Statement on Portugal Telecom, S.A.'s Cost Accounting System

Considering that:

i. In December 1996, after ICP defined the general principles of Portugal Telecom, S.A.'s accounting system, this operator officially informed ICP that it had implemented cost accounting system within the framework of the Concession Contract of the Public Telecommunications Service;

ii. ICP conducted audits of the said system for the 1996 and 1997 financial years;

iii. Such audits were carried out by entities independent of Portugal Telecom, S.A.;

iv. In the context of the recently completed audit of the 1997 financial year, a statement of compliance of the said system with the obligations contained in Article 13 of Directive 95/62/CE, Article 18 of Directive 98/10/CE.

v. All obligations contained in the previous referred dispositions are identical to the obligations contained in paragraph 3 of the Order of the MEPAT nr. 15021/99 (2nd Series)

ICP declares, for the purposes of Paragraph 5 of the Order of the Ministry of Equipment, Planning and Territorial Administration no. 15021/99 (2nd Series) that the results of Portugal Telecom, S.A.'s cost accounting system for the 1998 financial year were produced in accordance with the rules defined in Paragraph 3 of the Order of the Ministry of Equipment, Planning and Territorial Administration no 15021/99 (2nd Series).