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10 MAY 2012 1Q12 RESULTS PRESENTATION

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Page 1: 1Q12 RESULTS PRESENTATION - NOS · 2014-05-13 · RESULTS PRESENTATION. This presentation contains forward looking information, ... 1Q10 1Q11 1Q12 Broadband Net Adds of 9.4 thousand

10 MAY 2012

1Q12

RESULTS PRESENTATION

Page 2: 1Q12 RESULTS PRESENTATION - NOS · 2014-05-13 · RESULTS PRESENTATION. This presentation contains forward looking information, ... 1Q10 1Q11 1Q12 Broadband Net Adds of 9.4 thousand

This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of

the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and assumptions of our

management and on information available to management only as of the date such statements were made.

Forward-looking statements include

(a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for

our products and other aspects of our business, possible or future payment of dividends and share buy back program; and

(b) statements that are preceded by, followed by or include the words “believes”, “expects”, “anticipates”, “intends”, “is confident”, “plans”,

“estimates”, “may”, “might”, “could”, “would”, and the negatives of such terms or similar expressions.

These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions

and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These

factors, risks and uncertainties include, but are not limited to, changes in demand for the company’s services, technological changes, the effects

of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking

statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may

differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking

statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia – Serviços de

Telecomunicações e Multimédia, SGPS, S.A. (“Multimedia” or “ZON”) AGM and subject to (i) its approval by Multimedia’s shareholders, (ii) the

market conditions and (iii) the ZON’s financial and accounting position as revealed in the financial statements approved by Multimedia’s AGM.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new

information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any

forward-looking statements.

ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule

12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for PT Multimedia’s exemption is No. 82-5059. Under

this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information

that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or

has distributed or is required to distribute to its security holders.

This presentation is not an offer to sell or a solicitation of an offer to buy any securities.

Disclaimer

Page 3: 1Q12 RESULTS PRESENTATION - NOS · 2014-05-13 · RESULTS PRESENTATION. This presentation contains forward looking information, ... 1Q10 1Q11 1Q12 Broadband Net Adds of 9.4 thousand

Very resillient core Triple Play business despite

tough macro headwinds

Efforts to contain costs and CAPEX are evident in

solid financial performance

New growth options beginning to show interesting

results

3

1Q12 Highlights

Page 4: 1Q12 RESULTS PRESENTATION - NOS · 2014-05-13 · RESULTS PRESENTATION. This presentation contains forward looking information, ... 1Q10 1Q11 1Q12 Broadband Net Adds of 9.4 thousand

Record growth in cable with 26

thousand net adds

Strongest quarter since 2010 in RGU

growth with 65.8 thousand net adds

4

Very encouraging RGU growth

-20

-10

+0

+10

+20

+30

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

Pay TV – Cable Net Adds [Thousands]

RGU Net Adds [Thousands]

33.9 31.5

43.8

58.565.8

1Q11 2Q11 3Q11 4Q11 1Q12

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716 thousand Triple Play customers, up

7.5% yoy

120 thousand IRIS customers, 10% of

cable customer base

Strong take-up of entry-level bundles with

analogue switch-off

5

Good take-up of high-end IRIS bundles and

entry-level offers

Triple Play Customers [Thousands]

536.7

666.0 715.7

45.6%

57.6%

59.4%

30%

50%

70%

90%

110%

130%

150%

-30

70

170

270

370

470

570

670

770

1Q10 1Q11 1Q12

Page 6: 1Q12 RESULTS PRESENTATION - NOS · 2014-05-13 · RESULTS PRESENTATION. This presentation contains forward looking information, ... 1Q10 1Q11 1Q12 Broadband Net Adds of 9.4 thousand

Broadband Net Adds of 9.4 thousand

to 749 thousand subs

62.1% penetration of customer base

53% offers greater than 20 Mbps

and 32% higher or equal to 30 Mbps

ZON Online #1 in Portuguese App

store 6

Robust net additions in Broadband and Fixed Voice

Broadband Subscribers [Thousands, % of Penetration of Cable Base]

635.4704.7

748.6

54.0%

61.0% 62.1%

30%

35%

40%

45%

50%

55%

60%

65%

70%

200

300

400

500

600

700

800

1Q10 1Q11 1Q12

Fixed Voice Subscribers [Thousands; % of Penetration of Cable Base]

Fixed Voice Net Adds of 37.5

thousand to 921.4 thousand subs

74.9% penetration of customer base

Huge success of new fixed voice app

for free fixed line calls out of the

home

646.1

807.5921.4

54.3%

68.2%

74.9%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

00

100

200

300

400

500

600

700

800

900

1,000

1Q10 1Q11 1Q12

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Basic ARPU from core TV, BB and Voice

services increased 0.6% yoy

Adjusting for the impact of entry level

offers, basic ARPU would have increased

by 2.4%.

Success of lower ARPU, entry level,

offers and continued pressure from

discretionary premium ARPU (-15.3%) led

to decline in Blended ARPU of 2.2%

7

Resilience of Basic ARPU

Basic, Premium and Blended ARPU [1Q11 = Base 1]

-2.2%

+0.6%

-15.3%

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1Q11 2Q11 3Q11 4Q11 1Q12

Blended ARPU Basic ARPU Premium ARPU

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Cinema Exhibition:

Outperforming the market in a tough year

Source: ZON, ICA – Gross Revenue Data adjusted for VAT rate change in cinema tickets.

Cinema tickets sold and revenue per ticket [Thousands, Euros]

1Q12 Performance of Gross Revenues and Attendance

[%]

Average revenue per ticket: + 2.1% in 1Q12

Cinema Exhibition gross revenues were down 12.8% in 1Q12, with the market as a whole

falling by 14.6% yoy

8

-12.8%-14.5%-14.6% -14.9%

Gross Revenue Attendance

ZON Market

2,016 2,0942,372 2,260

1,725

4.74.9 5.1

4.8 4.8

03

04

04

05

05

06

06

07

07

0

500

1000

1500

2000

2500

3000

1Q11 2Q11 3Q11 4Q11 1Q12

Tickets Sold Avg. Revenue Per Ticket

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Source: ZON, ICA

9 9

Audiovisuals:

Maintaining clear leadership

Cinema Distribution gross revenues market share 1Q12 [%]

ZON46.0%

Columbia24.3%

Big Picture 2

16.4%

Others13.3%

ZON distributed 4 of the Top 10 movies

shown in cinemas in Portugal in 1Q12

46% market share of cinema distribution

gross revenues

New distribution agreements established

with Universal for home video and with

MGM Studios for both theatrical and

home video distribution

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10

Growing distribution network

13 own stores

Over 500 agents / points

of sale

Door-to-door sales force

of 200 people in Angola

ZAP – posting good results in Angola

ZAP Subscribers [Thousands]

Very strong operational

performance

EBITDA breakeven reached

in 1Q12

ZAP – the most

recognized brand in the

market

Strong focus on

Portuguese Language

content

ZAP Stores

1Q11 2Q11 3Q11 4Q11 1Q12

2

8

1213

June2010

December2010

June2011

December2011

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11 11

Solid revenue performance

Consolidated Operating Revenues [Millions of Euros]

Yoy change in Pay TV, BB and Voice Revenues [%]

1.5%

-3.0%

-2.5%

-2.8%

-1.9%

-4%

-3%

-2%

-1%

0%

1%

2%

1Q11 2Q11 3Q11 4Q11 1Q12

Flat consolidated revenue performance yoy

Proportionate consolidation of Angola JV in 1Q12 (6.4 million euros)

Slowdown in pace of decline of Triple Play revenues

214.1 214.2

1Q11 1Q12

+0.0%

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12

ARPU Revenues Growth [1Q11 = Base 1]

12

Growth in underlying core ARPU revenues

ARPU Revenues split [%]

0.80

0.85

0.90

0.95

1.00

1.05

1Q11 2Q11 3Q11 4Q11 1Q12

Total Basic Premium

-1.0%

+1.8%

-14.3% 83% 85%

17% 15%

1Q11 1Q12

Basic Revenues Premium Revenues

Basic ARPU revenue growth of 1.8%

Premium revenues down 14.3% yoy putting pressure on total revenues

Premium revenues now represent 15% of ARPU revenues down from 17% in 1Q11

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13 13

17.1 17.1

1Q11 1Q12

+0.5%

13.611.8

1Q11 1Q12

(13.7)%

Solid Audiovisuals revenues; pressure on Cinema

revenues

Cinema revenues affected by combination of:

• Macro pressure and consumer environment

• VAT increase (6% to 13%) on cinema tickets

• Fewer blockbuster and 3D movies

Cinema Revenues [Millions of Euros]

Audiovisuals Revenues [Millions of Euros]

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14 14

134.6 134.5

1Q11 1Q12

Costs savings materializing

Consolidated Operating Costs [Millions of Euros]

Excluding proportionate consolidation of Angolan JV, OPEX fell by 3.9% to 129.3 million

euros

Consolidated Operating Costs Excluding

Angolan Operation [Millions of Euros]

(0.1)%

134.6129.3

1Q11 1Q12

(3.9)%

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15 15

Operating Costs excluding Angolan Operation [Millions of Euros]

Cost savings materializing

14.7

13.6

1Q11 1Q12

61.157.7

1Q11 1Q12

15.2

13.3

1Q11 1Q12

W&S Direct Costs Commercial

Costs

Other Op.

Costs

Operating Costs ex Angola

(millions of euros) 1Q12 Δ % Drivers

Other Operating Costs 44.7 2.6%Excluding the impact of the consolidation of the Angolan Operation, like for like Other Operating Costs would have grown by 2.6% albeit

important savings were achieved in several General and Administrative areas, namely customer service, maintenance and repairs

Commercial Costs 13.3 (12.8%)Excluding the impact of the Angolan Operation commercial costs would have fallen by 12.8%, mainly due to a decrease in the level of

COGS, commissions and marketing costs

W&S 13.6 (7.5%)

Direct Costs 57.7 (5.5%)

Excluding the effect of the proportionate consolidation of the Angolan JV as from 1Q12, W&S like for like would have fallen by 7.5%

reflecting a one-off effect and the effort in the Portuguese operation to contain the level of costs and headcount

Excl. the impact of the consolidation of the Angolan JV, like for like direct costs would have fallen by 5.5%, driven by a reduction in

Programming Costs of 6.6%, due to the lower level of premium subscriptions, as well as the renegotiations of content contracts

43.644.7

1Q11 1Q12

(7.5)% (5.5)% (12.8)% +2.6%

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16 16

Strong improvement in EBITDA margin

Core Pay TV, Broadband and Voice margin grew by 2pp yoy to 39.5%

Group Margin remained relatively flat due to lower contribution from other domestic

businesses and consolidation of Angolan JV

Group EBITDA, EBITDA Margin [Millions of Euros, %]

Pay TV, Broadband and Voice EBITDA

and EBITDA Margin [Millions of Euros, %]

73.4 75.5

37.5%

39.5%

30%

32%

34%

36%

38%

40%

42%

30

35

40

45

50

55

60

65

70

75

80

1Q11 1Q12

79.5 79.7

37.1% 37.2%

30%

31%

32%

33%

34%

35%

36%

37%

38%

39%

40%

30

40

50

60

70

80

90

1Q11 1Q12

+0.2% +3.0%

35.4%

39.5%

34.3%

37.2%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Pay TV, Broadband and Voice Group

EBITDA Margin [%]

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17

10.2 10.3

1Q11 1Q12

+1.7%

Net Income [Millions of Euros]

Net Income Growth

(millions of euros) 1Q12 Δ % Drivers

In 1Q11 ZON had a negative contribution from the consolidation of the Angolan Operation of 2.8 million euros, which does not appear in

this line anymore. For comparative purposes, the equivalent impact for 1Q12 was a negative contribution at the EBT level of 1.3 million

euros, therefore reducing considerably the negative impact from 2011

Income Taxes (4.6)

(8.3) (19.1%)Net Financial Expenses

29.3%

D&A in line with the levels recorded in 1Q11 amounting to 55.9 million euros. D&A is still relatively high due to the significant accelerated

CAPEX cycle of the 2008-2010 period

Effective P&L tax rate of 30% due to the higher corporate tax rate applied to companies surpassing pre-defined taxable income thresholds

as a result of austerity measures for 2012/2013. In ZON´s case, the company was generally affected by an increase of 0.5 pp to 29.5%.

D&A (55.9) 0.7%

Net interest costs remained flat at 6 million euros in 1Q12.

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18

Continued reduction of CAPEX to more normalized

levels as forecast

38.8

29.6

15.19.1

19.1 18.9

1.7

1.6

2.9

1Q11 1Q12

Pay TV, BB and Voice Infr. Terminal Equipment

Other Baseline CAPEX Non-Recurrent CAPEX

Total CAPEX [Millions of Euros]

Total CAPEX, Total CAPEX / Operating

Revenues [Millions of Euros, %]

(23.7)%

38.8

29.618.1%

13.8%

00%

05%

10%

15%

20%

25%

00

05

10

15

20

25

30

35

40

45

1Q11 1Q12

CAPEX levels significantly down on previous years as forecast, with the conclusion of

major investment programmes regarding the network upgrade and the roll-out of next

generation customer equipment

CAPEX as percentage of total revenues at 13.8% in 1Q12, and at 15.4% as percentage

of Triple Play revenues

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19

Strong improvement in OCF

5.7 0.2

(9.2)

(22.3) 37.4

1Q11 ∆ EBITDA ∆ CAPEX ∆ Non-Cash Items and Working Capital

1Q12

Operating Cash Flow After Investment [Millions of Euros]

+ 31.7 M €

Strong improvement in OCF led by solid EBITDA performance, decline in CAPEX, and

lower Working Capital investment when compared with 1Q11

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20 20

Change in Net Financial Debt [Millions of Euros]

Solid Capital Structure,

2.1x Net Financial Debt / EBITDA

644.6

23.4

621.2

1.7

2.4

7.5

12.9

12.7

50.1

637.5

1Q12

International BusinessConsolidation

1Q12 Ex. InternationalBusiness

Other Items

Income Taxes Paid

Net Interest Paid

Long Term Contracts

Non-Cash Items andWorking Capital

EBITDA-CAPEX

2011

Improvement led by solid EBITDA and decline in

CAPEX

Consolidation of Net Debt of the

Angolan Operation

2.1x Net Financial Debt / EBITDA

at the end of 1Q12

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21

Despite the difficult macroeconomic environment, ZON continues

to post good results in its domestic businesses

Good operational performance of the core Triple Play business with

good growth in cable base

Despite slowdown of Premium subscriptions, optimization of cost

structure has enabled continued EBITDA growth

Strong FCF with very strong quarterly Cash Flow momentum

Excellent results of the Angolan business, on track for EBITDA

positive contribution in 2012

Wrap-up

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Appendix Financial Highlights

Operational Highlights

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23 23

(Millions of Euros) 1Q11 1Q12 ∆ y.o.y.

Operating Revenues 214.1 214.2 0.0%

Pay TV, Broadband and Voice 195.6 191.9 (1.9%)

Audiovisuals 17.1 17.1 0.5%

Cinema Exhibition 13.6 11.8 (13.7%)

International - 6.4 n.a.

Other (12.1) (13.0) 7.4%

EBITDA 79.5 79.7 0.2%

Income from Operations 24.0 23.7 (1.0%)

Net Income 10.2 10.3 1.7%

CAPEX 38.8 29.6 (23.7%)

EBITDA minus CAPEX 40.7 50.1 23.0%

Net Financial Debt 641.7 644.6 0.5%

EBITDA margin (%) 37.1% 37.2% 0.1pp

CAPEX as % of Revenues 18.1% 13.8% (4.3pp)

Net Financial Debt / EBITDA [x] 2.1x 2.1x n.a.

Financial Highlights

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24 24

Operational Highlights

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25

José Pedro Pereira da Costa

CFO

Maria João Carrapato

Head of Investor Relations

[email protected]

ZON Multimedia

Avenida 5 de Outubro, 208

1069-203 Lisboa, Portugal

Tel.: +351 21 782 47 25

Fax: +351 21 782 47 35

Operational Highlights

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