275 (67,635) 4,584 - 1,362,224

Shareholder's equity Equity before non-controlled interests 202,499 - 11,223 (12,814) 200,908 Non-controlled interests 10,515 - - - 10,515 Total equity 213,014 - 11,223 (12,814) 211,423

Total liabilities and shareholder's equity 1,638,289 (67,635) 15,808 (12,814) 1,573,647

9M13 Consolidated Management report 36 ZON OPTIMUS, SGPS, S.A

Joint Subscriber Rights on 31 DECEMBER 2012 Reported arrangements acquisition costs movies and series Restated Assets Intangible assets 319,155 (32,563) 16,249 20,781 323,621 Tangible assets 632,047 (13,809) - - 618,238 Deferred income tax assets 48,146 (706) - 4,753 52,193 Inventories 44,317 (10,154) - (2,582) 31,581 Investments in participated companies 222 34,857 - - 35,079 Accounts receivable and other assets 258,815 (7,807) - (34,315) 216,693 Cash and cash equivalents 308,251 (35,072) - - 273,179 Total assets 1,610,953 (65,256) 16,249 (11,363) 1,550,584

Liabilities Provisions for other liabilities and charges 8,831 21,540 - - 30,371 Deferred income tax liabilities 2,776 - 4,712 - 7,488 Borrowings 1,084,473 (77,151) - - 1,007,322 Accounts payable and other liabilities 295,639 (9,645) - - 285,994 Total liabilities 1,391,719 (65,256) 4,712 - 1,331,175

Shareholder's equity Equity before non-controlled interests 209,838 - 11,537 (11,363) 210,013 Non-controlled interests 9,396 - - - 9,396 Total equity 219,234 - 11,537 (11,363) 219,409

Total liabilities and shareholder's equity 1,610,953 (65,256) 16,249 (11,363) 1,550,584

The effects of these changes on the consolidated statements of comprehensive income are presented in the tables below.

Joint Subscriber Rights on 30 SEPTEMBER 2012 Reported arrangements acquisition costs movies and series Restated REVENUES: Sales and Services rendered 639,805 (52,244) - - 587,561 Other operating revenues 4,098 44 - (1,179) 2,963 643,903 (52,199) - (1,179) 590,524 COSTS, LOSSES AND GAINS: Wages and salaries 44,288 (4,004) - - 40,284 Direct costs 180,021 6,497 - (18,973) 167,544 Supplies and external services 95,005 (2,948) (16,119) - 75,938 Provisions and adjustments 6,238 - - - 6,238 Depreciation, amortisation and impairment losses 160,076 (39,414) 12,650 18,863 152,175 Other losses/(gains), net 80,678 (10,893) - - 69,785 566,306 (50,763) (3,469) (111) 511,963 Income before financial results and taxes 77,597 (1,436) 3,469 (1,068) 78,561 Equity in earnings of affiliated companies, net 198 776 - - 974 Net other financial expenses/(income) 30,707 (2,155) - - 28,552 Income before taxes 46,692 (58) 3,469 (1,068) 49,036 Income taxes 16,202 (58) 1,006 (315) 16,835 Net consolidated income 30,490 - 2,463 (753) 32,200 Attributable to: Non-controlled interests 860 - - - 860 ZON Optimus Group shareholders 29,630 - 2,463 (753) 31,340

Joint Subscriber Rights on 31 DECEMBER 2012 Reported arrangements acquisition costs movies and series Restated REVENUES: Sales and Services rendered 852,086 (69,694) - - 782,392 Other operating revenues 6,514 (194) - (1,579) 4,741 858,600 (69,888) - (1,579) 787,133 COSTS, LOSSES AND GAINS: Wages and salaries 59,783 (5,385) - - 54,398 Direct costs 243,401 7,993 - (26,843) 224,551 Supplies and external services 126,351 (4,053) (21,026) - 101,271 Provisions and adjustments 8,941 (102) - - 8,839 Depreciation, amortisation and impairment losses 214,580 (51,850) 17,116 24,273 204,119 Other losses/(gains), net 108,231 (14,986) - - 93,245 761,287 (68,384) (3,911) (2,570) 686,422 Income before financial results and taxes 97,313 (1,504) 3,911 991 100,710 Equity in earnings of affiliated companies, net 217 1,845 - - 2,062 Net other financial expenses/(income) 42,231 (3,249) - - 38,982 Income before taxes 54,865 (102) 3,911 991 59,666 Income taxes 17,978 (102) 1,134 293 19,303 Net consolidated income 36,887 - 2,777 698 40,363 Attributable to: Non-controlled interests 869 - - - 869 ZON Optimus Group shareholders 36,018 - 2,777 698 39,494

37 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

The effects of these changes on the consolidated statement of cash flows are presented in the tables below.

Joint 30 SEPTEMBER 2012 Reported arrangements Restated STATEMENT OF CASH FLOWS Operating activities 189,726 (18,474) 171,252 Investing activities (65,183) (20,686) (85,869) Financing activities (209,903) 18,298 (191,605) Change in cash and cash equivalents (85,359) (20,862) (106,222) Effect of exchange differences 95 - 95 Cash and cash equivalents at the beginning of the period 407,362 (1,125) 406,237 Changes in the consolidated scope 2,427 (2,427) - Cash and cash equivalents at the end of the period 324,525 (24,414) 300,110

The accounting policies adopted, including the policies of financial risk management, are consistent with those used in the preparation of financial statements for the year ended 31 December 2012, with the exception of the above mentioned.

3. Judgments and estimates

During the nine months ended 30 September 2013, no significant changes occurred in the accounting estimates compared with those used in the preparation of the financial statements for the year ended 31 December 2012, nor were any material errors relating to previous financial years recognized.

4. Changes in the consolidation perimeter

On 27 August 2013, the merger operation by incorporation of Optimus SGPS into ZON occurred, through the transfer of all assets of the company Optimus SGPS to ZON, under the terms of the subparagraph a) of paragraph 4 of the Article 97 of the CSC, with effect from the date of the merger.

Following the merger, the Company performed a preliminary assessment of the fair value of assets acquired and assumed liabilities through this operation. The allocation of the acquisition price is still subject to changes until the conclusion of a period of one year from the date of acquisition, in accordance with IFRS 3 - Business Combinations. Nevertheless, the Company does not expect significant changes in its financial position as a result from any changes to the allocation made. The detail of Optimus Group's net assets and Goodwill identified under this transaction are as follows:

The contribution the consolidated statement of financial position, at the date of the merger, is as follows:

Book Adjustments Fair value to fair value value Acquired assets Intangible assets 353,331 45,244 398,575 Tangible assets 569,441 (37,110) 532,331 Deferred income tax assets 100,976 13,227 114,203 Inventories 19,125 (1,384) 17,741 Accounts receivable and other assets 224,165 - 224,165 Cash and cash equivalents 17,987 - 17,987 Total assets 1,285,025 19,976 1,305,001 Acquired liabilities Provisions for other liabilities and charges (35,224) (33,215) (68,439) Borrowings (452,362) - (452,362) Share Plan (6,469) (2,077) (8,546) Accounts payable and other liabilities (288,510) (17,252) (305,762) Total do passivo (782,565) (52,544) (835,109) Total net assets acquired 502,460 (32,567) 469,892 Goodwill (Note 17) 386,512 Acquisition price (Note 22) 856,404

9M13 Consolidated Management report 38 ZON OPTIMUS, SGPS, S.A

The fair value of net assets acquired was determined through several valuation methodologies for each type of asset or liability, based on the best information available. The main fair value adjustments made in this process were: (i) customer portfolio (34.6 million euros), which will be amortized linearly based on the estimated average time of customer retention; (ii) infrastructure reconstruction and replacement equipment costs and other adjustments on basic equipment in the amount of 4.1 million euros; (iii) adjustment of 27.7 million euros to carrying amount of the assets falling within by the commitments made to the Competition Authority, under the merger operation, in particular, the agreement on an option to acquire the fiber network of Optimus; (iv) contingent liabilities related to present obligations in the amount of 33.2 million euros, as permitted by IFRS 3, and (v) contractual obligations in the amount of 17.3 million euros related to long-term contracts whose prices are different from market prices.

For the remaining assets and liabilities were not identified significant differences between the fair value and their book value.

As usual on mergers and acquisitions, also in this operation, there was a part of the acquisition price which was not possible to allocate to the fair value of some identified assets and liabilities that was considered as Goodwill and recorded in “Intangible Assets”. This Goodwill is related to a number of different elements, which cannot be individually quantified and isolated in a viable way and include, for example, synergies, qualified workforce and technical skills.

The contribution of Optimus group companies to the consolidated income for the period ended 30 September 2013, was positive, of 2,486 thousand euros. This contribution differs from the net income in the financial statements prepared by these entities, mainly because of the impacts in amortization related to fair value adjustments and the standardization of certain accounting policies.

The detail of the referred contribution is as follows:

Amount REVENUES: Sales and Services rendered 54,826 Other operating revenues 1,168 55,994

COSTS, LOSSES AND GAINS: Wages and salaries 7,491 Direct costs 17,601 Supplies and external services 7,223 Provisions and adjustments (3,507) Depreciation, amortisation and impairment losses 9,920 Other losses/(gains), net 6,183 44,910 Income before financial results and taxes 11,084

Financial results 1,688 Income before taxes 9,396

Income taxes 6,910

Net consolidated income 2,486

39 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

If the merged companies had been consolidated from 1 January 2013, the amounts of consolidated operating revenues and net income before non-controlling interests for the period ended 30 September 2013, would be as follows:

Pro-forma and Unaudit Amount REVENUES: Sales and Services rendered 490,653 Other operating revenues 8,872 499,524

COSTS, LOSSES AND GAINS: Wages and salaries 34,653 Direct costs 151,118 Supplies and external services 70,988 Provisions and adjustments (9,426) Depreciation, amortisation and impairment losses 103,036 Other losses/(gains), net 73,086 423,454 Income before financial results and taxes 76,070

Financial results 17,324 Income before taxes 58,746

Income taxes 3,555

Net consolidated income 55,190

The contribution of the companies merged in the consolidated statement of financial position of ZON Optimus on 30 September 2013, excluding the goodwill generated as a result of the merger, are as follows:

Amount Assets Intangible assets 396,360 Tangible assets 526,861 Deferred income tax assets 107,451 Inventories 16,565 Accounts receivable and other assets 216,161 Cash and cash equivalents 6,914 Total assets 1,270,312 Liabilities Provisions for other liabilities and charges 62,054 Borrowings 26,013 Accrued expenses 137,192 Share Plan 9,920 Accounts payable and other liabilities 154,893 Total liabilities 390,071 Total net assets 880,241

The main changes in the several items of the consolidated financial statements, as a result of the abovementioned contributions, result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 1).

At 31 October 2012, ZON Optimus carried out Grafilme – Sociedade impressora de legendas, Lda. (“Grafilme”).

The impact on its statement of financial position and statement of comprehensive income for the consolidation perimeter is not relevant.

9M13 Consolidated Management report 40 ZON OPTIMUS, SGPS, S.A

5. Segment Reporting

The business segments are as follows:

 Telco – the supply of TV, Internet (fixed and mobile) and voice (fixed and mobile) services and includes the following companies: Be Artis, Be Towering, Optimus, Per-mar, Sontária, ZON Optimus, ZON Televisão por Cabo, SGPS, S.A. (“ZON Televisão por Cabo”), ZON TV Cabo, ZON TV Cabo Açoreana, ZON TV Cabo Madeirense, ZON Conteúdos, ZON Lusomundo TV, ZON Finance B.V., Teliz Holding B.V..

 Audiovisual – the supply of video production services and sales, cinema exhibition and distribution and the acquisition/negociation of Pay TV and VOD (video-on-demand) rights and includes the following companies: ZON Audiovisual, SGPS, SA, ZON Cinemas, SGPS, S.A., ZON LM Audiovisual, ZON LM Cinemas, Lusomundo Moçambique, Lda ("Lusomundo Moçambique"), Lusomundo España, SL ("Lusomundo España"), Lusomundo Imobiliária 2, S.A. ("Lusomundo Imobiliária 2"), Lusomundo Sociedade de Investimentos Imobiliários, SGPS, S.A. (“Lusomundo SII”), Empracine – Empresa Promotora de Atividades Cinematográficas, Lda (“Empracine”).

The results by segment for the nine months ended 30 September 2012 and 2013 are shown below:

Telco Audiovisuals Group Restated Restated Restated 3º Quarter 12 9M 12 3º Quarter 12 9M 12 3º Quarter 12 9M 12 Total segment revenue 177,743 541,458 25,775 74,996 203,518 616,454 Inter-segment revenue (4,339) (12,967) (1,802) (12,963) (6,141) (25,930) Sales and services rendered 173,404 528,491 23,974 62,034 197,377 590,524

Operational income by segment 28,065 75,040 942 3,521 29,005 78,561 Net interest expense and other 10,621 27,131 373 792 10,994 27,924 Loss / (Gains) in financial assets - 1,200 10 (572) 10 628 Share of loss/(profit) from associates 2,163 2,125 (497) (1,151) 1,666 974 Income before taxes 15,281 44,584 1,055 4,452 16,336 49,037 Income tax expense 6,021 16,008 (30) 828 5,991 16,835

Net income 9,260 28,576 1,084 3,624 10,344 32,200

Other costs: Depreciation, amortisation and impairment 42,795 129,380 8,261 22,794 51,056 152,175 Provisions and adjustments 2,382 6,508 (683) (270) 1,699 6,238 Costs / (revenues) non-recurrent (416) 399 58 113 (358) 512

Telco Audiovisuals Group 3º Quarter 13 9M 13 3º Quarter 13 9M 13 3º Quarter 13 9M 13 Total segment revenue 233,874 588,961 26,915 74,824 260,789 663,785 Inter-segment revenue (5,044) (14,161) (4,152) (13,272) (9,195) (27,433) Sales and services rendered 228,830 574,800 22,763 61,552 251,594 636,351

Operational income by segment 7,372 64,322 1,784 2,423 9,156 66,744 Net interest expense and other 12,450 33,789 1,053 2,153 13,503 35,941 Loss / (Gains) in financial assets 800 1,300 5 30 805 1,330 Share of loss/(profit) from associates (1,605) (2,304) 924 (30) (681) (2,335) Income before taxes (4,273) 31,538 (198) 270 (4,471) 31,808 Income tax expense (3,339) 6,741 49 593 (3,290) 7,335

Net income (934) 24,797 (247) (323) (1,181) 24,474

Other costs: Depreciation, amortisation and impairment 52,683 137,934 7,162 21,511 59,845 159,445 Provisions and adjustments (217) 4,346 18 2,874 (198) 7,220 Costs / (revenues) non-recurrent 31,338 30,933 938 809 32,276 31,741

Resulting from the changes in accounting policies described in note 2, the net income of jointly controlled companies is recorded in the caption "Losses / (gains) from associates". The net income of Dreamia – Serviços de Televisão, S.A. and Dreamia Holding B.V. is included in the segment "Audio" while the net income of Sport TV Portugal, S.A., MSTAR, S.A., Upstar Comunicações S.A. and FINSTAR - Sociedade de Investimentos e Participações, S.A. is included in the segment "Telco".

41 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Inter-segment transactions are effected on market terms and conditions in a comparable way to transactions effected with third parties.

Assets and liabilities by segment, and investments in tangible fixed assets at 31 December 2012, are shown below:

Telco Audiovisuals Eliminations Not allocated Group Restated Restated Restated Restated Restated Assets 1,430,017 124,949 (136,059) 96,599 1,515,505 Investment in associated companies 33,146 1,933 - - 35,079

Total assets 1,463,163 126,882 (136,059) 96,599 1,550,584

Liabilities 334,760 116,746 (136,059) 1,015,728 1,331,175

Investment in tangible assets 115,071 2,806 - - 117,877

Investment in intangible assets 52,477 26,536 - - 79,014

At 31 December 2012, assets and liabilities allocated to segments are reconciled with total assets and liabilities as follows:

Assets Liabilities Not allocated: Deferred tax 52,193 7,488 Income tax expense 70 918 Borrowings - current (Note 19) - 295,328 Borrowings - non current (Note 19) - 711,994 Available-for-sale financial assets 20,629 - Non-current assets held-for-sale 678 - Investment property 842 - 96,599 1,015,728

Assets and liabilities by segment, and investments in tangible fixed assets at 30 September 2013, are shown below:

Telco Audiovisuals Eliminations Not allocated Group Assets 2,701,353 122,443 (141,293) 190,755 2,873,258 Investment in associated companies 30,401 2,088 - - 32,489

Total assets 2,731,754 124,531 (141,293) 190,755 2,905,747

Liabilities 697,249 118,624 (141,293) 1,157,960 1,832,541

Investment in tangible assets 85,047 2,136 - - 87,183

Investment in intangible assets 19,508 19,941 - - 39,449

At 30 September 2013, assets and liabilities allocated to segments are reconciled with total assets and liabilities as follows:

Assets Liabilities Not allocated: Deferred tax 164,219 8,623 Income tax expense 5,716 - Borrowings - current (Note 19) - 84,987 Borrowings - non current (Note 19) - 1,064,350 Available-for-sale financial assets 19,329 - Non-current assets held-for-sale 678 - Investment property 812 - 190,755 1,157,960

The changes in assets and liabilities of the Telco’s segment, result mainly from the entrance in this segment of the contributions of the companies merged on 27 August 2013 (Note 4).

9M13 Consolidated Management report 42 ZON OPTIMUS, SGPS, S.A

6. Direct Costs

In the nine months and three months ended 30 September 2012 and 2013, this item was composed as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated

Exhibition costs 41,598 123,401 39,447 118,334 Telecommunications costs 10,452 33,705 32,055 54,535 Shared advertising revenues 2,210 7,702 2,262 7,016 Others 1,016 2,736 1,424 3,230

55,276 167,544 75,188 183,116

The main changes in the item telecommunications costs result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4) in the amount of approximately of 16,849 thousand euros.

7. Support services and provision of external services

In the nine months and three months ended 30 September 2012 and 2013, this item was composed as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13

Restated Restated

Support services: Call centers and customer support 5,299 17,667 5,430 15,256 Information systems 4,076 12,548 4,694 12,242 Administrative support and other 4,552 13,960 5,398 14,641

13,926 44,175 15,522 42,138

Supplies and external services: Commissions 1,076 2,964 2,395 4,115 Maintenance and repair 6,309 20,651 11,987 24,929 Rentals 5,650 16,633 7,175 17,671 Professional services 3,477 11,273 271 7,253 Communications 1,694 5,260 1,814 4,823 Installation and removal of terminal equipment 1,190 3,787 1,256 3,444 Other 5,185 15,369 6,746 17,056

24,583 75,938 31,644 79,291

The positive changes in the items Support services and provision of external services result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4) in the amount of approximately of 7,223 thousand euros.

43 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

8. Provisions and adjustments

In the nine months and three months ended 30 September 2012 and 2013, provisions and adjustments were composed as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated Provisions (Note 21) (100) (100) (3,807) (4,177) Provision for impairment of trade receivable 1,800 6,344 3,490 11,313 Provision for impairment of other receivable - - 122 89 Debts recovery (2) (6) (2) (6)

1,699 6,238 (198) 7,220

9. Depreciation, amortisation and impairment losses

In the nine months and three months ended 30 September 2012 and 2013, depreciation, amortisation and impairment losses were composed as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated Intangible assets: Industrial property and other rights 16,904 48,527 19,438 51,271 Other intangible assets 455 1,404 415 1,229 17,359 49,931 19,853 52,500 Tangible assets: Buildings and other constructions 858 2,559 1,508 3,215 Basic equipment 28,636 82,179 34,618 93,612 Transportation equipment 364 1,161 276 957 Tools and dies 1 3 1 2 Administrative equipment 3,577 12,164 3,702 10,880 Other tangible assets 598 1,824 581 1,738 34,034 99,890 40,687 110,404

Depreciation and amortisation 51,393 149,821 60,540 162,904

Impairment losses (337) 2,353 (695) (3,458)

51,057 152,175 59,845 159,445

The positive changes in the items depreciation, amortisation and impairment losses result mainly from the entrance in the consolidation scope of the companies merged on August 27, 2013 (Note 4) in the amount of approximately of 9,920 thousand euros.

Additionally, during the period ended 30 September 2013, the useful lives of the cable and fiber network were reviewed, with prospective effect. The change in depreciation, amortisation and impairment losses resulting from this impact are approximately 790 thousand euros.

9M13 Consolidated Management report 44 ZON OPTIMUS, SGPS, S.A

10. Financing costs and other costs / (income), net

In the financial nine months and three months ended 30 September 2012 and 2013, finance costs and other net financial costs were composed as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated

Interest expense: Borrowings 9,626 27,877 8,886 24,250 Finance leases 1,339 3,106 1,565 4,502 Other 55 193 53 98 11,019 31,176 10,505 28,850 Interest earned (4,174) (15,117) (1,877) (6,588)

6,845 16,059 8,629 22,263

Other financial costs: Comissions and guarantees 3,117 8,734 3,708 11,135 Other 1,175 3,313 1,115 2,451 4,292 12,047 4,823 13,586 Other financial income: Other (1) (6) - -

4,290 12,040 4,823 13,586

The changes in these items result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4) and reduction of the interest earned with deposits as a result of the decrease of the deposits.

11. Losses / (gains) of affiliated companies

In the nine months and three months ended 30 September 2012 and 2013, this item was as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated Equity accounting: Sport tv 2,881 990 710 2,627 Dremia (537) (1,357) 858 (254) Finstar (794) 878 (2,145) (4,609) Mstar 85 255 (166) (311) Upstar (9) 10 (3) (12) Other 40 198 66 224 1,666 974 (681) (2,335)

12. Income tax expenses

ZON Optimus and its associated companies are subject to IRC - Corporate Income tax - at the rate of 25% (17.5% for ZON TV Cabo Açoreana), plus IRC surcharge at the maximum rate of 1.5% on taxable profit, giving an aggregate rate of approximately 26.5%. Following the introduction of austerity measures approved by Law no. 66- B/2012 of 31 December which sets out the 2013 State Budget, this rate is raised by 3% on taxable profit for companies with more than 1.5 million euros and less than 7.5 million euros, and by 5% on taxable profit for companies exceeding 7.5 million. In the calculation of the taxable income, to which the above tax rates apply, amounts which are not fiscally allowed are added to and subtracted from the book results. These differences between accounting income and taxable income may be of a temporary or permanent nature.

45 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

ZON Optimus is taxed in accordance with the special taxation regime for groups of companies (RETGS), which includes companies which it directly or indirectly holds at least 90% of their share capital and which fulfill the requirements of Article 69 of the IRC Code, with the exception of the companies incorporated during the year 2013 (Note 4) which are detailed as follows:

 Be Artis  Be Toweing  Optimus  Per-mar  Sontária

The companies covered by the RETGS in 2013 are:

 ZON Optimus  ZON Lusomundo TV  Empracine  Lusomundo SII  ZON Cinemas SGPS  ZON Audiovisuais SGPS  ZON TV Cabo  ZON Televisão por Cabo SGPS  Lusomundo Imobiliária 2  ZON LM Audiovisuais  ZON LM Cinemas  ZON Conteúdos

Under current legislation, tax declarations are subject to review and correction by the tax authorities for a period of four years (five years in the case of Social Security), except where tax losses have occurred (where the period is five or six years) or tax benefits have been obtained or inspections, appeals or disputes are in progress, in which case, depending on the circumstances, the periods are extended or suspended.

The tax rate applied on 30 September 2012 and 30 September 2013 was 34.33% and 23.06% respectively. The variation occurred results mainly from the recognition of deferred tax assets related to tax credits related to incentives to investment. As stated in IAS 34, this rate corresponds to the most accurate estimate of average tax owed on expected returns for the current financial year.

The Board of Directors for ZON Optimus, based on information from its tax advisers, believes that these and any other revisions and corrections to these tax declarations, as well as other contingencies of a fiscal nature, will not have a significant effect on the consolidated financial statements as of 30 June 2013, except for situations which were the subject to recording provisions (Note 21).

The changes in the items deferred income tax assets and liabilities result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4).

9M13 Consolidated Management report 46 ZON OPTIMUS, SGPS, S.A

13. Earnings per share

Earnings per share in the nine months and three months ended 30 September 2012 and 2013, were calculated as follows:

3º Quarter 12 9M 12 3º Quarter 13 9M 13 Restated Restated Net income attributable to equity holders of the parent 10,099 31,340 (1,393) 23,904 Weighted average number of ordinary shares in issue 308,692,909 308,868,457 384,975,709 334,425,187 Basic earnings per share - euros 0.03 0.10 (0.00) 0.07 Diluted earnings per share - euros 0.03 0.10 (0.00) 0.07

As of 30 September 2012 and 2013, there were no diluting effects on the net earnings per share, thus the diluted earnings per share is equal to the basic earnings per share.

14. Dividends

The General Meeting of Shareholders held on 24 April 2013 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.12 euros, totaling 37,093 thousand euros, relating to the reported net profit of 35,720 thousand euros plus free reserves totaling 1,371 thousand euros for the year ended 31 December 2012. The dividend attributable to own shares, totaling 48 thousand euros, was transferred to retained earnings.

Dividends 37,093 Dividends of treasury shares (48)

37,045

In the first half of 2013, dividends totaling 229 thousand euros were paid to the minority shareholders of TV Cabo Madeirense.

The General Meeting of Shareholders held on 27 April 2012 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.16 euros, totaling 49,455 thousand euros, relating to the reported net profit of 34,726 thousand euros plus free reserves totaling 14,730 thousand euros for the year ended 31 December 2011. The dividend attributable to own shares, totaling 17 thousand euros, was transferred to retained earnings.

Dividends 49,455 Dividends of treasury shares (17) 49,438

In the first half of 2012, dividends totaling 329 thousand euros were paid to the minority shareholders of TV Cabo Madeirense.

47 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

15. Cash and cash equivalents

At 31 December 2012 and 30 September 2013, this item was composed as follows:

31-12-2012 30-09-2013 Restated Cash 1,430 1,730 Deposits 4,663 10,856 Other deposits i) 267,086 44,999

273,179 57,586

i) At 31 December 2012 and 30 September 2013, term deposits have short-term maturities and bear interest at normal market rates.

16. Accounts receivable – customers

At 31 December 31 and 30 September 2013, this item was as follows:

31-12-2012 30-09-2013 Restated Trade receivables 107,361 228,667 Doubtful accounts for trade receivables 135,679 215,334 Unbilled revenues 7,870 63,639 250,910 507,640 Impairment of trade receivable (131,763) (217,411) 119,147 290,229

The main changes in the items trade receivables and unbilled revenues result mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4) of balances in the amount of 170.6 million euros.

17. Intangible assets

At 31 December 2012 and 30 September 2013, this item was as follows:

31-12-2012 30-09-2013 Restated Cost Industrial property and other rights 507,134 1,323,640 Goodwill 175,497 562,009 Other intangible assets 10,502 11,416 Intangible assets in-progress 332 22,771

693,466 1,919,836 Accumulated amortization Industrial property and other rights 361,526 795,026 Other intangible assets 8,319 9,524

369,845 804,550

323,621 1,115,286

9M13 Consolidated Management report 48 ZON OPTIMUS, SGPS, S.A

The increase in the item Intangible Assets results mainly from the entrance in the consolidation scope of the companies merged on 27 August 2013 (Note 4), as well as the Goodwill recognized under the merger between ZON and Optimus.

At 30 September 2013, the item "Industrial property and other rights" includes mainly:

(1) A net amount of 76,582 thousand euros (2012: 74,995 thousand euros) relating to the contract for the exclusive acquisition of satellite capacity between ZON TV Cabo and Hispasat, which is recorded as a finance lease;

(2) A net amount of 163,971 thousand euros, mainly related to the investment, net of depreciation, made in the development of the UMTS network by Optimus, including: (i) 55,175 thousand euros related to the license, (ii) 17,293 thousand euros related to the agreement signed in 2002 between Oni Way and the other three mobile telecommunication operators with activity in Portugal, (iii) 5,311 thousand euros related to the “Fundação para as Comunicações Móveis’’, established in 2007, under an agreement entered with ‘MOPCT’ and the three mobile telecommunication operators in Portugal; and (iv) 85,189 thousand euros related with the programme “Initiatives E”;

(3) A net amount of 106,235 thousand euros corresponding to the current value of future payments related with the acquisition of rights of use for frequencies (spectrum) bands of 800 MHz, 1800 MHz, 2600 MHz, which will be used to develop 4th generation services (LTE - Long Term Evolution). At the end of the period of nine months ended 30 September 2013 and considering the availability of LTE technology, although subject to restrictions in some areas of the country, and the start of commercial operation of the same, a fraction of the present value of future payments related to the acquisition of rights of use for 4th generation frequencies service 4th generation (LTE - Long Term Evolution), in the amount of 17,485 thousand euros, is still recorded in intangible assets in- progress;

(4) A net amount of approximately 59,492 thousand euros corresponding to the valuation of Optimus customer portfolio under the fair value allocation process resulting from the merger (Note 4);

(5) Net amounts of approximately 16,273 thousand euros and 22,928 thousand euros corresponding to the capitalized costs related to customers’ loyalty contracts and future rights to use movies and series, respectively (Note 2).

Goodwill was allocated to the cash-generating units of each reportable segment, as follows:

31-12-2012 30-09-2013 Restated Goodwill by segment Telco 98,896 485,408 Audiovisuals 76,601 76,601

175,497 562,009

The changes in Goodwill are related to part of the acquisition price which was not possible to allocate to the fair value of the identified assets and assumed liabilities under the merger described in Note 4.

49 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

18. Tangible Assets

At 31 December 2012 and 30 September 2013, this item was composed as follows:

31-12-2012 30-09-2013 Restated Cost Land 388 1,244 Buildings and other constructions 49,380 292,562 Basic equipment 1,404,843 2,161,182 Transportation equipment 11,995 12,135 Tools 340 1,222 Administrative equipment 145,705 292,365 Other tangible assets 32,316 39,240 Tangible assets in-progress 29,895 20,024

1,674,861 2,819,974

Accumulated depreciation Buildings and other constructions 33,960 134,983 Basic equipment 863,752 1,262,568 Transportation equipment 5,993 6,235 Tools 339 1,201 Administrative equipment 122,271 269,354 Other tangible assets 30,308 36,980

1,056,623 1,711,322

618,238 1,108,653

The significant increase in the item “Tangible Assets” results mainly from the entrance in the consolidation scope of the subsidiaries of Optimus SGPS merged on 27 August 2013 (Note 4). It includes the following tangible assets acquired:

(1) Buildings and all the structural component of towers and rooftops where telecommunications antennas are installed, recorded in the caption “Buildings and other constructions” amounting to 114.7 million euros; and

(2) The entire network and telecommunications infrastructure (fiber optic network and cabling, network equipment, and other equipment), included in the caption of “Basic equipment” amounting to 371 million euros.

19. Borrowings

At 31 December 2012 and 30 September 2013, the composition of borrowings was as follows:

31-12-2012 30-09-2013 Restated Current Non Current Current Non Current Loans 275,000 605,843 50,264 946,295 Debenture loan - 357,500 - 497,500 Commercial paper 275,000 150,000 45,000 350,000 Foreign loans - 98,343 - 98,795 Internal loans - - 5,000 - Bank overdrafts - - 264 - Loans - Accruals anda deferrels (5,183) (4,414) 8,007 (2,685) Financial Leases 24,737 110,565 25,634 120,741 Long Term Contracts 17,600 102,878 15,205 111,163 Other 7,137 7,687 10,428 9,578

Financial Leases - Accruals and deferrels 775 - 1,083 -

295,328 711,994 84,988 1,064,350

9M13 Consolidated Management report 50 ZON OPTIMUS, SGPS, S.A

19.1 Debenture Loans

The Company has bonds issued via three banks totaling 157 million euros maturing in 2014, with half-yearly payments of interest and repayment at par at the end of the contract.

In June 2012, ZON Optimus launched a Public Offer for Subscription of Bonds for the general public, called "ZON Multimédia Bonds 2012-2015”, under which it issued 200 million euros with a maturity of three years and half yearly payment at a fixed rate.

During the period ended 30 September 2013, and following the merger (Note 4), a bond loan of 40 million euros hired by Sonaecom in March 2010 was transferred to ZON Optimus. The loan bears interest at variable rates, indexed to Euribor and paid semiannually. This issue was organized and mounted, respectively, by Banco Espírito Santo de Investimento and Caixa - Banco de Investimento.

After the merger a bond loan of 100 million euros hired by Sonaecom in September 2011was also transferred to ZON Optimus. The loan bears interest at variable rates, indexed to Euribor and paid semiannually. This issue was organized and mounted by BNP Paribas, ING Belgium SA/NV and Portigon AG (formerly known as WestLB AG). During the period ended 30 September 2013, Portigon AG transferred its entire stake of 33.3 million euros in bonds to Erste Abwicklungsanstalt ("EAA"), a German state entity.

The amount of 111 thousand euros, corresponding to interest and commissions, was deducted from this amount and recorded in the caption “Loans - accruals and deferrals”.

19.2. Commercial Paper

The Company has borrowings of 395,000 thousand euros, in the form of commercial paper contracted with six banks, corresponding to six programs, earning interest at market rates. Grouped commercial paper programmes with maturities over 1 year totaling 350,000 thousand euros are classified as non-current, since the Company has the ability to unilaterally renew the current issues on or before the programmes’ maturity dates and because they are underwritten by the organizer. This amount, although it has current maturity, was classified as non-current for purposes of presentation in the statement of financial position. The remaining programmes, given the schedule settlement dates, are classified as current.

An amount of 3,163 thousand euros, corresponding to interest and commissions, was deducted from this amount.

19.3 Foreign Loans

In September 2009 ZON Optimus and ZON TV Cabo signed a Next Generation Network Project Finance Contract with the European Investment Bank in the amount of 100 million euros. This contract matures in September 2015 and is intended for investments relating to the implementation of the next generation network. An amount of 1,205 thousand euros was deducted from this amount, corresponding to the benefit associated with the fact that the loan is at a subsidized rate.

19.4 Financial Leases

On 31 December 2012, the long-term contracts are mainly related to contracts signed by ZON TV Cabo for the acquisition of exclusive satellite use and for the purchase of rights to use the distribution network and contracts signed by ZON LM cinemas regarding the acquisition of digital equipment.

On 30 September 2013, the long-term contracts are mainly related to contracts signed by ZON TV Cabo for the acquisition of exclusive satellite use, contracts signed by ZON TV Cabo and Be Artis for the purchase of rights to use the distribution network and contracts signed by ZON LM cinemas regarding the acquisition of digital equipment.

51 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

Financial Leases 31-12-2012 30-09-2013 Restated Financial leases - payments: Until 1 year 30,851 32,314 Between 1 and 5 years 63,957 71,924 Over 5 years 76,754 79,494 171,562 183,733 Future financial costs (35,485) (36,276)

Present value of finance lease liabilities 136,077 147,457

31-12-2012 30-09-2013 Restated The present value of the finance lease liabilities: Until 1 year 25,512 26,716 Between 1 and 5 years 47,202 53,919 Over 5 years 63,363 66,821

136,077 147,457

All bank borrowings (with the exception of ZON Multimédia bonds 2012-2015) and finance leases contracted are negotiated at variable short term interest rates and their book value is therefore broadly similar to their fair value.

Maturity of loans

31-12-2012 30-09-2013

BetweenRestated 1 and 5 Between 1 and 5 Until 1 year years Over 5 years Until 1 year years Over 5 years

Debenture loan (1,607) 353,579 - 1,708 495,680 - Commercial paper 271,502 149,537 - 42,686 349,151 - Foreign loans (78) 98,312 - (36) 98,778 - Internal loans - - - 13,649 - - Financial Leases 25,512 47,202 63,363 26,716 53,919 66,821 295,328 648,631 63,363 84,988 997,529 66,821

The item “Internal loans”, includes accruals and deferrals, in the amount of 8,593 thousand euros, related to interest and commissions to be paid to Sonaecom related to loans obtained by Optimus SGPS prior to the merger.

20. Accounts payable - suppliers

At 31 December 2012 and 30 September 2013, this item was composed as follows:

31-12-2012 30-09-2013

Restated Accounts payable trade 157,551 245,650 Advances from customers 582 115

158,133 245,764

The main changes in the item “Accounts payable trade” result mainly from the entrance in the consolidation scope of the companies merged on August 27, 2013 (Note 4) of balances in the amount of 105.2 million euros.

9M13 Consolidated Management report 52 ZON OPTIMUS, SGPS, S.A

21. Provisions

At 31 December 2012 and 30 September 2013, the breakdown of provisions between current and non-current was as follows:

31-12-2012 30-09-2013 Restated Current provision Litigation 20 20 Other 400 2,830 420 2,850 Non-current provision Taxes 563 563 Litigation 2,130 4,557 Investments in participated companies - i) 21,540 16,265 Other 5,718 73,435 Asset retirement obligation - ii) 4,910 16,735 Contingent liabilities - iii) - 33,215 Contigencies - other - iv) 807 26,316 29,951 94,820

30,371 97,670

i) The amount under the item "Investments in participated companies" corresponds to the equity method record of jointly controlled and associated companies with a negative equity; ii) The amount under the item "Assets retirement obligation" refers to the estimated future costs discounted to the present value, related with the termination of the use of the space where there are telecommunication towers and cinemas. The significant increase in this caption, mainly results from the inclusion of asset retirement obligations related to telecommunication towers of subsidiaries of Optimus SGPS merged on August 27, 2013 (Note 4); iii) The amount in the item "Contingent liabilities" refers to several provisions recorded for present but not likely obligations, related to the merger by incorporation of Optimus SGPS (Note 4). Highlights, in the amount of 28,2 million euros, are:

a. Future credits transferred: for the year ended at 31 December 2010, the subsidiary Optimus was notified of the Report of Tax Inspection, where it is considered that the increase, when calculating the taxable profit for the year 2008, of the amount of 100 million euros, with respect to initial price of future credits transferred to securitization, is inappropriate. Given the principle of periodization of taxable income, Optimus was subsequently notified of the improper deduction of the amount of 20 million euros in the calculation of taxable income for the years 2009 (Report of the Tax Inspection and tax settlement notice received in December 2011 and January 2012, respectively) and 2010 (Report of the Tax Inspection and the tax settlement notice received in January and May 2013, respectively). Given that the increase made in 2008 was not accepted due to not complying with Article 18 of the CIRC, also in the years following, the deduction corresponding to credits generated in that year, will eliminate the calculation of taxable income, to meet the annual amortization hired as part of the operation (20 million per year during 5 years). Optimus challenged the decisions regarding 2008 and 2009 fiscal years and will challenge, in time, the decision regarding 2010 fiscal year;

b. Other tax proceedings: which the Board of Directors are convinced that there are strong arguments to obtain a favorable decision for Optimus, but considers that they correspond to a contingent liability under the fair value allocation of assumed liabilities related to the merger operation;

c. Administrative offense due to an alleged failure, by Optimus, to apply the resolutions taken by ANACOM on 26 October 2005, concerning termination rates for fixed calls. Following a deliberation of Board of Directors of the regulator, in April 2012, a fine of approximately 6.5 million euros was applied to Optimus;

53 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

d. The amount under the caption "Contingencies - other" refers to provisions for risks related to miscellaneous events/disputes of various kinds, the settlement of which may result in outflows of cash, and other likely liabilities related to several transactions from previous periods, and whose outflow of cash is probable, namely, costs charged to the current period or previous years, for which it is not possible to estimate reliably the time of occurrence of the expense. The significant increase in this caption, result mainly from the inclusion in the consolidation scope of the subsidiaries of Optimus SGPS merged on 27 August 2013 the Company (Note 4).

For the nine months ended 30 September 2012 and 30 September 2013, the movements in provisions were as follows:

31-12-2011 Changes of 30-09-2012 Restated Increases Decreases scope Other Restated Taxes 563 - - - - 563 Legal actions 2,258 - (100) - - 2,158 Investments in participated companies 18,778 1,842 - - - 20,620 Other risks 5,565 124 - - - 5,689 Asset retirement obligation 4,758 124 - - - 4,882 Contigencies - other 807 - - - - 807 27,164 1,966 (100) - - 29,029

Changes of 31-12-2012 scope Restated Increases Decreases (Note 4) Other 30-09-2013 Taxes 563 - - - - 563 Legal actions 2,150 - - 2,427 - 4,577 Investments in participated companies 21,540 - (5,275) - - 16,265 Other risks 6,118 10,951 (3,892) 66,012 (2,923) 76,265 Asset retirement obligation 4,910 64 - 14,261 (2,500) 16,735 Contingent liabilities - - - 33,215 - 33,215 Contigencies - other 1,207 10,888 (3,892) 18,536 (423) 26,316 30,371 10,951 (9,168) 68,439 (2,923) 97,670

The net movements for the nine months ended 30 September 2012 and 30 September 2013 reflected in the statement of comprehensive income, under “Provisions” are composed as follows:

9M 12 9M 13 Restated Other liabilities and charges (100) (4,177) Provisions (Note 8) (100) (4,177) Interest paid 124 64 Investments in participated companies - i) 1,842 (5,275) Reestructuring costs - ii) - 2,830 Other losses/(gains) non-recurring, net - iii) - 8,057 Other losses/(gains), net - 284 1,966 5,960

Provision for other liabilities and charges 1,866 1,783

i) The item “Investments in participated companies” corresponds to changes in equity and income of the companies recorded accordingly to the equity method; ii) Restructuring costs mainly correspond to provisions for severance costs resulting from the merger. The total amount of these charges of the nine months ended 30 September 2013 amounted to approximately 16 million euros; iii) Non-recurring costs are related with an increase in provisions due to the alignment of estimates between the Group companies as a result of changes in the consolidation scope (Note 4).

9M13 Consolidated Management report 54 ZON OPTIMUS, SGPS, S.A

22. Shareholder’s equity

22.1. Share capital

At 30 September 2013 the share capital of ZON Optimus was 5,151,613.80 euros, represented by 515,613,380 shares registered book-entry shares, with a nominal value of 1 euro cent per share.

During the period ended 30 September 2013, ZON Optimus, formerly named ZON Multimédia, completed a merger operation by incorporation of Optimus SGPS into ZON, which resulted in the issue of 206,064,552 registered shares for delivery to previous shareholders of Optimus SGPS, which corresponded to a capital increase in the amount of 2,060,646 euros.

The main shareholders as of 31 December 2012 and 30 September 2013 are:

31-12-2012 30-09-2013

Shareholder NO.Of Shares % Voting Rights NO.Of Shares % Voting Rights ZOPT, SGPS, SA (1) - - 257,632,005 50.01% Sonaecom, SGPS, SA - - 37,489,324 7.28% Banco BPI, SA 23,344,798 7.55% 23,344,798 4.53% Fundação José Berardo e Metalgest - Sociedade de Gestão, SGPS, SA(2) 13,408,982 4.34% 17,999,249 3.49% Espírito Santo Irmãos, SGPS, SA (3) 15,455,000 5.00% 15,455,000 3.00% Joaquim Alves Ferreira de Oliveira (4) 14,955,684 4.84% 14,955,684 2.90% Unitel International Holdings, B.V. 58,147,094 18.81% - - Kento Holding Limited 30,909,683 10.00% - - Total 156,221,241 50.54% 366,876,060 71.22%

(1) In accordance with subparagraphs 1.b) and 1.c) of Article 20 and Article 21 of the Security Code, a qualified shareholding of 57.29% of the share capital and voting rights of company, calculated in accordance with Article 20. of the Security Code, is attributable to ZOPT, Sonaecom and the following entities:

a. Kento Holding Limited and Unitel International Holdings B.V., as well as Isabel dos Santos, being (i) Kento Holding Limited and Unitel International Holdings, B.V., companies directly and indirectly controlled by Isabel Santos, and (ii) ZOPT, a jointly controlled company by its shareholders Kento Holding Limited, Unitel International Holdings B.V. and Sonaecom under the shareholder agreement signed between them;

b. Entities in a control relationship with Sonaecom, namely, Sontel B.V., Sonae Investments B.V., Sonae, SGPS, S.A., Efanor Investimentos, SGPS, S.A. and Belmiro Mendes de Azevedo, also due of such a control and the shareholder agreement mentioned in a.

(2) The “Fundação José Berardo” holds 14,013,761 shares representing 2.72% of the share capital of the Company. In turn, the Metalgest - Sociedade de Gestão, SGPS, S.A. holds 3,985,488 shares representing 0.774% of the share capital of the Company. The position of the “Fundação José Berardo” is reciprocally attributed to Metalgest - Sociedade de Gestão, SGPS, S.A..

(3) The voting rights corresponding to Espírito Santo Irmãos, SGPS, SA are attributable to Espírito Santo Industrial, S.A., Espírito Santo Resources Limited, and Espírito Santo International, S.A., companies that control Espírito Santo Irmãos in that order.

(4) The voting rights corresponding to 2.90% of the share capital are attributed to Joaquim Francisco Alves Ferreira de Oliveira, as he controls GRIPCOM, SGPS, SA, and Controlinveste International S.à.rl, which holds, respectively, 1.36% and 1.55% of the share capital of ZON Optimus.

55 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

22.2 Premium for issue of shares

On 27 August 2013, and following the completion of the merger between ZON and Optimus SGPS, the Company's share capital was increased by 856,404,278 euros, corresponding to the total number of issued shares (Note 22.1), based on the closing market price of August 27. The capital increase is detailed as follows: i) Share capital in the amount of 2,060,646 euros; ii) Premium for issue of shares in the amount of 854,343,632 euros.

Additionally, the premium for issue of shares was deducted in the amount of 125 thousand euros related to costs with the respective capital increase.

22.3 Own Shares

Company law regarding own shares requires the establishment of a non-distributable reserve of an amount equal to the purchase price of such shares, which becomes frozen until the shares are disposed of or distributed. In addition, the applicable accounting rules determine that gains or losses on the disposal of own shares are stated in reserves.

At 30 September 2013 there were 250,696 own shares, representing 0.000487% of the share capital (30 September 2012: 402,792 own shares, representing 0.13031% of the share capital).

The transactions which occurred during the nine months ended 30 September 2012 and 2013 were as follows:

Quantity Value Balance as at 1 January 2012 265,612 554 Acquisition of own shares 392,317 906 Distribution of own shares (255,137) (544)

Balance as at 30 September 2012 402,792 916

Balance as at 1 January 2013 401,523 914 Acquisition of own shares 420,973 1,490 Distribution of own shares (571,800) (1,508)

Balance as at 30 September 2013 250,696 896

22.4 Reserves

Legal Reserve

Company law and ZON Optimus’s Articles of Association establish that at least 5% of the Company’s annual net profit must be used to build up the legal reserve until it corresponds to 20% of the share capital. This reserve cannot be distributed except in the event of liquidation of the company, but it may be used to absorb losses after all other reserves have been exhausted, or for incorporation in the share capital.

9M13 Consolidated Management report 56 ZON OPTIMUS, SGPS, S.A

Other reserves

Movements in the nine months ended 30 September 2012 and 2013 and the composition of “Other reserves” are as follows:

Non-distributable Free reserves reserves Other reserves Balance as at 1 January 2012 134,621 28,298 162,919 Distribuition of own shares 544 (1,088) (544) Aquisition of own shares (906) 906 - Dividends (Note 14) (14,730) - (14,730) Undistributed profit - 18,016 18,016 Share plan - 1,540 1,540 Interest rate derivatives (Note 23) - (2,743) (2,743) Exchange rate derivatives (Note 23) - (375) (375) Other - (240) (240)

Balance as at 30 September 2012 119,529 44,314 163,843

Balance as at 1 January 2013 114,504 49,877 164,381 Distribuition of own shares 1,508 (3,016) (1,508) Aquisition of own shares (1,490) 1,490 - Dividends (Note 14) (1,371) - (1,371) Share plan (Note 27) - 1,223 1,223 Share Plan - Changes of scope (Note 4 and 27) - 8,546 8,546 Interest rate derivatives (Note 23) - 982 982 Exchange rate derivatives (Note 23) - (62) (62) Other - 1,121 1,121

Balance as at 30 September 2013 113,149 60,161 173,311

23. Derivatives

23.1. Exchange rate derivatives

Exchange rate risk is mainly related to exposure resulting from payments made to certain producers of audiovisual content and equipment for the Pay TV, broadband and voice business. Business transactions between the Group and these suppliers are mainly denominated in US dollars.

Depending on the balance of accounts payable resulting from transactions denominated in a currency different from the Group’s operating currency, the ZON Optimus Group may contract financial instruments, namely short- term foreign currency forwards, in order to hedge the risk associated with these balances. At the date of the statement of financial position there were foreign currency forwards open for 9,368 thousand Dollars (31 December 2012: 2,288 thousand Dollars), the fair value amounts to a loss of about 132 thousand euros (31 December 2012: a negative amount of 45 thousand euros) which is stated in liabilities as a contra entry in shareholder’s equity.

57 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

23.2. Interest rate derivatives

At 30 September 2013, ZON Optimus had contracted three interest rate swaps totaling of 257,500 thousand euros (31 December 2012: 257,500 thousand euros), with maturities at two years from the reference date. The fair value of interest rate swaps, in the negative amount of 4,715 thousand euros (31 December 2012: negative amount of 6,051 thousand euros) is stated in liabilities, with a contra entry for this amount stated in shareholder’s equity.

31-12-2012 Asset Liability Notional Current Non Current Current Non Current

Derivative Financial instruments Interest rate swaps 257,500 - - - 6,051 Exchange rate forward 1,734 - - 45 - 259,234 - - 45 6,051

30-09-2013 Asset Liability Notional Current Non Current Current Non Current

Derivative Financial instruments Interest rate swaps 257,500 - - - 4,715 Exchange rate forward 6,937 - - 132 - 264,437 - - 132 4,715

Movements during the first nine months ended 30 September 2012 and 2013 are as follows:

31-12-2011 Result Equity 30-09-2012 Fair value interest rate swaps (2,577) - (3,731) (6,308) Fair value exchange rate forward 532 - (529) 3

Cashflow hedge derivatives (2,045) - (4,260) (6,305) Deferred income tax liabilities (154) - 153 (1) Deferred income tax assets 683 - 989 1,672 529 - 1,142 1,671 (1,516) - (3,118) (4,634)

31-12-2012 Result Equity 30-09-2013 Fair value interest rate swaps (6,051) - 1,335 (4,715) Fair value exchange rate forward (45) - (87) (132) Cashflow hedge derivatives (6,095) - 1,248 (4,847) Deferred income tax liabilities - - - - Deferred income tax assets 1,616 - (329) 1,288

1,616 - (329) 1,288 (4,479) - 920 (3,559)

9M13 Consolidated Management report 58 ZON OPTIMUS, SGPS, S.A

24. Guarantees and financial undertakings

24.1. Guarantees

At 31 December 2012 and 30 September 2013, the Group had furnished guarantees in favour of third parties corresponding to the following situations:

31-12-2012 30-09-2013 Restated Bank guarantees given to other entities: Financial instituitions i) 100,164 100,180 Tax authorities ii) 23,779 28,122 Suppliers iii) - 24,000 Other iv) 21,546 18,292

145,489 170,594

i) At 30 September 2013 and 2012, this amount relates to guarantees furnished by ZON Optimus in connection with the loan from EIB (Note 19). ii) At 30 September 2013 and 2012, this amount relates to guarantees demanded by the tax authorities in connection with tax proceedings contested by the Company and its subsidiaries (Note 26). iii) At 30 September 2013, this amount relates to guarantees furnished by Optimus on the acquisition of spectrum for the 4th generation. iv) At 30 September 2013 and 2012, this amount mainly relates to guarantees provided in connection with Municipal Wayleave Tax proceedings and guarantees provided to cinema owners (Note 26).

At 30 September 2013, in connection with the finance obtained by Upstar from BES, totaling 20 million euros, ZON Optimus signed a promissory note in the total amount of the loan. Furthermore, it includes a promissory note signed by ZON Optimus, responsible for up to 30% of Finstar’s financing along with BFA, to the sum of 1,500 million AKZ.

In connection with the finance obtained by Finstar from Banco Caixa Totta, Banco BIC, Banco BNI, Banco Finibanco, BFA and BMA, totaling 2,430 million AKZ, 1,849 million AKZ, 980 million AKZ, 1,000 million AKZ, 1,500 million AKZ and 950 million AKZ, respectively, ZON Optimus signed six comfort letters accepting liability for up to 30% of the total amount of the loan. The comfort letter from the Banco Caixa Totta also covers 30% of 7.5 million USD of back to back letters of credit for importing goods.

The following guarantees were furnished in connection with the finance obtained by Sport TV totaling 13 million euros: a security financial collateral arrangement in respect of the shares and new shares held by ZON Optimus and Sportinveste, SGPS, S.A., a mortgage on the Sport TV building, a lien on rights arising from Sport TV contracts, 5 promissory notes and assignment of credits in guarantee.

In addition to the guarantees required by the Tax Authorities were set up sureties for the current fiscal processes. The Sonaecom consisted of Optimus surety for the amount of 10,529,619 euros and ZON Optimus consisted of Optimus surety for the amount of 1.212.933 euros.

At 30 September 2013, the Board of Directors of the Group believes that the decision of the court proceedings and ongoing tax assessments in progress will not have significant impacts on the consolidated financial statements, except for situations which were the subject to recording provisions (Note 21).

59 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

24.2. Operating Leases

The rentals due on operating leases have the following maturities:

31-12-2012 (Restated) 30-09-2013 Automatically Less than 1 Between 1 and More than 5 Automatically Less than 1 Between 1 and More than 5 renewable year 5 years years renewable year 5 years years

Stores, movie theatre, pipelines and other buildings 2,369 25,004 79,167 63,832 4,997 43,978 127,410 50,073 Telecommunication towers and rooftops - - - - 8,371 6,008 15,443 13,708 Equipamentos - - 82 - - 124 283 56 Viaturas - 51 35 - - 2,159 3,715 - 2,369 25,056 79,284 63,832 13,369 52,268 146,852 63,837

24.3. Other undertakings

In July 2010, ZON TV Cabo Portugal signed a contract with the Portuguese Professional Football League as co- sponsor with the brewing company Sociedade Central de Cervejas, covering four football seasons (2010/2011 to 2013/2014) of the first and second division competitions, to be known henceforth as the “LIGA ZON SAGRES” (formerly the “LIGA SAGRES”) and the “Segunda LIGA” (formerly the “LIGA VITALIS”).

On 21 November 2008, the Competition Authority approved the acquisition by ZON TV Cabo of exclusive control of TVTel, Bragatel, Pluricanal Leiria and Pluricanal Santarém, subject to a series of undertakings, of which the following are the most significant:

 An undertaking to vacate the areas in secondary and tertiary network infrastructures by removing or selling integrated cables in network cells that are not included in the previous commitment, or that have not been disposed of under the terms of the previous commitment;

 An undertaking to provide a wholesale national coverage satellite television offer by means of which any third party can offer Pay TV services nationwide via satellite platforms without the need for network infrastructures.

The EIB loan totaling 100 million euros with a maturity of 5 years is intended exclusively to finance the next generation network investment project. This amount may not in any circumstances exceed 50% of the total cost of the project.

Covenants

Management regularly monitors the forecasts of the Group’s liquidity reserves, including the amounts of unused credit lines and the amounts of cash and cash equivalents, on the basis of estimated cash flows and compliance with any covenants usually associated with borrowings.

Of the loans obtained (excluding finance leases), in addition to being subject to the Group complying with its operating, legal and fiscal obligations, all contracts are subject to cross-default clauses, 92% to pari passu clauses, 49% to ownership clauses, and 68% to negative pledge clauses.

In addition, approximately 39% of the total loans obtained require that the consolidated net financial debt does not exceed 3 times consolidated EBITDA, and approximately 9% of the total loans obtained require that net interest does not exceed 4 times consolidated EBITDA.

Commitments under the merger between ZON and Optimus SGPS

Following the final decision of the Competition Authority not to oppose the merger between ZON and Optimus SGPS were made the following commitments: a) To ensure that Optimus extends the contract's period of validity for the reciprocal sharing of the Optimus S.A. and Vodafone Portugal ("Vodafone") network;

9M13 Consolidated Management report 60 ZON OPTIMUS, SGPS, S.A b) To ensure that Optimus modifies the reciprocal sharing contract for the Optimus and Vodafone network so that the limitation of liability in the event that the resolution is unjustified or justified because it is attributable, does not apply; c) To ensure that Optimus, for a determined period of time, will not charge its fiber optic triple play service clients the payment due because of loyalty clauses in place, in the event of a disconnection request; d) To ensure that Optimus will be open to negotiate, for a determined period of time, with a requested third party, a contract which allows wholesale access to its fiber network; e) To ensure that Optimus will present to and negotiate with Vodafone, for a determined period of time, a contract that gives the option of buying its fiber network.

25. Related Parties

25.1. Summary list of Related Parties

Detailed summary of Related Parties as of 30 September 2013:

Related Parties

Apor - Agência para a Modernização do Porto PCJ - Público, Comunicação e Jornalismo, S.A. Banco BPI, SA Praesidium Services Limited Banco Espírito Santo, SA Público – Comunicação Social, S.A. BES Vida - Companhia de Seguros, S. A. Saphety – Transacciones Electronicas SAS Big Picture 2 Films, SA Saphety Brasil Transações Eletrônicas Ltda. Blackrock, Inc. Saphety Level – Trusted Services, S.A. Caixa Geral de Depósitos, SA SGC, SGPS, SA Caixanet – Telecomunicações e Telemática, SA Sociedade Independente de Radiodifusão Sonora, S.A. Canal 20 TV Sonae com – Sistemas Informação, SGPS, S.A. Cape Technologies Limited Sonaecom - Serviços Partilhados, S.A. Cinveste, SGPS, SA Sonaecom – Sistemas de Información España, S.L. Companhia de Pesca e Comércio de Angola (Cosal), SARL Sonaecom BV Digitmarket – Sistemas de Informação, S.A. Sonaecom, SGPS, S.A. Distodo, Lda Sonaetelecom BV Dreamia - Serviços de Televisão, SA Sport TV Dreamia Holding BV SSI Angola, S.A. ESAF - Espírito Santo Fundos de Investimento Mobiliário, SA Tecnológica Telecomunicações LTDA. Espírito Santo Irmãos, SGPS, SA Telefónica, SA Estêvão Neves - SGPS, SA Turismo da Samba (Tusal), SARL Filmes Mundáfrica, SARL Unipress – Centro Gráfico, Lda FINSTAR - Sociedade de Investimentos e Participações, SA Unitel International Holdings, B.V. Fundação José Berardo Upstar Comunicações SA Fundo Investimento para Cinema e Audiovisual We Do Technologies Panamá S.A. Gesgráfica - Projectos Gráficos, Lda We Do Technologies Singapore PTE. LTD. Grupo Visabeira, SGPS, SA WeDo Consulting – Sistemas de Informação, S.A. Infosystems-Sociedade de Sistemas de Informação,S.A. WeDo do Brasil – Soluções Informáticas, Ltda Joaquim Alves Ferreira de Oliveira WeDo Poland Sp. Z.o.o. Kento Holding Limited WeDo Technologies (UK) Limited Lugares Virtuais, S.A. WeDo Technologies Americas, Inc. Lusitânia - Companhia de Seguros, SA WeDo Technologies Australia PTY Limited Lusitânia Vida - Companhia de Seguros, SA WeDo Technologies BV Mainroad – Serviços em Tecnologias de Informação, S.A. WeDo Technologies BV – Sucursal Malaysia Metalgest - Sociedade de Gestão, SGPS, SA WeDo Technologies Egypt LLC Miauger – Organização e Gestão de Leilões Electrónicos., S.A. WeDo Technologies Mexico, S de R.L. Mstar, SA ZON II - Serviços de Televisão SA Norges Bank ZON III - Comunicações electrónicas S.A. Ongoing Strategy Investments, SGPS, SA

61 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

25.2. Balances and transactions between related parties a) Transactions and balances between ZON Optimus and companies of the ZON Optimus Group were eliminated in the consolidation process and are not subject to disclosure in this Note.

The balances at 31 December 2012 and 30 September 2013 and transactions in the first nine months ended 30 September 2012 and 30 September 2013 between ZON Optimus Group and its associated companies, joint ventures and other related parties are as follows:

2012:

Balances at 31 December 2012 Accounts Accounts Accruals and receivable - receivable - Accounts Accounts Accruals and deferred trade other payable - trade payable - other deferred assets liabilities BES ------Big Picture 2 Films 2 - 7 - - 164 BPI ------Dreamia Holding BV 942 1,856 - - - - Dreamia SA 1,898 1,506 2,148 - - 192 Finstar 6,457 - - - - - Fundo Invetimento para Cinema e Audiovisual - - - 17,500 - - Sport TV 52 (298) 26,480 - 30 3,258 Upstar 4,113 31,156 640 - - 1,811 Outras 112 790 1 - - - 13,576 35,010 29,276 17,500 30 5,425

Other financial Derivatives Derivatives Balances Loan obtained aplications assets liabilities Financial leases

Banco Espírito Santo 267,830 203,387 - - 3,185 Banco BPI 95,482 - - 994 78 363,312 203,387 - 994 3,263

Transactions during the period ended 30 September 2012 Interest income / Sales and Fornecimento e (expenses) and bank Supplementary services rendered serviços externos expenses income BES - 1,418 (6,542) - Big Picture 2 Films 13 2,038 - - BPI 1 179 (5,288) - Caixa Geral de Depósitos 15 - (3,786) - Distodo 1 462 - - Dreamia BV 320 - 138 - Dreamia SA 3,130 604 - - Fundo Investimento para Cinema e Audiovisual - - - - Sport TV 492 48,934 - - Upstar 6,806 - 2,124 - 10,778 53,635 (13,354) -

9M13 Consolidated Management report 62 ZON OPTIMUS, SGPS, S.A

2013:

Balances at 30 September 2013 Accounts Accounts Accruals and receivable - receivable - Accounts Accounts Accruals and deferred trade other payable - trade payable - other deferred assets liabilities BES 14 - - - - - Big Picture 2 Films 6 - 398 - - 85 BPI - - 675 - 1 4 Dreamia BV 941 2,264 - - - - Dreamia SA 2,907 3,669 3,528 - - 323 Finstar 6,248 693 - - - - Fundo Investimento para Cinema e Audiovisual - - - 17,500 - - Mainroad 248 1 479 - 395 45 Saphety 263 1 80 - 19 1 Sonaecom 2,067 6,503 14,311 - 172 85 Sport TV 645 44 17,832 - - 7,832 Upstar 3,774 5,115 173 - - - WeDo 193 - 856 - 247 146 Outras 301 6 197 - 171 (1) 17,608 18,297 38,528 17,500 1,005 8,520

Other financial Derivatives Derivatives Balances Loan obtained aplications assets liabilities Financial leases

Banco Espírito Santo 148,942 30,663 - - 1,659 Banco BPI 117,337 1,649 - 481 - 266,279 32,313 - 481 1,659

Transactions during the period ended 30 September 2013 Interest income / Sales and Fornecimento e (expenses) and bank Supplementary services rendered serviços externos expenses income BES - 20 (6,629) - Big Picture 2 Films 15 2,086 - 1 BPI 1 - (4,970) - Dreamia BV 252 - 156 - Dreamia SA 2,298 78 - 547 Finstar 511 - - - Fundo Investimento para Cinema e Audiovisual - - - - Mainroad 39 194 - 17 Sonaecom 5 88 (1,468) 71 Sport TV 198 42,709 - - Upstar 5,012 - 946 546 Distodo - 460 - 2 WeDo 239 359 - 63 Outras 88 141 - 57 8,657 46,134 (11,964) 1,303

The Company regularly performs transactions and signs contracts with several parties within the ZON Optimus Group. Such transactions were performed on normal market terms for similar transactions, as part of the contracting companies' current activity.

The Company also regularly performs transactions and enters into financial contracts with various credit institutions which hold qualifying shareholdings in the Company. However, these are performed on normal market terms for similar transactions, as part of the contracting companies' current activity.

63 9M13 Consolidated Management Report ZON OPTIMUS, SGPS, S.A

26. Ongoing litigation and contingent assets and liabilities

26.1. Municipal Wayleave Tax (TMDP) proceedings

In February 2004, pursuant to Article 13 of the Authorization Directive (Directive 2002/20/EC of 7 June), Law no. 5/2004 of 10 February (Electronic Communications Law) established in its Article 106 the Municipal Wayleave Tax (TMDP) as consideration for the “rights and costs of the installation, passage and crossing, in a determined area, of the public and private municipal domain" by the systems, equipment and other resources of companies offering public electronic communications networks and services. The TMDP charge is levied on “each invoice issued by the companies offering public electronic communications networks and services at a fixed location to all end customers within the respective municipality", and is calculated at a maximum percentage of 0.25% of the amount of each invoice. Some municipalities, despite the TMDP approval, have continued to collect Occupancy Taxes, while others have opted to maintain the latter taxes to the detriment of the TMDP.

In light of legal advice on the matter, the Group is of the view that the TMDP is the only tax that should be collected considering the above mentioned rights, namely the right of installation, for which reason it has challenged the public highway Occupancy Taxes charged to it by municipalities, since it deems such taxes illegal. It must also be highlighted that under the scope of an administrative complaint, a decision has been made by some municipalities, which have either subscribed to the Group's interpretation or decided that they may only opt for one rate or the other, as it is not possible for the TMDP and public road Occupancy Rates to overlap.

Meanwhile, various judicial decisions have been issued on the issue, including by the Supreme Administrative Court, that uphold the position and understanding of ZON TV Cabo, with the result that there are good prospects that this dispute will be definitively resolved in favour of ZON TV Cabo by the majority of municipalities. Two appeals were made to the Constitutional Court in two proceedings by Lisbon Town Hall, it was decided that one of them did not have the right to appeal.

With the entry into force of Decree-Law 123/2009, this matter has been superseded for the future. This law clearly states (in line with ZON’s interpretation of the previous legislation) that the TMDP is payable for the use of goods in the public or private municipal domain which involves the construction or installation, by companies that offer public electronic communications networks and services, of infrastructures for housing electronic communications in accordance with the terms of the Electronic Communications Law, and that no other taxes, official fees or consideration are due.

26.2. Legal actions with regulators

 On 8 July 2009, ZON TV Cabo was notified by the Competition Authority (AdC) about administrative offence proceedings relating to the ZON triple-play offer, requesting ZON TV Cabo comment on the content of the notification, which it did in good time. The case is currently at the fact-finding stage in AdC and various information has been requested, to which ZON has responded. If it is concluded that an infringement has occurred, the AdC may levy a fine not exceeding 10% of the company’s turnover in last year of infringement.

 ICP-ANACOM instituted regulatory infringement proceedings against ZON TV Cabo, as it did against the majority of Portuguese electronic communications operators, for infringement of the portability regulations. ZON TV Cabo brought an action for judicial review of Anacom's decision to order it to pay a fine, and the court ruled that Anacom’s decision was null and void, there having been no further developments to date. ZON TV Cabo, ZON TV Cabo Açoreana and ZON TV Cabo Madeirense appealed against Anacom's decision to demand payment of fines for breach of number portability rules, these proceedings are still under way.

 ZON TV Cabo, ZON TV Cabo Açoreana and ZON TV Cabo Madeirense brought actions for judicial review of ICP-ANACOM’s decisions concerning the Annual Fee payment (for 2009, 2010, 2011 and 2012) for carrying on

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the business of Electronic Communications Services Networks Supplier in the amounts, respectively, of (i) 1,087 thousand euros, 2,325 thousand euros, and 3,580 thousand euros and 3,447 thousand euros; (ii) 42 thousand euros, 79 thousand euros, 123 thousand euros and 113 thousand euros, 55 thousand euros, 109 thousand euros, 169 thousand euros and 156 thousand euros, and seek reimbursement of the amounts meanwhile paid in connection with the enforcement proceedings. This fee is a percentage decided annually by ANACOM (in 2009 it was 0.5826%) of operators’ electronic communications revenues. The scheme is being introduced gradually: 1/3 in the first year, 2/3 in the second year and 100% in the third year. ZON TV Cabo, ZON TV Cabo Açoreana and ZON TV Cabo Madeirense claim, in addition to defects of unconstitutionality and illegality, that only revenues from the electronic communications business per se, subject to regulation by ANACOM, should be considered for the purposes of the application of the percentage and the calculation of the fee payable, and that revenues from television content should be excluded.

 On 18 December 2012 a ruling was passed on the proceedings instigated by ZON TV Cabo Portugal for 2009, for which the appeal was upheld, with no prior hearing, condemning ICP-ANACOM to pay the costs, with the decision still subject to appeal by ICP-Anacom. The remaining cases are awaiting trial and decision.

 ZON Optimus tendered in an auction for licenses for a nationwide free view generalist programme service, to be broadcast via terrestrial television. The Regulator of Social Communication decided on 23 March 2009 to disqualify ZON Optimus’s bid, along with that of another bidder. ZON Optimus has applied for judicial review of the decision. The outcome of these proceedings is yet to be decided.

26.3. Tax authorities

During the course of the 2003 to 2013 financial year, certain companies of the ZON Optimus Group were the subject of tax inspection for the 2001 to 2010 financial year. Following these inspections, ZON Optimus, as the controlling company of the Tax Group, and companies not covered by tax group, were notified by the Tax Inspection Service of corrections made to the Group tax loss and to make payments corresponding to the corrections made to those financial years. The total value of the notifications amounted to 30.7 million euros. The Group considered that the corrections were unfounded, and contested the amounts mentioned. The Group provided the bank guarantees demanded by the Tax Authorities in connection with these proceedings, as stated in Note 24.

The Board of Directors of the group, based on information from its lawyers and tax advisers, the risk of losing these proceedings is not likely and the outcome thereof will not have a significant effect on the consolidated financial statements.

26.4. Actions by Portugal Telecom against ZON TV Cabo Madeirense and ZON TV Cabo Açoreana

 PT brought an action in Funchal Judicial Court against ZON TV Cabo Madeirense, claiming payment of 1,608 thousand euros, plus accrued interest until the date of full settlement, for the alleged use of ducts, supply of the MID service, supply of video and audio channels, operating, maintenance and management costs of the Madeira/Porto Santo undersea cable and the use of two fiber optic circuits. The company contested the action, in particular the prices concerned, the services and PT’s legal capacity in respect of the ducts. At the end of July 2013, a favorable decision was given to ZON TV Cabo Madeira, which, however, PT appealed. The case is pending normal development.

 In April 2012, following the decision made on 19 July 2011 in which ZON TV Cabo Açoreana was acquitted, PT brought two new actions against ZON TV Cabo Açoreana, one relating to the MID service and the other to the supply of video and audio channels, claiming payment of 222 thousand euros and 316 thousand euros respectively, plus interest. They are awaiting decision.

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26.5. Cinema Law

Law n.º 55/2012, which establishes the principles of state action under the promotion, development and protection of cinema and cinematographic and audiovisual activities in Portugal, was published on September 6, 2012. This Law was enacted in 2013 (DL 9/2013) for the sole purpose of liquidating and charging publicity rates for showing films and charging television distribution operators.

ZON Optimus is currently analysing this issue, as well as its impact on the financial statements and potential actions which it may result in, namely a legal appeal, based, amongst other reasons, on (i) the illegal and unconstitutional nature of the rate, namely, due to violating the principles of tax equality and fair taxation and not on back-dated taxation and on (ii) violation of the European directives that cover the virtual communication services and networks.

ZON TV Cabo Portugal has already been notified of the settlement of amounts payable to the Institute of Cinema and Audiovisual, which will be challenged, as legally allowed. The same goes with ZON TV Cabo Açoreana and ZON TV Cabo Madeira.

This process is also being carried out by APRITEL.

26.6. Actions against Sport TV

Sport TV Portugal, SA was fined by the Competition Authority to the value of 3.730 million euros for the alleged abuse of its dominant position in the domestic market of subscription channels with premium sport content.

Sport TV is not in agreement with the decision and has therefore decided to appeal against the same to the competent judicial authorities.

26.7. Contractual Penalties

The general conditions that affect the agreement and termination of this contract between ZON Optimus and its clients, establish that if the products and services provided by the client can no longer be used prior to the end of the binding period, the client is obliged to immediately pay damages to ZON TV CABO. As of September 2013, damages were charged to a total of 19,631 thousand euros, of which 792 thousand euros were received and recorded in the first nine months in profits and loss under 'Other invoices'.

26.8. Interconnection tariffs

At 30 September 2013, accounts receivable and accounts payable include 37,550,902 euros and 29,913,608 euros, respectively, resulting from a dispute between the subsidiary Optimus – Comunicações, S.A. and, essentially, the operator TMN – Telecomunicações Móveis, S.A., in relation to the indefinition of interconnection tariffs, recorded in the year ended at 31 December 2001. In the lower court, the decision was favorable to Optimus. The “Tribunal da Relação” (Court of Appeal), on appeal, rejected the intentions of TMN. However, TMN again appealed to the “Supremo Tribunal de Justiça” (Supreme Court), for final and permanent decision, who upheld the decision of the “Tribunal da Relação” (Court of Appeal), thus concluding that the interconnection prices for 2001 were not defined. The settlement of outstanding amounts will depend on the price that will be established.

27. Shares incentive scheme

The Share Incentive Schemes approved by the General Meetings of Shareholders on 27 April 2008 and 19 April 2010 with the aim of promoting employee loyalty, aligning their interests with the Company’s objectives and creating more favorable conditions for the recruitment of staff of high strategic value, have been implemented in accordance with the principles agreed at those meetings.

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These incentive plans comprise a Standard Plan and a Senior Executive Plan. The Standard Plan is aimed at eligible members selected by the responsible bodies, regardless of the roles they perform. In this plan the vesting period for the assigned shares is five years, starting twelve months after the period to which the respective assignment relates, at a rate of 20% a year. The Senior Executive Plan is aimed at eligible members classed as Senior Executives, also selected by the responsible bodies. The Senior Executive Plan, implemented following approval by the General Meeting of Shareholders in April 2010, has a vesting period of 3 years following the attribution of the shares.

The maximum number of shares assigned each year to these plans is approved by the Board of Directors and depends exclusively on fulfillment of the performance objectives established for ZON Optimus and on the assessment of the individual’s performance.

The number of shares vested in 2013 under the Share Plans approved in 2008, 2009, 2010, 2011 and 2012 was 571,800 shares.

In addition, the Group recognized liabilities in respect of the 2008, 2009, 2010, 2011, 2012 and 2013 Plans, which extend until 2017, totaling 10,847 thousand euros – 1,951 thousand euros in 2008, 1,592 thousand euros in 2009, 1,401 thousand euros in 2010, 1,862 thousand euros in 2011, 2,053 thousand euros in 2012 and 1,989 thousand euros in 2013.

In addition, in the first half of 2013 ZON Optimus implemented the Share Savings Plan, also established in the Regulation approved by the General Meeting of Shareholders. This plan is open to all employees who, if they meet internally decided criteria, may invest up to 10% of their annual salary in this plan, up to a maximum of 7,500 euros per annum, with the benefit of purchasing shares at a 10% discount.

Under the Share Savings Plan launched in 2013, ZON Optimus employees bought 28,298 shares.

The Optimus Group companies had implemented since 2000, a share incentive scheme for more senior employees based on Sonaecom shares, subsequently converted into Optimus SGPS shares. The vesting occurs three years after the award of each plan, assuming that the employees are still employed in the Group, during that period.

Following the merger process (Note 4), the share plans assigned to more senior Optimus Group employees, and in the form of Optimus SGPS’s shares, were converted into Zon Optimus share plans, based on the ratio disclosed in the merger project.

The number of shares outstanding is 1,518,073 for the 2010 plan, 1,563,856 for the 2011 plan and 1,202,408 for the 2012 plan.

The costs of the share plans are recognized throughout the year that mediates the attribution and the vesting of the same. At 30 September 2013, the outstanding liability related to these plans is 9,220 thousand euros, corresponding to 5,033 thousand euros for the 2010 plan, 3,146 thousand euros for the 2011 plan and 1,041 thousand euros for the 2012 plan.

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28. Subsequent Events

On 1 October 2013, in the Extraordinary General Shareholder’s Meeting of ZON Optimus was approved:

1) The change, by modification, suppression, and/or supplement of the majority of the Zon Optimus’ Articles of Association;

2) Election of corporate bodies for the term of office of 2013/2015, with the following composition:

Board of Directors:

Chairman of the Board of Directors: Jorge Brito Pereira

Executive Committee: Miguel Nuno Santos Almeida (Chief Executive Officer) Luís Miguel Gonçalves Lopes (Vice- Chief Executive Officer) Ana Paula Garrido de Pina Marques André Nuno Malheiro dos Santos Almeida José Pedro Faria Pereira da Costa Manuel António Neto Portugal Ramalho Eanes Miguel Filipe Veiga Martins

Members of the Board of Directors: Ângelo Gabriel Ribeirinho dos Santos Paupério António Bernardo Aranha da Gama Lobo Xavier António Domingues Catarina Eufémia Amorim da Luz Tavira Fernando Fortuny Martorell Isabel dos Santos Joaquim Francisco Alves Ferreira de Oliveira Lorena Solange Fernandes da Silva Fernandes Maria Cláudia Teixeira de Azevedo Mário Filipe Moreira Leite da Silva Rodrigo Jorge de Araújo Costa

Board of the General Meeting: Chairman: Pedro Canastra de Azevedo Maia Secretary: Tiago Antunes da Cunha Ferreira de Lemos

Fiscal Board: Chairman: Paulo Cardoso Correia da Mota Pinto Member: Eugénio Ferreira Member: Nuno Sousa Pereira Alternate Member: Luís Filipe da Silva Ferreira

On 18 October 2013, Goldman Sachs Group, Inc. announced it held a qualified shareholding in the share capital of ZON Optimus after purchasing 1,722,129 shares and holding after the acquisition, 10,666,988 shares representing 2.07% of the capital. On 31 October 2013, Goldman Sachs Group, Inc. sold 436,885 shares. After this disposal the company no longer holds a qualified shareholding in ZON Optimus.

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On 29 October 2013, Sonaecom has announced it will make a partial and voluntary tender offer for the acquisition of a maximum of 88,479,803 shares representing 24.16% of its own share capital, giving the option to its shareholders to sell, in equal standing conditions, their Sonaecom shares for consideration of the directly held 37,489,324 ZON Optimus shares.

These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

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ANNEX I

a) Companies included in the consolidation by the full consolidation method

b) Associated companies

c) Jointly controlled companies

d) Companies recorded at cost

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ANNEXES a) Companies included in the consolidation by the full consolidation method

Percentage of Ownership Effective Direct Effective Company Head Office Activity Shareholder 31-12-2012 30-09-2013 30-09-2013 ZON Optimus, SGPS, S.A. (a) Lisbon Management of investments - - - Be Artis – Concepção, Construção e Gestão Design, construction, management and exploitation of electronic de Redes de Comunicações, S.A. ('Artis') (b) Maia communications networks and their equipment and infrastructure, ZON Optimus 0.00% 100.00% 100.00% management of technologic assets and rendering of related services

Be Towering – Gestão de Torres de Implementation, installation and exploitation of towers and other sites Maia ZON Optimus 0.00% 100.00% 100.00% Telecomunicações, S.A. (‘Be Towering’) (b) for the instalment of telecommunications equipment Empracine - Empresa Promotora de Lisbon Movies exhibition Lusomundo SII 99.87% 100.00% 99.87% Atividades Cinematográficas, Lda. Grafilme - Sociedade Impressora de ZON LM Lisbon Providing services on audiovisual subtitling 55.56% 55.56% - Legendas, Lda. (c) Audiovisuais Lusomundo - Sociedade de investimentos Lisbon Management of Real Estate ZON Optimus 99.87% 99.87% 99.87% imobiliários SGPS, SA Management of investments relating to activities in Spain in the Lusomundo España, SL Madrid ZON Optimus 100.00% 100.00% 100.00% audiovisuals business Lusomundo Imobiliária 2, S.A. Lisbon Management of Real Estate Lusomundo SII 99.68% 99.80% 99.68%

Lusomundo Moçambique, Lda. Maputo Movies exhibition and commercialization of other public events ZON LM Cinemas 100.00% 100.00% 100.00%

Implementation, operation, exploitation and offer of networks and Optimus - Comunicações, S.A. ('Optimus') rendering services of electronic comunications and related resources; (b) Maia ZON Optimus 0.00% 100.00% 100.00% offer and commercialisation of products and equipments of electronic communications

Per-Mar – Sociedade de Construções, S.A. Purchase, sale, renting and operation of property and commercial ('Per-Mar') (b) Maia ZON Optimus 0.00% 100.00% 100.00% establishments

Sontária - Empreendimentos Imobiliários, Realisation of urbanisation and building construction, planning, urban S.A. ('Sontária') (b) Maia management, studies, construction and property management, buy ZON Optimus 0.00% 100.00% 100.00% and sale of properties and resale of purchased for that purpose

Teliz Holding B.V. Amstelveen Management of group financing activities ZON Optimus 100.00% 100.00% 100.00% ZON LM ZON Audiovisuais, SGPS S.A. Lisbon Management of investments 100.00% 100.00% 100.00% Audiovisuais ZON Cinemas, SGPS S.A. Lisbon Management of investments ZON LM Cinemas 100.00% 100.00% 100.00%

ZON Conteúdos - Actividade de Televisão e ZON Televisão Lisbon Comercialization of cable tv contents 100.00% 100.00% 100.00% de Produção de Conteúdos, S.A. por Cabo ZON TV Cabo / ZON FINANCE B.V. Amsterdam Management of group financing activities 100.00% 50% / 50% 100.00% ZON Optimus Import, distribution, commercialization and production of audiovisual ZON Lusomundo Audiovisuais, S.A. Lisbon ZON Optimus 100.00% 100.00% 100.00% products

ZON Lusomundo Cinemas , S.A. Lisbon Movies exhibition and commercialization of other public events ZON Optimus 100.00% 100.00% 100.00%

Movies distribution, editing, distribution, commercialization and ZON Audiovisuais ZON Lusomundo TV, Lda. Lisbon 100.00% 100.00% 100.00% production of audiovisual products SGPS S.A.

ZON Televisão por Cabo, SGPS, S.A. Lisbon Management of investments ZON TV Cabo 100.00% 100.00% 100.00%

Distribution of television by cable and satellite and operation of ZON TV Cabo Açoreana, S.A. Ponta Delgada ZON TV Cabo 83.82% 83.82% 83.82% telecommunications services in the Azores area

Distribution of television by cable and satellite and operation of ZON TV Cabo Madeirense, S.A. Funchal ZON TV Cabo 77.95% 77.95% 77.95% telecommunications services in the Madeira area

Distribution of television by cable and satellite and operation of ZON TV Cabo Portugal, S.A. Lisbon ZON Optimus 100.00% 100.00% 100.00% telecommunications services (a) Company changed its designation from ZON Multimédia – Telecomunicações e Multimédia, SGPS, S.A. to ZON Optimus, SGPS, S.A. (b) Subsidiaries of Optimus SGPS, which was merged into ZON Optimus on 27 August 2013 (c) Company wound up in October 2012

b) Associated companies

Percentage of Ownership Effective Direct Effective Company Head Office Activity Shareholder 31-12-2012 30-09-2013 30-09-2013 Distodo - Distribuição e Logística, Lda. ZON LM Lisbon Stocking, sale and distribution of audiovisuals material 50% 50% 50% ("Distodo") Audiovisuais

Canal 20 TV, S.A. Madrid Production, distribution and sale of contents rights for television films ZON Optimus 50% 50% 50%

Conception, production, realization and commercialization of ZON II - Serviços de Televisão S.A. (a) Lisbon ZON Optimus 100% 100% 100% audiovisual contents and provision of publicity services

Import, distribution, commercialization and production of audiovisual ZON Audiovisuais Big Picture 2 Films, S.A. Lisbon 20% 20% 20% products SGPS S.A.

ZON III - Comunicações electrónicas S.A. (a) Lisbon Network operator and provider of eletronic communication services ZON Optimus 100% 100% 100%

(a) Companies with no activity.

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c) Jointly controlled companies

Percentage of Ownership Effective Direct Effective Company Head Office Activity Shareholder 31-12-2012 30-09-2013 30-09-2013 Conception, production, realization and commercialization of sports programs for telebroadcasting, purchase and resale of the rights to Sport TV Portugal, S.A. Lisbon ZON Optimus 50% 50% 50% broadcast sports programs for television and provision of publicity services

Conception, production, realization and commercialization of Dreamia Holding Dreamia - Serviços de Televisão, S.A. Lisbon 50% 100% 50% audiovisual contents and provision of publicity services BV

ZON Audiovisuais Dreamia Holding B.V. Amsterdam Management of investments 50% 50% 50% SGPS S.A.

Distribution of television by satellite, operation of telecommunications MSTAR, SA Maputo ZON Optimus 30% 30% 30% services Electronic communications services provider, production, Upstar Comunicações S.A. Vendas Novas commercialization, broadcasting and distribution of audiovisual ZON Optimus 30% 30% 30% contents FINSTAR - Sociedade de Investimentos e Distribution of television by satellite, operation of telecommunications Luanda Teliz Holding B.V. 30% 30% 30% Participações, S.A. services (a) Financial investments whose participation is less than 50% were considered as joint arrangements due to shareholder agreements that confer joint control.

d) Companies recorded at cost

Percentage of Ownership Effective Direct Effective Company Head Office Activity Shareholder 31-12-2012 30-09-2013 30-09-2013 Turismo da Samba (Tusal), SARL (a) Luanda n.a. ZON Optimus 30% 30% 30%

Filmes Mundáfrica, SARL (a) Luanda Movies exhibition ZON Optimus 24% 24% 24%

Companhia de Pesca e Comércio de Angola Luanda n.a. ZON Optimus 16% 16% 16% (Cosal), SARL (a) Caixanet – Telecomunicações e Telemática, Lisbon Telecommunication services ZON Optimus 5% 5% 5% S.A.

Apor - Agência para a Modernização do Porto Porto Development of modernizing projects in Oporto ZON Optimus 4% 4% 4%

Lusitânia Vida - Companhia de Seguros, S.A Lisbon Insurance services ZON Optimus 0% 0% 0% ("Lusitânia Vida") Lusitânia - Companhia de Seguros, S.A Lisbon Insurance services ZON Optimus 0% 0% 0% ("Lusitânia Seguros") (a) The financial investments in these companies are fully provisioned.

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