Sonaecom SGPS

Quarterly Report • May 30, 2007

SONAECOM FIRST QUARTER 2007 RESULTS JANUARY – MARCH

Table of contents

1.	Message from Paulo Azevedo, CEO of Sonaecom 2
2.	Quarterly highlights 4
3.	Consolidated results5
	3.1.Consolidated income statement 5
	3.2.Consolidated balance sheet 7
4.	Optimus9
	4.1.Operational data 9
	4.2.Financial data 10
5.	Sonaecom Fixed 11
	5.1.Operational data 11
	5.2.Financial data 13
6.	Público 14
	6.1.Operational data 14
	6.2.Financial data 15
7.	Software and Systems Information 15
	7.1.Operational data 15
	7.2.Financial data 16
8.	Other issues 17
	8.1.Regulatory developments 17
	8.2.Corporate developments 17
9.	Additional information 17
	10. Financial information 19
	Consolidated financial statements 19
	Notes to the consolidated financial statements 25

Notes:

(i) The Consolidated Financial Information contained in this report is unaudited and based on Financial Statements that have been prepared in accordance with International Financial Reporting Standards ("IAS/IFRS") issued by the International Accounting Standards Board ("IASB"), as adopted by the European Union;

(ii) Enabler was sold on 30 June 2006 and, in order to facilitate comparisons of 1Q07 results against the previous year, the 1Q06 comparative figure has been restated (1Q06^R ) to exclude Enabler's contribution to Sonaecom and to the Software and System Information Division (SSI) Consolidated Results in 1Q06 (unaudited). All comparisons, when stated, are made on this "like-for-like" basis;

(iii) 4Q06 results include costs associated with the Public Tender Offer for Portugal Telecom (PT) and, in order to isolate these non-recurrent costs from the operational performance of the quarter, the 4Q06 figures have been adjusted (4Q06^A ) for comparative purposes. All comparisons, when stated, are made on this basis.

1. Message from Paulo Azevedo, CEO of Sonaecom

I am pleased to be able to report 1Q07 results that reflect continued progress in our search for growth in our telecoms businesses. During 1Q07, consolidated turnover increased by 4.5% and customer revenues rose by 8.5%, when compared to 1Q06(R), driven by growth in our new mobile services, including wireless internet and our fixed-mobile convergent products, and by growth in our wireline direct broadband services.

Regarding our Telco companies, Optimus increased its active subscribers by 12% to 2.1 million, in a highly competitive environment. Sonaecom Fixed continued to develop its double-play voice and broadband internet service, growing its direct services subscriber base by 70.5% and introducing at the end of the quarter significant improvements in its offer in terms of speed, price, communication and TV and Home Video advanced services.

As regards our other businesses, Público completed its restructuring programme, having achieved significant annual costs savings, and in February launched Público's redesigned new-look all colour newspaper. While the quarter still showed deterioration in all revenue line trends, post-launch trends are more encouraging. SSI continued to deliver solid results, with an improvement in operational profitability and with a strong performance at WeDo that achieved a significant level of new orders from international clients.

In March 2007, and following the blocking of our public tender offer for PT, we sold 11.3 million shares representing just over 1% of its share capital, generating a capital gain of 2.5 million euros. Following this transaction, we no longer have a shareholding in PT.

We will continue to fight for the regulatory and competitive improvements in the Portuguese Telecom sector, which were publicly announced by Government and regulators but have not to-date, materialized in any way or form. It is particularly important to ensure that the structure of any spin off of PTM will be implemented in a truly independent fashion, and for the copper network to be split into a separate infrastructure and retail businesses.

Consistent with the priorities established last year, in 2007 we plan to focus on achieving customer growth by investing further in our brands and new products, expanding the coverage and capacity of our mobile and wireline networks and by continuously exploiting new market opportunities and anticipating customer needs through innovation.

At Optimus, we believe there is an opportunity to further increase our rate of growth, which will however give rise to higher total customer acquisition costs for the full year.

At Sonaecom Fixed, we aim to consolidate the transformation of our business as a direct access broadband provider, by growing our market share of the broadband market through the expansion and development of our direct broadband services, namely our bundled voice and internet solutions with access to IPTV and Home video services.

At SSI, we will look to achieve growth in both the Portuguese and international markets, by expanding our customer base and examining and exploring new markets and business opportunities that are value enhancing, including potential acquisitions.

At Público, having re-dimensioned the fixed cost base, we will look to improve profitability by increasing circulation, on the back of the newly launched redesigned newspaper, and by stimulating advertising revenues.

As a Group, we will continue to pursue cost efficiencies, corporate governance best practices, and financial efficiencies, and will look at acquisition opportunities for both our telecoms businesses and SSI division.

The appointment of Ângelo Paupério, one of Sonae Group's most senior managers, as Sonaecom's new CEO, together with the remainder of the current executive team, which I

believe to be the best Telecom management team in Portugal, is proof of Sonae SGPS's commitment to the business and the surest enabler of future value creation for all shareholders.

On behalf of the Board, I would like to pay tribute to Belmiro de Azevedo, our outgoing Chairman. His contribution to the development of our business has been immense, not only in terms of the day-to-day guidance to the management team, but also his extraordinary vision which has always held us in such good stead.

2. Quarterly highlights

During 1Q07, Sonaecom was able to sustain the high level of growth in customers and customer revenues achieved in 4Q06 in its telecoms businesses, while maintaining a focus on cost contention, despite the continuous investment in mobile innovation and direct wireline services.

Operational Highlights

OPERATING KPI's	1Q06	1Q07	y.o.y	4Q06	q.o.q
Optimus
Customers (EOP) ('000)	2,383.4	2,629.2	10.3%	2,601.9	1.1%
Active Customers (1)	1,890.1	2117.1	12.0%	2,058.4	2.8%
Data as % Service Revenues	13.4%	16.0%	2.7pp	16.3%	-0.3pp
MOU (2) (min.)	113.7	116.4	2.3%	117.9	-1.3%
Sonaecom Fixed
Total Services (3) (EOP)	336,932	393,483	16.8%	380,729	3.3%
Direct	181,459	309,461	70.5%	281,541	9.9%
Direct access as % Customer Revenues	56.9%	75.7%	18.8pp	71.5%	4.2pp
Sonaecom
Employees	2,278	1,847	-18.9%	1,871	-1.3%

(1) Active Customers with Revenues generated in the last 90 days; (2) Minutes of Use per Customer per month; (3) Services restated according to a "revenue generator unit" criteria.

• Optimus: customers increased by 10.3% to 2.6 million in 1Q07, compared to 2.4 million at the end of 1Q06; data revenues represented 16.0% of service revenues in the quarter, up from 13.4% in 1Q06.
• Sonaecom Fixed: direct access services increased by 128 thousand to 309.5 thousand at the end of 1Q07, from 181.5 thousand, at the end of 1Q06. When compared to 4Q06, direct access services increased by 9.9%; direct access revenues represented 75.7% of customer revenues in 1Q07, compared to 56.9% in 1Q06.
• Sonaecom: total employees decreased 18.9% compared to 1Q06, mainly as a result of the sale of Enabler in June 2006 and Público's restructuring plan that reduced headcount by 80. Excluding Enabler's 310 employees in 1Q06, Sonaecom's headcount would have decreased by 6.1% in 1Q07 compared to 1Q06, consistent with the pursuit of an integrated structure and productivity gains.

Consolidated financial highlights

Million euros
CONSOLIDATED FINANCIAL KPI's	1Q06	1Q06(R)	1Q07	y.o.y	4Q06	4Q06(A)	q.o.q
Turnover	196.9	190.3	198.9	4.5%	212.0	212.0	-6.2%
Service Revenues	179.5	173.0	183.2	5.9%	189.3	189.3	-3.2%
Customer Revenues	132.9	126.3	137.1	8.5%	141.2	141.2	-2.9%
Operator Revenues	46.7	46.7	46.2	-1.1%	48.1	48.1	-4.1%
EBITDA	39.0	38.1	34.0	-10.8%	33.1	33.1	2.7%
EBITDA Margin (%)	19.8%	20.0%	17.1%	-2.9pp	15.6%	15.6%	1.5pp
EBIT	6.5	5.7	-2.6	-	-33.3	-2.4	-10.2%
EBT	3.0	2.1	-6.8	-	-38.2	-7.3	6.8%
Net Results - Group Share (1)	0.1	-0.3	-6.0	-	-40.4	-9.4	36.4%
Operating CAPEX (2)	32.0	32.0	28.7	-10.1%	52.4	52.4	-45.1%
Operating CAPEX as % of Turnover	16.3%	16.8%	14.5%	-2.3pp	24.7%	24.7%	-10.3pp
EBITDA - Operating CAPEX	7.0	6.1	5.2	-14.6%	-19.3	-19.3	-
Total CAPEX	36.1	36.0	29.6	-17.7%	54.4	54.4	-45.5%
Operating Cash Flow (3)	-15.5	-14.0	-18.6	-32.9%	18.9	18.9	-
FCF (4)	-18.8	-17.3	63.2	-	12.2	12.2	-

(1) Net Results after Minority Interests; (2) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (3) Operating Cash Flow = EBITDA - Operating CAPEX - Change in WC -Non Cash item & Other; (4) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs; (R) Restated to exclude Enabler's contribution in 1Q06; (A) Adjusted to exclude Tender Offer Costs.

• Service revenues were 5.9% higher than in 1Q06(R), driven by growth of Optimus' mobile broadband products and convergent products and Sonaecom Fixed ADSL direct services, notwithstanding the impact of lower MTRs and lower roaming in tariffs.
• Customer revenues increased by 8.5% in 1Q07 when compared to 1Q06(R), driven by a 20.2% increase at Sonaecom Fixed and a 6.1% increase at Optimus.
• EBITDA decreased by 10.8% to 34 million euros, mainly explained by the higher handset subsidization and leased lines costs in 1Q07.

3. Consolidated results

3.1. Consolidated income statement

1Q06	1Q06(R)	1Q07	y.o.y	4Q06	4Q06(A)	q.o.q
196.9	190.3	198.9	4.5%	212.0	212.0	-6.2%
141.2	141.2	142.8	1.1%	156.7	156.7	-8.9%
44.5	44.5	54.0	21.4%	54.0	54.0	0.0%
8.7	8.7	7.2	-17.8%	9.0	9.0	-20.1%
22.1	15.5	15.0	-3.7%	17.4	17.4	-13.9%
-19.7	-19.7	-20.0	-1.7%	-25.1	-25.1	20.3%
1.3	0.8	1.3	59.9%	2.4	2.4	-44.9%
157.3	151.2	162.7	7.6%	179.0	179.0	-9.1%
16.0	16.0	22.3	39.0%	29.7	29.7	-25.1%
63.7	63.7	68.4	7.3%	66.6	66.6	2.7%
27.0	23.2	23.4	1.1%	25.2	25.2	-7.0%
19.7	19.6	19.0	-3.3%	26.7	26.7	-28.8%
16.7	15.7	15.2	-3.1%	15.6	15.6	-2.1%
11.6	10.4	11.3	9.2%	12.1	12.1	-6.3%
2.6	2.6	3.1	19.5%	3.2	3.2	-2.6%
1.9	1.9	3.6	93.3%	2.4	2.4	51.6%
39.0	38.1	34.0	-10.8%	33.1	33.1	2.7%
19.8%	20.0%	17.1%	-2.9pp	15.6%	15.6%	1.5pp
44.4	44.4	35.0	-21.2%	34.5	34.5	1.4%
-4.5	-4.5	0.2	-	0.2	0.2	22.8%
-1.9	-1.9	-1.2	38.5%	-2.9	-2.9	59.1%
1.9	1.1	1.2	7.2%	1.8	1.8	-32.9%
-0.8	-0.9	-1.2	-31.7%	-0.5	-0.5	-154.3%
0.0	0.0	0.0	-	30.9	0.0	-
32.5	32.4	36.6	13.0%	35.5	35.5	3.2%
6.5	5.7	-2.6	-	-33.3	-2.4	-10.2%
-3.5	-3.6	-4.1	-16.4%	-4.9	-4.9	15.1%
1.9	1.8	9.2	-	1.5	1.5	-
5.4	5.4	13.3	147.6%	6.3	6.3	110.8%
3.0	2.1	-6.8	-	-38.2	-7.3	6.8%
2.2	2.5	0.8	-66.2%	-2.1	-2.1	-
5.2	4.6	-5.9	-	-40.3	-9.3	36.4%
0.1	-0.3	-6.0	-	-40.4	-9.4	36.4%
5.1	5.0	0.1	-98.8%	0.1	0.1	-44.2%

(1) Network Costs = Interconnection plus Leased Lines plus Content plus Other Network Operating Costs; (2) Outsourcing Services = Customer Services plus Consultants plus Subcontracts; (R) Restated to exclude Enabler's contribution in 1Q06; (A) Adjusted to exclude Tender Offer Costs.

Turnover

Consolidated turnover totalled 198.9 million euros in 1Q07, 4.5% above 1Q06(R), notwithstanding the negative impact of the lower MTRs of 4.8 million euros and lower roaming in tariffs at Optimus. Service revenues increased by 5.9% to 183.2 million euros compared to 1Q06(R), with the main contributions for this positive performance coming from: (i) 21.5% higher service revenues at Sonaecom Fixed, driven by strong growth in both operator revenues of 22.8% and in customer revenues of 20.2%, the former explained by the increase of voice traffic and leased lines, and the latter mainly due to the strong performance of the direct access business; and (ii) 0.9% increase in Optimus' service revenues, with the 6.1% growth in customer revenues offsetting the negative impact of lower MTRs on operator revenues, for the second consecutive quarter since the programmed reduction in MTRs began.

Operating costs

In 1Q07, although total operating costs excluding COGS were 3.8% higher than in 1Q06(R), as a percentage of service revenues this represented an improvement of 1.6pp to 76.6%, when compared to 78.2% in 1Q06(R). The main drivers of the higher cost level were: (i) 7.3% higher network costs when compared to 1Q06(R), driven by the 27.7% increase in leased line costs and the growth of energy and rental costs, associated with the extension of both Optimus' 3G network and Sonaecom Fixed's direct access network; that were not fully compensated by the lower maintenance costs in the quarter by 14.6%, resulting from the renegotiation of the outsourcing network maintenance contract at Optimus, completed during 1Q06; and (ii) 9.2% higher general & administrative costs, mainly explained by the

increased post paid client base at Optimus and the consequent billing requirements and related expenses. COGS increased by 39% in 1Q07 when compared to 1Q06(R), as a result of a one-off discount of 3.5 million euros from equipment suppliers at Optimus in 1Q06 and due to the higher subsidization costs in the quarter aimed at accelerating Optimus' customer growth.

Marketing & sales costs were down by 3.3% compared to 1Q06(R), driven by Sonaecom Fixed lower promotional effort and the lower amount of commissions paid in the quarter, the latter due to the lower customer acquisition rate in 1Q07. This more than compensated the higher marketing & sales costs at Optimus. Outsourcing services decreased by 3.1%, mainly as a result of lower call centre costs at Optimus.

Provisions and impairment losses increased to 3.6 million euros in 1Q07 from 1.9 million euros in 1Q06(R), due to higher provisions for bad debt at Sonaecom Fixed in relation to its wholesale business, despite a 68.0% reduction in provisions for inventories due to improvements in stock management at Optimus.

EBITDA

Consolidated EBITDA totalled 34.0 million euros in 1Q07 generating a margin of 17.1%, compared to an EBITDA of 38.1 million euros and a margin of 20.0% in 1Q06(R), driven by the lower EBITDA contribution from Optimus and notwithstanding the positive EBITDA performance at Sonaecom Fixed and SSI: (i) Optimus generated an EBITDA of 35.0 million euros, compared to 44.4 million euros in 1Q06, mainly reflecting a one off benefit in the form of credit from equipment suppliers in 1Q06, the lower MTRs and the higher handset subsidization costs incurred in 1Q07; despite the improvement in customer revenues resulting from the investments in its convergent product and mobile internet access solutions; (ii) Sonaecom Fixed recorded a positive EBITDA of 0.2 million euros compared to a negative EBITDA of 4.5 million euros in 1Q06, reflecting the success of its direct access model strategy; and (iii) SSI EBITDA increased by 7.2% to 1.20 million euros when compared to 1Q06(R), pushed by higher service revenues and by better cost management and efficiency in the division. Público's EBITDA was negative 1.2 million euros, an improvement compared to a negative 1.9 million euros in 1Q06, due to the re-dimensioned cost base achieved.

Net profit

Depreciation and amortization charges increased by 13.0% in 1Q07, from 32.4 million euros in 1Q06(R) to 36.6 million euros, due to the higher asset base resulting from the extension of Optimus' UMTS/HSDPA network and the extension of Sonaecom Fixed access network capillarity.

Net financial charges increased by 16.4% to 4.1 million euros in 1Q07, as compared to 3.6 million euros in 1Q06(R), explained primarily by higher financial expenses, up by 7.9 million euros to 13.3 million euros due to: (i) the higher average cost of debt of 4.49% in 1Q07, compared to 3.31%, in 1Q06(R); and (ii) the temporarily higher gross debt in the form of shareholder loans granted by Sonae SGPS, totalling 1.2 billion euros, related to the cash funding of the guarantee for the public tender offer for PT, that generated net interest expenses of 1.2 million euros. Financial income in 1Q07 of 9.2 million euros includes the capital gain of 2.5 million euros from the sale of Sonaecom's 1% shareholding in PT.

The tax line in 1Q07 showed a benefit of 0.8 million euros, compared to a benefit of 2.5 million euros in 1Q06(R) and comprised a current tax cash charge of 0.3 million euros and movements in deferred tax assets that generated a net benefit of 1 million euros compared to a net benefit of 2.5 millions in 1Q06(R), the latter driven by the recognition of additional deferred tax assets at Optimus.

Due to the lower level of EBITDA, higher depreciation & amortization charges and higher net financial charges, net results were negative 5.9 million euros, down from positive 4.6 million euros in 1Q06(R). Net results group share were negative 6.0 million euros and reflect

the impact on minority interest of the share-for-share exchange agreements with EDP and Parpública, reached during 3Q06.

3.2. Consolidated balance sheet

Million euros
CONSOLIDATED BALANCE SHEET	1Q06	1Q07	y.o.y	4Q06	q.o.q
Total Net Assets	1,456.1	1,676.4	15.1%	1,720.2	-2.5%
Non Current Assets	1,016.5	1,226.1	20.6%	1,343.6	-8.7%
Tangible and Intangible Assets	654.3	654.3	0.0%	661.4	-1.1%
Goodwill	285.6	507.1	77.6%	506.9	0.0%
Investments	2.1	1.9	-6.2%	113.1	-98.3%
Deferred Tax Assets	68.8	62.8	-8.7%	61.8	1.7%
Others	5.7	0.0	-100.0%	0.3	-100.0%
Current Assets	439.7	450.3	2.4%	376.6	19.6%
Trade Debtors	136.4	138.6	1.6%	152.0	-8.8%
Liquidity	190.2	189.5	-0.4%	125.9	50.5%
Others	113.1	122.2	8.0%	98.7	23.7%
Shareholders' Funds	692.1	889.9	28.6%	909.5	-2.2%
Group Share	571.9	889.3	55.5%	909.0	-2.2%
Minority Interests	120.2	0.6	-99.5%	0.5	20.6%
Total Liabilities	764.1	786.5	2.9%	810.7	-3.0%
Non Current Liabilities	485.7	484.9	-0.2%	486.1	-0.2%
Bank Loans	457.1	461.9	1.1%	460.6	0.3%
Provisions for Other Liabilities and Charges	9.1	21.2	132.4%	20.1	5.4%
Others	19.5	1.8	-90.5%	5.4	-65.8%
Current Liabilities	278.4	301.6	8.3%	324.6	-7.1%
Bank Loans	0.4	0.8	115.9%	0.1	-
Trade Creditors	145.8	136.9	-6.1%	162.7	-15.8%
Others	132.2	163.9	24.0%	161.9	1.3%
Operating CAPEX (1)	32.0	28.7	-10.2%	52.4	-45.1%
Operating CAPEX as % of Turnover	16.3%	14.5%	-1.8pp	24.7%	-10.3pp
Total CAPEX	36.1	29.6	-17.8%	54.4	-45.5%
EBITDA - Operating CAPEX	7.0	5.2	-25.2%	-19.3	-
Operating Cash Flow (2)	-15.5	-18.6	-19.8%	18.9	-
FCF (3)	-18.8	63.2	-	12.2	-
Gross Debt	461.8	465.6	0.8%	464.0	0.3%
Net Debt	271.7	276.1	1.6%	338.1	-18.3%
Net Debt/ EBITDA last 12 months	1.8 x	1.5 x	-0.2x	1.8 x	-0.3x
EBITDA/Interest Expenses (4)	10.0 x	2.9 x	-7.1x	6.9 x	-4x
Debt/(Debt + Shareholders' Funds)	40.0%	34.4%	-5.7pp	33.8%	0.6pp

(1) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (2) Operating Cash Flow = EBITDA - Operating CAPEX - Change in WC -Non Cash item & Other; (3) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs; (4) Interest Cover.

Capital structure

Consolidated gross debt at the end of 1Q07 stood at 465.6 million euros, similar to the level in December 2006. Consolidated liquidity increased by 63.6 million euros to 189.5 million euros, compared to 125.9 million euros at the end of 4Q06, reflecting the FCF generated in the quarter. Consolidated net debt as end 1Q07 stood at 276.1 million euros, a decrease of 62 million euros compared to end 4Q06.

At the end of 1Q07 and compared to end 4Q06, net debt to annualised EBITDA improved to 1.5x from 1.8x, explained by the lower level of net debt at the end of 1Q07. Interest cover deteriorated to 2.9x, from 6.9x, as a result of a higher cost of debt and the interest related with Sonae SGPS loan in 1Q07, a level that is expected to be normalized in the next quarter, with the shareholder loans from Sonae SGPS having been repaid. Debt to Equity deteriorated marginally to 34.4% from 33.8%, due to the lower level of shareholder funds at the end of 1Q07, as the result of Sonaecom's acquisition of own shares in March 2007.

Net debt at Sonaecom SGPS stood at 180.4 million euros at the end of 1Q07, reflecting a total cash position of 4.7 million euros, external debt of 146.8 million euros and treasury applications made by subsidiaries with Sonaecom of 38.3 million euros.

CAPEX

Consolidated CAPEX was 29.6 million euros and operating CAPEX reached 28.7 million euros, 10.2% lower than in 1Q06, representing 14.5% of turnover. This lower level of operating CAPEX was driven by Optimus lower investment effort in the quarter, down by 28.7% when compared to 1Q06, explained by the lower deployment rate of its UMTS network, that at the end of 1Q07 reached a coverage level of 70% of the Portuguese population, compared to only 40% in 1Q06.

Of total operating CAPEX, 22.5% was related to GSM network, 21.9% was invested in the deployment of UMTS/HSDPA network, 12.4% was related to Information Technology/Information Systems investments, 4.3% was invested in the network to support direct broadband and 2.8% was capitalized Triple Play development costs.

Other balance sheet items

Gross tangible and intangible assets were 1,504 million euros at the end of 1Q07, compared to 1,475 million euros in 4Q06 and cumulative depreciation and amortization totalled 849 million euros, compared to 813 million euros in 4Q06. Total investments reached 1.9 million euros, down by 111.2 million euros when compared to 113.1 million euros in 4Q06, reflecting the sale, in March 2007, of the 1% shareholding in PT valued at 111.1 million euros at end 4Q06, on a mark-to-market basis. At end 1Q07, Sonaecom shareholders' funds reflect the acquisition, in March 2007, of a total of 1.89 million own shares valued at 8.9 million euros on a mark-to-market basis, thus reducing shareholders' funds accordingly. These own shares were acquired with the sole purpose of covering the obligations under Sonaecom's Medium Term Incentive Plans attributed to its employees.

FCF

FCF	-18.8	-17.3	63.2	-	12.2	-
Income taxes	-0.4	-0.1	-0.1	28.8%	-0.4	77.4%
Financial results	-2.1	-2.4	-4.2	-75.7%	-4.6	8.8%
Tender Offer Costs	0.0	0.0	-13.1	-	-1.6	-
Own Shares	0.0	0.0	-8.9	-	0.0	-
Financial Investments	-0.8	-0.8	108.2	-	0.0	-
Operating Cash Flow	-15.5	-14.0	-18.6	-32.9%	18.9	-
Non Cash Items & Other	2.3	2.5	0.8	-68.6%	3.0	-73.6%
Change in WC	-24.8	-22.7	-24.7	-8.7%	35.1	-
EBITDA-Operating CAPEX	7.0	6.1	5.2	-14.6%	-19.3	-
LEVERED FREE CASH FLOW	1Q06	1Q06(R)	1Q07	y.o.y	4Q06	q.o.q
Million euros

(R) Restated to exclude Enabler's contribution in 1Q06.

Consolidated FCF in 1Q07 was positive 63.2 million euros, compared to a negative 17.3 million euros in 1Q06(R), primarily as a result of the proceeds of 108 million euros from the sale of Sonaecom's 1% shareholding in PT, at an average price of 9.61 euros per share, compared to the average purchase price of 9.38 euros per share during 2Q06. This more than compensated for the cash outflow of 8.9 million euros in relation to the acquisition of own shares at an average price of 4.71 euros per share, the disbursement of 13.1 million euros related to the tender offer costs and the higher net financial charges in the quarter.

Operating cash flow was negative 18.6 million euros in 1Q07, down from negative 14.0 million euros in 1Q06(R), mainly due to: (i) lower EBITDA generated in the quarter; and (ii) a 24.7 million euros deterioration in working capital, similar to last year's performance, mainly explained by lower credit from fixed assets suppliers at Optimus and higher level of payments to trade creditors at Sonaecom Fixed.

4. Optimus

During the quarter, Optimus continued to exploit the increasing importance of mobile data communications, by further developing existing wireless internet solutions and by promoting its fixed-mobile convergent products, reflected in higher active users and customer revenues. Active customers increased by 58.6 thousand in the quarter compared to an increase of 8 thousand in 1Q06.

4.1. Operational data

OPTIMUS OPERATIONAL KPI's	1Q06	1Q07	y.o.y	4Q06	q.o.q
Customers (EOP) ('000)	2,383.4	2,629.2	10.3%	2,601.9	1.1%
Net Additions ('000)	30.2	27.3	-9.5%	110.4	-75.3%
% Pre-paid Customers	80.9%	75.9%	-5.1pp	77.8%	-1.9pp
Active Customers (1)	1,890.1	2,117.1	12.0%	2,058.4	2.8%
Data as % Service Revenues	13.4%	16.0%	2.7pp	16.3%	-0.3pp
Total #SMS/month/user	49.2	45.0	-8.5%	49.1	-8.3%
MOU (2) (min.)	113.7	116.4	2.3%	117.9	-1.3%
ARPU (euros)	19.3	17.7	-8.5%	19.1	-7.5%
ARPM (3) (euros)	0.17	0.15	-11.6%	0.16	-6.3%
CCPU (4) (euros)	14.4	14.3	-0.7%	15.7	-9.0%
SAC&SRC (5) ( '000 000 euros)	18.7	27.1	44.6%	29.8	-9.4%
Employees (6)	1,067	1,034	-3.1%	1,055	-2.0%
Shared Services Division	790	766	-3.0%	776	-1.3%

(1) Active Customers with Revenues generated on last 90 days; (2) Minutes of Use per Customer per month; (3) Average Revenue per Minute; (4) Cash Cost per Customer = Total Operational Costs per Customer less Equipment Sales; (5) Total Acquisition & Retention Costs; (6) Includes Shared Services Division.

Growth initiatives

During 1Q07, Optimus reinforced its wireless broadband leadership and was able to push up data usage through the extension of its Kanguru product range, with the pioneering launch of an updated version of its broadband internet solution, based on HSDPA technology, offering speeds up to 7.2Mbps. Also, new customized services were offered to extract more value from voice and messaging, such as add-on voice and chat plans to the base tariff plans with specific discounted prices, and the reinforcement of the 3G handset range available, supported by promotional campaigns focused on down priced, more appealing and exclusive equipment on offer.

Customer base

Optimus' customer base increased by 10.3% to 2.6 million, at the end of 1Q07, compared to 2.4 million at the end of 1Q06, with net additions of 27.3 thousand in 1Q07, reflecting the success of its growth strategy. Active customers at the end of 1Q07 totalled 2.1 million, as compared to 1.9 million in 1Q06, an increase of 12.0% over 1Q06. Net additions of active customers in the quarter were 58.6 thousand, 7.4 times higher than in 1Q06. The new products launched, particularly Home and Kanguru, continued to be the main drivers of customer growth at Optimus, performing ahead of expectations and pushing up voice and data usage in the quarter.

During 1Q07, Optimus customers generated an ARPU of 17.7 euros, down from an ARPU of 19.3 euros in 1Q06, of which 13.5 euros related to customer monthly bill and 4.2 euros related to operator revenues. The lower ARPU is mainly explained by the decrease of 20.9% in operator revenues ARPU, due to the phased reductions in MTRs, and to a lesser extent the decrease in voice ARPU, explained by the higher price pressures on voice tariffs mainly on the SME segment.

Data usage

Data revenues represented 16.0% of service revenues in 1Q07, an improvement of 2.7pp over 1Q06, as the result of Optimus' promotional focus on increasing usage of data services and the success of its wireless broadband solutions. Non-SMS related data services accounted for 47% of total data revenues in 1Q07, compared to 38% in 1Q06.

Traffic

In 1Q07, total voice traffic1 was 12.9% higher than that recorded in 1Q06, with minutes of use per customer increasing by 2.3% to 116.4 minutes, compared to 113.7 minutes in 1Q06, reflecting the continuous success of Optimus' investment effort to enhance voice usage.

4.2. Financial data

Million euros
OPTIMUS CONSOLIDATED INCOME STATEMENT	1Q06	1Q07	y.o.y	4Q06	q.o.q
Turnover	141.2	142.8	1.1%	156.7	-8.9%
Service Revenues	133.7	134.9	0.9%	142.2	-5.1%
Customer Revenues	97.2	103.1	6.1%	106.9	-3.5%
Operator Revenues	36.4	31.8	-12.8%	35.3	-9.9%
Equipment Sales	7.6	7.9	4.0%	14.5	-45.9%
Other Revenues	8.9	8.4	-5.6%	8.4	0.3%
Operating Costs	103.8	114.9	10.6%	128.3	-10.5%
COGS	8.8	16.7	90.0%	23.6	-29.3%
Interconnection & Contents	31.4	32.6	3.8%	34.7	-6.1%
Leased Lines & Other Network Operating Costs	13.1	14.2	8.0%	14.1	0.4%
Personnel Costs	12.6	13.1	3.9%	14.2	-8.1%
Marketing & Sales	14.6	15.3	4.8%	18.5	-17.1%
Outsourcing Services (1)	13.4	12.5	-7.1%	12.5	0.0%
General & Administrative Expenses	7.2	7.9	9.6%	7.9	-1.1%
Other Operating Costs	2.7	2.7	-1.7%	2.7	-2.4%
Provisions and Impairment Losses	2.0	1.4	-30.2%	2.3	-41.2%
Service Margin (2)	102.3	102.3	0.1%	107.5	-4.8%
Service Margin (%)	76.5%	75.8%	-0.7pp	75.6%	0.2pp
EBITDA	44.4	35.0	-21.2%	34.5	1.4%
EBITDA Margin (%)	31.4%	24.5%	-6.9pp	22.0%	2.5pp
Depreciation & Amortization	28.2	31.6	12.1%	30.4	4.1%
EBIT	16.2	3.3	-79.3%	4.1	-18.5%
Net Financial Results	-3.1	-3.7	-17.5%	-3.0	-21.2%
Financial Income	0.6	1.0	67.8%	1.4	-24.7%
Financial Expenses	3.8	4.7	25.9%	4.4	6.8%
EBT	13.0	-0.3	-	1.1	-
Tax results	2.8	1.1	-60.8%	-2.8	-
Net Results	15.8	0.8	-95.2%	-1.7	-
Operating CAPEX (3)	23.0	16.4	-28.7%	42.0	-60.9%
Operating CAPEX as % of Turnover	16.3%	11.5%	-4.8pp	26.8%	-15.3pp
EBITDA - Operating CAPEX	21.4	18.6	-13.1%	-7.5	-
Total CAPEX	26.3	17.1	-35.1%	44.0	-61.2%
FCF (4)	2.9	1.7	-40.8%	16.4	-89.5%
Gross Debt	315.2	318.4	1.0%	317.3	0.4%
Net Debt	225.1	216.4	-3.8%	217.1	-0.3%
Net Debt/ EBITDA last 12 months	1.3 x	1.4 x	0.1x	1.3 x	0.1x
EBITDA/Interest Expenses	18.0 x	10.1 x	-7.9x	10.9 x	-0.8x
Debt/(Debt + Shareholders' Funds)	45.0%	47.1%	2.1pp	47.1%	0pp

(1) Outsourcing Services = Customer Services plus Consultants plus Subcontracts; (2) Service Margin = Service Revenues minus Interconnection & Content Costs; (3) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (4) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs.

Turnover

Service revenues increased by 0.9% to 134.9 million euros, compared to 133.7 million euros in 1Q06, driven by the 6.1% growth in customer revenues that fully compensated the negative impact of lower MTRs on operator revenues, by 4.8 million euros, and despite the decrease of roaming in revenues explained by the lower roaming in tariffs. This positive performance is the result of the success of Optimus' growth strategy carried out during the last 2 years and focused on obtaining more value from voice and data, growing market share and broadening market boundaries. Excluding the impact of the MTRs, service revenues would have increased by 4.5% as compared to 1Q06.

EBITDA

EBITDA in 1Q07 reached 35.0 million euros and a margin of 24.5%, a decrease of 21.2% and 6.9pp below 1Q06, respectively. This decline was primarily a result of higher total

1 Total voice traffic = total incoming traffic plus total outgoing traffic plus total Roaming out

operating costs and lower MTRs that led to a reduction of 2.3 million euros in EBITDA compared to 1Q06, despite the 1.1% increase in turnover. Excluding the impact of the MTRs and the one-off discount from equipment suppliers in 1Q06, EBITDA would have decreased by 8.8%, as compared to 1Q06, generating an EBITDA margin of 26.1%, 5.3pp below 1Q06.

Total OPEX excluding COGS and marketing & sales reached 82.9 million euros, 3.0% higher than 1Q06 level. Leased line costs were up by 21.9%, primarily due to the extension of Optimus' 3G/HSDPA network and resulting higher number of circuits rented, not compensated by the lower network maintenance costs of 19.9%, due to Optimus' network price renegotiation completed during 1Q06. Outsourcing services decreased by 7.1%, reflecting Optimus' effort to contain operating costs and search for synergies within the Group.

Marketing & sales and handset subsidisation costs reached 24.1 million euros in 1Q07, 8.3 million euros higher than in 1Q06, reflecting the benefit of 3.5 million euros one-off discount from equipment suppliers in 1Q06, and higher subsidization costs related with the promotion of 3G handsets in the quarter and the advertising of convergent products.

5. Sonaecom Fixed

Sonaecom Fixed consolidated its direct access business during the 1Q07 and grew its direct customer base by 70.5% and customer revenues by 20.2%, compared to 1Q06. In the quarter, Sonaecom Fixed introduced significant improvements in its broadband offer in terms of speed, price and customer experience.

SONAECOM FIXED OPERATIONAL KPI's	1Q06	1Q07	y.o.y	4Q06	q.o.q
Total Services (EOP) (1)	336,932	393,483	16.8%	380,729	3.3%
Direct	181,459	309,461	70.5%	281,541	9.9%
ULL	159,919	281,481	76.0%	256,625	9.7%
Other	21,541	27,980	29.9%	24,916	12.3%
Indirect	155,473	84,022	-46.0%	99,188	-15.3%
Voice	76,277	46,311	-39.3%	53,897	-14.1%
Internet Broadband	14,103	11,752	-16.7%	11,994	-2.0%
Internet Narrowband	65,093	25,959	-60.1%	33,297	-22.0%
Total Accesses (2)	199,870	332,546	66.4%	310,338	7.2%
PSTN/ISDN	106,719	179,093	67.8%	167,227	7.1%
ULL ADSL	79,048	141,701	79.3%	131,117	8.1%
Wholesale ADSL	14,103	11,752	-16.7%	11,994	-2.0%
Unbundled Central Offices with transmission	138	149	8.0%	144	3.5%
Unbundled Central Offices with ADSL2+	130	141	8.5%	137	2.9%
Direct access as % Customer Revenues	56.9%	75.7%	18.8pp	71.5%	4.2pp
Total Voice Traffic ('000 Min.) (3)	371,030	377,708	1.8%	357,423	5.7%
Total Internet Traffic
Narrowband ('000 Min.)	78,908	31,638	-59.9%	41,433	-23.6%
Broadband ('000 Gigabytes)	2,044	4,824	136.0%	3,922	23.0%
Employees	170	165	-2.9%	172	-4.1%

5.1. Operational data

(1) Services restated according to a "revenue generator unit" criteria; (2) Reporting criteria according to Anacom standard: ISDN services equivalent to 2 or 30 accesses depending on whether they are basic rate (BRI) or primary rate (PRI); Accesses do not include indirect voice or narrowband services and data and wholesale services; (3) Includes Wholesale and Retail traffic.

Growth initiatives

During 1Q07, Sonaecom Fixed upgraded its residential double play product with free calls to 16 top international destinations, increasing the price point, and further strengthening its competitive positioning versus VoIP players.

At the end of the quarter, the company increased the promotion of its double play offering of voice and internet enhanced with the access to IPTV and Home Video, in order to protect pricing, reduce levels of churn and improve loyalty of its direct access customer base. With no additional price charged, Sonaecom Fixed broadband solutions, with bandwidths up to 12Mbps and 24Mbps, started offering the access to the 4 Portuguese basic free-to-air generalist channels and to 17 other additional international channels, with the possibility of

subscribing 3 additional packages of channels with more than 90 channels available and a home video service with an assortment of more than 600 films. This triple play service is available to approximately 1 million Portuguese eligible households, 27% of the Portuguese population.

Customer base

During 1Q07, Sonaecom Fixed continued its transformation process into a direct access business model. At the end of 1Q07, Sonaecom Fixed total services2 reached 393.5 thousand, an increase of 16.8% compared to 1Q06 and 3.3% above 4Q06. The acquisition of direct access services more than compensated for the decline in indirect access customers, with total direct services representing 78.7% of Sonaecom Fixed customer base in 1Q07, compared to 53.9% in 1Q06, and to 74.0% in 4Q06. Average monthly direct net adds exceeded 9 thousand services in 1Q07.

Traffic

Sonaecom Fixed voice traffic increased by 1.8% in 1Q07 to 377.7 million minutes compared to 371.0 million minutes in 1Q06, mainly as a result of the increase of direct voice traffic by 71%, more than compensating for the decrease of indirect voice traffic of 30%.

2 Services were restated according to a "revenue generator unit" criteria.

5.2. Financial data

SONAECOM FIXED INCOME STATEMENT 1Q06 1Q07 y.o.y 4Q06 q.o.q Turnover 44.5 54.0 21.4% 54.0 0.0% Service Revenues 44.5 54.0 21.5% 54.0 0.0% Customer Revenues 22.0 26.4 20.2% 26.0 1.6% Direct Access Revenues 12.5 20.0 59.9% 18.6 7.6% Indirect Access Revenues 9.2 5.7 -38.0% 6.6 -13.4% Other 0.3 0.7 157.2% 0.8 -13.0% Operator Revenues 22.5 27.7 22.8% 28.1 -1.5% Equipment Sales 0.0 0.0 - 0.0 7.1% Other Revenues 1.4 1.0 -28.5% 1.8 -44.5% Operating Costs 50.6 52.6 4.0% 55.7 -5.4% COGS 0.0 -0.1 - 0.4 - Interconnection 25.8 28.1 9.1% 26.5 6.1% Leased Lines & Other Network Operating Costs 7.8 8.9 13.4% 8.3 6.8% Personnel Costs 2.7 2.4 -12.4% 2.3 3.4% Marketing & Sales 4.5 2.8 -37.9% 7.2 -61.4% Outsourcing Services (1) 7.6 7.9 3.9% 7.9 -0.4% General & Administrative Expenses 2.1 2.3 5.0% 2.5 -11.0% Other Operating Costs 0.1 0.4 - 0.5 -15.7% Provisions and Impairment Losses -0.2 2.2 - 0.0 - Service Margin (2) 18.7 25.9 38.5% 27.5 -5.8% Service Margin (%) 42.1% 48.0% 5.9pp 51.0% -3pp EBITDA -4.5 0.2 - 0.2 22.8% EBITDA Margin (%) -10.1% 0.4% 10.6pp 0.4% 0.1pp Depreciation & Amortization 3.8 4.7 24.5% 4.8 -1.9% EBIT -8.3 -4.5 45.9% -4.6 3.0% Net Financial Results -0.5 -0.8 -48.2% -1.0 25.1% Financial Income 0.0 0.0 64.3% 0.0 2.2% Financial Expenses 0.5 0.8 49.0% 1.1 -24.0% EBT -8.8 -5.3 40.4% -5.7 7.0% Tax results 0.0 0.0 8.3% 0.0 8.3% Net Results -8.8 -5.3 40.3% -5.7 7.0% Operating CAPEX (3) 8.7 12.2 41.3% 10.5 17.0% Operating CAPEX as % of Turnover 19.5% 22.6% 3.2pp 19.4% 3.3pp EBITDA - Operating CAPEX -13.2 -12.0 8.9% -10.3 -16.8% Total CAPEX 8.7 12.2 41.3% 10.5 16.4% FCF (4) -18.7 -14.0 25.4% -1.4 - Gross Debt 71.4 77.3 8.2% 71.7 7.8% Net Debt 69.5 77.1 11.0% 63.2 22.1%	Million euros
Net Debt/ EBITDA last 12 months -3.9 x -51.6 x -47.7x -10.1 x -41.5x
EBITDA/Interest Expenses -8.4 x 0.3 x 8.7x 0.2 x 0.1x
Debt/(Debt + Shareholders' Funds) 84.9% 81.6% -3.3pp 76.0% 5.6pp

(1) Outsourcing Services = Customer Services plus Consultants plus Subcontracts; (2) Service Margin = Service Revenues minus Interconnection Costs; (3) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (4) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs.

Turnover

Turnover in 1Q07 totalled 54.0 million euros, an increase of 21.4% over 1Q06, driven mainly by the significant increase in direct access revenues, up 59.9%, and by operator revenues, up 22.8%, which represented 37.0% and 51.3% of service revenues respectively, as compared to 28.1% and 50.6% respectively in 1Q06. Direct access revenues accounted for 75.8% of customer revenues in the quarter, confirming Sonaecom Fixed transformation to a direct access business with its current double play offering.

EBITDA

Sonaecom Fixed generated a positive EBITDA of 0.2 million euros, compared to a negative 4.5 million euros in 1Q06, an improvement that is primarily due to the performance of the ULL direct business that began to generate a positive contribution to profitability since 3Q06.

Operating costs at Sonaecom Fixed increased by 4.0% as compared to 1Q06, reflecting the effort in developing and expanding the direct access broadband business: (i) leased lines and other network operating costs were up by 13.4%, mainly as a result of a higher demand for circuits and higher maintenance costs related to the increased number of equipment in unbundled central offices; and (ii) interconnection costs were up by 9.1%, due to the

increased voice traffic in 1Q07 compared to 1Q06, as well as the higher ULL monthly fees, driven by the larger number of direct customer base. Marketing & sales costs decreased by 37.9%, as a result of lower advertising costs and commissions related with the lower level of customer acquisitions when compared to 1Q06. Personnel costs fell by 12.4%, explained by lower number of employees in 1Q07 compared to 1Q06, consistent with cost contention and integration efforts.

During the quarter, Sonaecom Fixed's service margin increased by 5.9pp over 1Q06, with an implied margin of 48.0% as compared to 42.1% in 1Q06.

6. Público

Público focused on implementing its annouced strategy with the launch, in mid February, of a totally new newspaper and supplements and the introduction of full colour. Work continued on the re-dimensioning of the cost base. First results are encouraging with sales post-relaunch showing increases in paid circulation and the inversion of the strong negative trend occurring since summer 2006.

6.1. Operational data

PÚBLICO OPERATIONAL KPI's	1Q06	1Q07	y.o.y	4Q06	q.o.q
Average Paid Circulation (1)	44,783	41,274	-7.8%	40,404	2.2%
M arket Share of Advertising (%) (2)	15.6%	14.4%	-1.2pp	15.4%	-1pp
Employees	354	263	-25.7%	266	-1.1%

(1) Estimated value updated in the following quarter; (2) 1Q07 = February YTD.

Público's average paid circulation, reflecting 2 months circulation of the old format newspaper, decreased by 7.8%, from an average level of 44.8 thousand units in 1Q06 to 41.3 thousand units in 1Q07, as a result of the continuous reduction in the size of the paid press market, as well as the competitive pressures of tabloid newspapers and free newspapers. Nevertheless, paid circulation in March, after the re-launching of the newspaper and supported by a strong promotional campaign, increased by 3.6 thousand units per day, a good sign regarding future performance.

Público's advertising market share was impacted by circulation performance, reaching an average of 14.4% at the end of 1Q07, down 1.2pp as compared to end 1Q06. Market readership data, for the 1Q07, presented some encouraging numbers, with Público's total audience reaching 4.9% of the market readers3 , up by 0.9pp as compared to 4Q06 and by 0.6pp as compared to 1Q06.

Público´s online website continued to be the leader in unique visitors and visits in Portugal, with the integration of both the online and offline being further accelerated in the quarter. Online advertising, although still a small number, grew by 68% when compared to 1Q06, with Público.pt reaching for the first time EBITDA positive in the quarter.

³ Universe: individuals with 15 or more years old, residing in Portugal (8,314,409 readers)

6.2. Financial data

M illion euros
PÚBLICO CONSOLIDATED INCOM E STATEM ENT	1Q06	1Q07	y.o.y	4Q06	q.o.q
Turnover	8.72	7.18	-17.8%	8.98	-20.1%
Advertising Sales (1)	3.43	3.22	-6.1%	4.37	-26.3%
Newspaper Sales	2.95	2.86	-3.0%	2.97	-3.6%
Associated Product Sales	2.35	1.10	-53.3%	1.64	-33.4%
Other Revenues	0.13	0.07	-46.2%	0.17	-59.8%
Operating Costs	10.72	8.37	-21.9%	12.04	-30.5%
COGS	2.86	1.71	-40.2%	2.21	-22.8%
Personnel Costs	3.74	2.83	-24.2%	5.10	-44.5%
M arketing & Sales	0.51	0.43	-15.2%	0.87	-50.5%
Outsourcing Services (2)	2.79	2.67	-4.5%	2.95	-9.7%
General & Administrative Expenses	0.88	0.74	-16.1%	0.90	-18.0%
Other Operating Costs	-0.04	0.00	-	0.01	-80.0%
Provisions and Impairment Losses	0.05	0.05	5.0%	0.00	-
EBITDA	-1.92	-1.18	38.5%	-2.89	59.1%
EBITDA M argin (%)	-22.0%	-16.5%	5.5pp	-32.2%	15.7pp
Depreciation & Amortization	0.22	0.17	-25.1%	0.17	-1.2%
EBIT	-2.14	-1.35	37.1%	-3.06	55.9%
Net Financial Results	-0.05	-0.03	38.8%	-0.13	77.4%
Financial Income	0.00	0.00	0.0%	0.00	-50.0%
Financial Expenses	0.05	0.03	-38.0%	0.14	-77.0%
EBT	-2.19	-1.38	37.1%	-3.19	56.8%
Tax results	-0.01	-0.01	0.0%	-0.15	96.6%
Net Results	-2.20	-1.38	37.0%	-3.34	58.6%
Operating CAPEX (3)	0.09	0.25	166.0%	0.19	31.6%
Operating CAPEX as % of Turnover	1.1%	3.5%	2.4pp	2.1%	1.4pp
EBITDA - Operating CAPEX	-2.01	-1.43	28.9%	-3.08	53.5%
Total CAPEX	0.09	0.25	166.0%	0.19	31.6%
FCF (4)	-2.17	-3.36	-54.3%	-3.05	-10.1%
Gross Debt	6.00	4.40	-26.7%	0.93	-
Net Debt	5.69	4.07	-28.6%	0.71	-
Net Debt/ EBITDA last 12 months	-1.8 x	-0.5 x	1.3x	-0.1 x	-0.4x
EBITDA/Interest Expenses	-43.6 x	-40.7 x	2.9x	-22.1 x	-18.7x
Debt/(Debt + Shareholders' Funds)	435.4%	171.7%	-263.6x	194.6%	-22.8pp

(1) Includes Contents; (2) Outsourcing Services = Customer Services plus Consultants plus Subcontracts; (3) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (4) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs.

During 1Q07, turnover decreased by 17.8% to 7.2 million euros, compared to 8.7 million euros in 1Q06, due primarily to: (i) the decrease in associated product sales by 53.3%, as a result of market competition and saturation; despite the decrease in turnover, profitability of the associated products has increased significantly versus 1Q06; (ii) lower advertising sales that were down by 6.1%; and (iii) the decrease in newspaper sales of 3.0%.

EBITDA reached a negative 1.2 million euros, an improvement compared to a negative 1.9 million euros in 1Q06, already reflecting the fixed cost savings reached in personnel costs, down by 24.2% when compared to 1Q06, and general & administrative costs, down by 16.1% over 1Q06, as a result of the restructuring plan implemented in the second half of 2006.

7. Software and Systems Information

SSI division continued to achieve a good set of operational and financial results, by focusing on expanding WeDo's range of clients and projects in implementation through its Revenue Assurance Product (RAID).

7.1. Operational data
SSI OPERATIONAL KPI's	1Q06	1Q06(R)	1Q07	y.o.y	4Q06	q.o.q
IT Serv Revenues/Employee( '000 euros) (1)	24.1	26.8	29.7	10.7%	32.2	-7.9%
Equipment Sales as % Turnover (2)	26.9%	38.3%	33.6%	-4.7pp	36.7%	-3.1pp
Equipment Sales/Employee (2) ( '000 euros)	543.6	543.6	461.4	-15.1%	587.5	-21.5%
EBITDA/Employee ( '000 euros)	3.0	3.3	3.5	4.4%	5.3	-34.5%
Employees	645	335	344	2.7%	336	2.4%

(1) Excluding employees dedicated to Equipment Sales; (2) Bizdirect; (R) Restated to exclude Enabler's contribution in 1Q06.

SSI's IT service revenues per employee totalled 29.7 thousand euros in 1Q07, 10.7% above 1Q06(R) while equipment sales per employee decreased by 15.1% to 0.46 million euros in 1Q07 compared to 0.5 million euros in 1Q06(R). Headcount increased by 9 to 344 as compared to 1Q06(R), due to the launch of Saphety, a company carved out from Sonaecom Fixed in December 2006, and the resulting need for internal consultants.

WeDo continued to invest in building its international footprint, acquiring three new key accounts during the 1Q07 for implementation of its RAID solution with Mobilink in Pakistan, a mobile operator of the Orascom Group; implementation of a churn and segmentation project with Movistar in Mexico, a mobile operator of the Telefonica Group; and execution of a roaming project with STA, a fixed and mobile operator from Andorra.

7.2. Financial data

Million euros
SSI CONSOLIDATED INCOME STATEMENT	1Q06	1Q06(R)	1Q07	y.o.y	4Q06	q.o.q
Turnover	22.10	15.54	14.96	-3.7%	17.39	-13.9%
Service Revenues	16.16	9.59	9.94	3.6%	11.01	-9.7%
Equipment Sales	5.95	5.95	5.02	-15.5%	6.38	-21.2%
Other Revenues	0.53	0.09	0.19	120.7%	0.09	115.7%
Operating Costs	20.68	14.46	13.94	-3.6%	15.65	-10.9%
COGS	5.71	5.71	4.83	-15.5%	6.16	-21.6%
Personnel Costs	7.90	4.06	5.00	23.0%	4.10	22.0%
Marketing & Sales	0.21	0.15	0.28	84.7%	0.26	7.8%
Outsourcing Services (1)	4.04	3.01	2.11	-29.9%	3.46	-39.0%
General & Administrative Expenses	2.75	1.48	1.57	5.8%	1.65	-4.9%
Other Operating Costs	0.07	0.05	0.16	-	0.04	-
Provisions and Impairment Losses	0.04	0.04	0.01	-70.0%	0.03	-57.1%
EBITDA	1.91	1.12	1.20	7.2%	1.79	-32.9%
EBITDA Margin (%)	8.6%	7.2%	8.0%	0.8pp	10.3%	-2.3pp
Depreciation & Amortization	0.42	0.34	0.33	-0.3%	0.31	8.1%
EBIT	1.49	0.79	0.87	10.4%	1.49	-41.5%
Net Financial Results	0.17	0.15	0.05	-67.3%	0.01	-
Financial Income	0.27	0.22	0.25	10.8%	0.01	-
Financial Expenses	0.10	0.07	0.20	173.6%	0.00	-
EBT	1.66	0.94	0.92	-2.0%	1.50	-38.6%
Tax results	-0.58	0.32	-0.25	-	0.87	-
Net Results	1.08	0.61	0.67	9.0%	2.36	-71.7%
Group Share	1.08	0.61	0.61	-1.0%	2.36	-74.3%
Attributable to Minority Interests	0.00	0.00	0.06	-	0.00	-
Operating CAPEX (2)	0.23	0.18	0.15	-20.7%	0.14	5.8%
Operating CAPEX as % of Turnover	1.0%	1.2%	1.0%	-0.2pp	0.8%	0.2pp
EBITDA - Operating CAPEX	1.69	0.94	1.06	12.7%	1.66	-36.2%
Total CAPEX	0.23	0.18	0.39	109.2%	0.89	-56.6%
FCF (3)	-1.05	0.47	-2.02	-	0.34	-
Gross Debt	0.34	0.32	0.40	28.3%	0.37	8.6%
Net Debt	-13.56	-10.04	-10.99	-9.5%	-35.42	69.0%
Net Debt/ EBITDA last 12 months	-1.6 x	-1.9 x	-0.4 x	1.5x	-1.1 x	0.8x
EBITDA/Interest Expenses	119.4 x	70.1 x	601.5 x	531.4x	598.0 x	3.5x
Debt/(Debt + Shareholders' Funds)	1.4%	1.8%	0.8%	-1pp	0.8%	0pp

(1) Outsourcing Services = Customer Services plus Consultants plus Subcontracts; (2) Operating CAPEX excludes Financial Investments and Provisions for sites dismantling; (3) FCF Levered after Financial Expenses but before Capital Flows and Financing related up-front Costs; (R) Restated to exclude Enabler's contribution in 1Q06.

SSI turnover decreased by 3.7% in 1Q07 to 14.9 million euros as compared to 1Q06(R), mainly due to lower IT equipment sales, which decreased by 15.5% to 5.0 million euros, a reflection of the volatility of this revenue stream. This was not compensated by the higher service revenues, up by 3.6%, mainly driven by the 7.0% increase in service revenues at WeDo. In 1Q07, equipment sales represented 33.7% of turnover, compared to 38.3% in 1Q06(R).

SSI EBITDA totalled 1.20 million euros in 1Q07, a 7.2% increase over 1Q06(R), mainly explained by the higher cost efficiency achieved in the quarter, reflected in lower outsourcing services that decreased 29.9% in the quarter, in particular lower IT and consultants outsourcing. FCF was negative 2 million euros in 1Q07, down from a positive 0.47 million in 1Q06(R), explained by the deterioration of working capital in the quarter.

8. Other issues

8.1. Regulatory developments

• On 15 February 2007, ANACOM released information on the terms and conditions for the activity of Mobile Virtual Network Operators, namely the direct relation with the final client, the introduction of specific differentiator numbers and the possibility of free negotiation with network operators for the access to their network.
• On 22 March 2007, ANACOM approved a framework whereby PT can launch retail offers that bundle the monthly fee with traffic, at the same time imposing a further 10% decrease of PT's interconnection charges.

8.2. Corporate developments

• Between 5 and 6 March 2007, Sonaecom acquired a total of 1.89 million own shares, representing 0.52% of the share capital, at an average price of 4.71 euros per share. These acquisitions were carried out to cover obligations under Sonaecom's Medium Term Incentive Plan attributed to employees;
• On 6 March 2007, Sonaecom sold its 1% shareholding in PT, at an average price of 9.61 euros per share. This compares to the average purchase price of 9.38 euros per share during 2Q06, generating a capital gain of 2.5 million euros;
• Consistent with the management changes proposed by Sonae Group on 20 March 2007, at Sonaecom's Board meeting held on 24 April 2007, Belmiro de Azevedo resigned as the Chairman of Sonaecom and Paulo Azevedo was elected to take over his position along with his new role as CEO of the Sonae SGPS. At the same time, Ângelo Paupério was co-opted to the Sonaecom Board and elected as the new CEO.

9. Additional information

Consolidated nominal net debt before application of IAS 39

Million euros
CONSOLIDATED NOMINAL DEBT	1Q06	1Q07	y.o.y	4Q06	q.o.q
Gross Debt	479.5	479.5	0.0%	478.0	0.3%
Liquidity	190.2	189.5	-0.4%	125.9	50.5%
Net Debt	289.3	290.0	0.2%	352.0	-17.6%
Net Debt/ EBITDA last 12 months	1.9 x	1.6 x	-0.3x	1.9 x	-0.3x
Debt/(Debt + Shareholders' Funds)	40.9%	35.0%	-5.9pp	34.4%	0.6pp

Optimus nominal net debt before application of IAS 39

Million euros
OPTIMUS NOMINAL DEBT	1Q06	1Q07	y.o.y	4Q06	q.o.q
Gross Debt	329.2	329.0	0.0%	327.8	0.4%
Liquidity	90.1	102.0	13.2%	100.2	1.8%
Net Debt	239.0	227.0	-5.0%	227.6	-0.3%
Net Debt/ EBITDA last 12 months	1.4 x	1.4 x	0x	1.3 x	0.1x
Debt/(Debt + Shareholders' Funds)	46.1%	48.0%	1.8pp	47.9%	0.1pp

Reconciliation of consolidated net debt

Million euros
CONSOLIDATED NET DEBT	Debt (1)	Shareholder Loans	Liquidity	Net Debt
Aggregate Debt	465.6	312.4	232.2	545.8
Optimus	318.4	0.0	102.0	216.4
Sonaecom Fixed	0.0	77.3	0.2	77.1
Público	0.0	4.4	0.3	4.1
SSI	0.4	0.3	11.3	-10.6
Sonaecom SGPS (2)	146.8	38.3	4.7	180.4
Others	0.0	192.1	113.7	78.4
Intra-groups	0.0	312.4	42.7	269.7
Optimus	0.0	0.0	28.8	-28.8
Sonaecom Fixed	0.0	77.3	0.0	77.3
Público	0.0	4.4	0.0	4.4
SSI	0.0	0.3	9.2	-8.9
Sonaecom SGPS	0.0	38.3	4.4	33.9
Others	0.0	192.1	0.3	191.8
Total	465.6	0.0	189.5	276.1

(1) Debt= Bank Loans plus Other Financial Liabilities; (2) Sonaecom Holding Company Shareholder Loans relates to Treasury Applications from Operating Companies (Operating Companies' Liquidity intra-group).

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET FOR THE QUARTERS ENDED AT 31 MARCH 2007 AND 2006 AND

FOR THE YEAR ENDED AT 31 DECEMBER 2006

(Amounts expressed in Euro)

ASSETS	Notes	March 2007	March 2006	December 2006
NON CURRENT ASSETS: Tangible assets	1.c), 1.h) and 5	492,730,857	482,331,748	494,771,742
Intangible assets	1.d), 1.e) and 6	161,554,371	171,941,716	166,664,974
Goodwill	1.f) and 7	507,080,550	285,593,276	506,902,772
	1.b) and 3
Investments in associated companies Investments available for sale		735,613	864,427	762,437
	1.g) and 8	1,207,320	1,207,320	112,317,225
Other non current debtors		-	1,898,198	-
Deferred tax assets	1.q) and 9	62,819,612	68,827,031	61,786,654
Other non current assets Total non current assets	1.r), 1.s), 1.w) and 10	- 1,226,128,323	3,823,403 1,016,487,119	348,568 1,343,554,372
CURRENT ASSETS:
Inventories	1.i)	21,078,871	28,781,452	15,138,395
Trade debtors	1.j)	138,607,237	136,387,964	151,981,914
Other current debtors	1.j)	17,075,145	21,827,771	20,060,419
Other current assets	1.r), 1.s) and 1.w)	83,070,399	60,710,146	62,687,227
Investments recorded at fair value through profit or loss	1.g) and 11	950,625	1,784,411	849,375
Cash and cash equivalents	1.k) and 12	189,490,045	190,169,400	125,917,344
Total current assets		450,272,322	439,661,144	376,634,674
Total assets		1,676,400,645	1,456,148,263	1,720,189,046
SHAREHOLDERS' FUNDS AND LIABILITIES
SHAREHOLDERS' FUNDS:
Share capital		366,246,868	296,526,868	366,246,868
Reserves	1.t)	529,049,836	275,229,118	556,646,226
Consolidated net income/(loss) for the period		(6,004,250)	146,584	(13,883,168)
		889,292,454	571,902,569	909,009,925
Minority interests		567,984	120,165,976	471,382
Total Shareholders' Funds		889,860,438	692,068,545	909,481,307
LIABILITIES:
NON CURRENT LIABILITIES:
Medium and long-term loans - net of short-term portion	1.l), 1.m) and	461,885,384	457,065,497	460,600,827
Other non current creditors		-	9,596,144	-
Other non current financial liabilities	1.h) and 14	1,316,850	2,037,689	1,614,602
Provisions for other liabilities and charges	1.o) and 15	21,160,436	9,103,510	20,078,571
Deferred tax liabilities		114,914	-	-
Other non current liabilities	.r), 1.s), 1.w) and 24	414,231	7,873,031	3,785,049
Total non current liabilities		484,891,815	485,675,872	486,079,050
CURRENT LIABILITIES:
Short-term loans and other loans	1.l), 1.m) and 13	772,663	357,959	74,607
Trade creditors		136,930,882	145,847,571	162,680,112
Other current financial liabilities	1.h) and 16	1,645,945	2,370,788	1,708,922
Other creditors		19,223,464	13,988,962	17,538,711
Other current liabilities	.r), 1.s), 1.w) and 24	143,075,438	115,838,566	142,626,337
Total current liabilities		301,648,392	278,403,846	324,628,689
Total Shareholders' Funds and liabilities		1,676,400,645	1,456,148,263	1,720,189,046

The notes are an integral part of the consolidated financial statements at 31March 2007 and 2006

The Chief Accountant The Board of Directors

CONSOLIDATED PROFIT AND LOSS ACCOUNT BY NATURE

FOR THE QUARTERS ENDED AT 31MARCH 2007 AND 2006 AND

FOR THE YEAR ENDED AT 31 DECEMBER 2006

(Amounts expressed in Euro)

	Notes	March 2007	March 2006	December 2006
Sales Services rendered Other operating revenues		15,724,760 183,219,065 1,329,424	17,361,095 179,534,392 1,269,547	89,288,539 746,751,737 32,035,543
		200,273,249	198,165,034	868,075,819
Cost of sales External supplies and services Staff expenses Depreciation and amortisation Provisions and impairment losses Other operating costs	17 5 and 6 1.o), 1.v) and 15 1.v)	(22,253,402) (113,908,940) (23,423,800) (36,630,606) (3,605,463) (3,095,966) (202,918,177)	(16,004,263) (111,643,019) (27,018,595) (32,491,391) (1,865,343) (2,611,003) (191,633,614)	(102,115,774) (457,366,138) (102,501,059) (135,670,907) (10,612,459) (11,142,336) (819,408,673)
Tender Offer costs		- (202,918,177)	- (191,633,614)	(30,906,602) (850,315,275)
Gains and losses in associated companies Other financial expenses Other financial income	18 1.m), 1.n), 1.u), 1.v) and 1.n), 1.u), 1.v) and 18	(87,573) (13,250,670) 9,202,055	28,766 (5,418,838) 1,851,585	(162,483) (23,138,426) 5,931,577
Current income/(loss)		(6,781,116)	2,992,933	391,212
Income taxation	1.p), 9 and 19	835,092	2,211,374	(5,259,937)
Consolidated net income/(loss) Attributed to:		(5,946,024)	5,204,307	(4,868,725)
Shareholders of parent company Minority interests	23	(6,004,250) 58,226	146,584 5,057,723	(13,883,168) 9,014,443
Earnings per share Including discontinued operations Basic Diluted		(0.02) (0.02)	0.00 0.00	(0.04) (0.04)
Excluding discontinued operations Basic Diluted		(0.02) (0.02)	0.00 0.00	(0.04) (0.04)

The notes are an integral part of the consolidated financial statements at 31 March 2007 and 2006

The Chief Accountant The Board of Directors

CONSOLIDATED MOVEMENTS IN SHAREHOLDERS' FUNDS

FOR THE QUARTERS ENDED AT 31 MARCH 2007 AND 2006

(Amounts expressed in Euro)

						200 7
					Res erv es
						Res erv es
	Sha re ital cap	Leg al res erv es	Sha re miu pre m	Ow n Sha res	Oth er res erv es	Me diu m T erm Inc ent ive Pla ns	lue Fai r va res erv es	al Tot res erv es	Min orit y Inte ts res	Net e/ (los s) inc om	Tot al
Bal e at 31 De ber 20 06 anc cem	366 ,24 6,8 68	559 ,07	8 7 75, 290 ,37 7	-	(22 ) 5,2 77, 495	952 ,39 0	5,1 21, 876	556 ,64 6,2 26	-	(13 68) ,88 3,1	909 ,00 9,9 26
App of c olid d re sult of 200 6 riat ion ate rop ons	-	443 ,20 9	-	-	(14 77) ,32 6,3	-	-	(13 68) ,88 3,1	-	13, 883 ,16 8	-
me/ (los s) f Con soli he p 31 Ma rch 20 dat ed n et i or t erio d en ded 07 nco	-	-	-	-	-	-	-	-	-	(6,0 ) 04, 250	(6,0 ) 04, 250
Acq uisi tion of sha own res	-	-	-	(8,9 38, 165	) -	-	-	(8,9 ) 38, 165	-	-	(8,9 ) 38, 165
Fair lue va res erv es	-	-	-	-	-	-	(5,1 ) 21, 876	(5,1 ) 21, 876	-	-	(5,1 ) 21, 876
Me diu m T Inc ent ive Pla gni tion erm ns r eco						442 ,77 0		442 ,77 0			442 ,77 0
Adj ust nts in f ign cy t slat ion nd o the me ore cur ren ran res erv es a rs	- -	- -	- -	- -	- (95 1) ,95	-	- -	(95 1) ,95	- -	- -	(95 1) ,95
Bal 31 Ma rch 20 07 e at anc	366 ,24 6,8 68	1,0 02, 287	775 ,29 0,3 77	(8,9 38, 165	) (23 ) 9,6 99, 823	1,3 95, 160	-	529 ,04 9,8 36	- -	(6,0 ) 04, 250	889 ,29 2,4 54
Min orit y in ter est s
Bal e at 31 De ber 20 06 anc cem	-	-	-	-	-	-	-	-	471 ,38 2	-	471 ,38 2
Min orit y in ter est ults s on res	-	-	-	-	-	-	-	-	58, 226	-	58, 226
Oth han er c ges	-	-	-	-	-	-	-	-	38, 376	-	38, 376
Bal 31 Ma rch 20 e at 07 anc	-	-	-	-	-	-	-	-	567 4 ,98	-	567 4 ,98
Tot al	366 ,24 6,8 68	1,0 02, 287	775 ,29 0,3 77	(8,9 ) 38, 165	(23 ) 9,6 99, 823	1,3 95, 160	-	529 ,04 9,8 36	567 ,98 4	(6,0 ) 04, 250	889 ,86 0,4 38
						200 6
					Res erv es
	Sha re	Leg al	Sha re	Ow n	Oth er	Res erv es Me diu m T erm	Fai lue r va	Tot al	Min orit y	Net
	ital cap	res erv es	miu pre m	Sha res	res erv es	Inc ent ive Pla ns	res erv es	res erv es	Inte ts res	me/ (los s) ino	Tot al
Bal e at 31 De ber 20 05 anc cem	296 ,52 6,8 68	114 ,36	0 4 99, 633 ,16 0	-	(22 ) 6,6 54, 302	-	-	273 ,09 3,2 18	-	2,1 56, 198	571 ,77 6,2 84
App of c olid d re sult of 200 5 riat ion ate rop ons	-	444 ,71 8	-	-	1,7 11, 480	-	-	2,1 56, 198	-	(2,1 ) 56, 198	-
me/ (los s) f Con soli dat ed n et i he p erio d en ded 31 Ma rch 20 06 or t nco	-	-	-	-	-	-	-	-	-	146 ,58 4	146 ,58 4
Adj in f slat nd o the ust nts ign cy t ion me ore cur ren ran res erv es a rs	-	-	-	-	(20 8) ,29	-	-	(20 8) ,29	-	-	(20 8) ,29
Bal e at 31 Ma rch 20 06 anc	- 296 ,52 6,8 68	- 559 ,07	- 8 4 99, 633 ,16 0	- -	- (22 ) 4,9 63, 120	- -	- -	- 275 ,22 9,1 18	- -	- 146 ,58 4	- 571 ,90 2,5 70
Min orit y in ter est s Bal 31 De ber 20 05 e at anc cem	-	-	-	-	-	-	-	-	115 ,16 3,1 14	-	115 ,16 3,1 14

The notes are an integral part of the consolidated financial statements at 31 March 2007 and 2006

Minority interests on results - - - - - - - - 5,057,723 - 5,057,723 Other changes - - - - - - - - (54,861) - (54,861) Balance at 31 March 2006 - - - - - - - - 120,165,976 - 120,165,976 Total 296,526,868 559,078 499,633,160 - (224,963,120) - - 275,229,118 120,165,976 146,584 692,068,546

SONAECOM, S.G.P.S., S.A. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT

FOR THE QUARTERS ENDED AT 31 MARCH 2007 AND 2006

(Amounts expressed in Euro)

	31 March 2007		31 March 2006
Operating activities
Receipts from trade debtors	200,870,089		202,276,262
Payments to trade creditors	(151,001,973)		(146,738,047)
Payments to employees	(36,231,079)		(37,729,095)
Cash flows from operating activities	13,637,037		17,809,120
Payments/receipts relating to income taxes, net	(1,315,150)		55,355
Other payments/receipts relating to operating activities, net	5,846,855		(8,752,835)
Cash flows from operating activities (1)	18,168,742	18,168,742	9,111,640	9,111,640
Investing activities
Receipts from:
Investments	108,461,473		-
Tangible assets	396,812		1,153,192
Intangible assets	2,922		426,916
Investment subsidies	-		103,491
Interest and similar income	5,809,215	114,670,422	846,597	2,530,196
Payments for:
Loans granted	-		10
Investments	-		(564,841)
Tangible assets	(38,546,361)		(23,963,897)
Intangible assets	(3,430,377)	(41,976,738)	(3,789,110)	(28,317,838)
Cash flows from investing activities (2)		72,693,684		(25,787,642)
Financing activities
Payments for:
Leasing	(360,728)		-
Interest and similar expenses	(18,752,830)		(2,936,976)
Own Shares	(8,938,165)	(28,051,723)	-	(2,936,976)
Cash flows from financing activities (3)		(28,051,723)		(2,936,976)
Net cash Flows ( 4 )=( 1 )+( 2 )+( 3 )		62,810,703		(19,612,978)
Effect of the foreign exchanges		63,942		64,128
Cash and cash equivalents at the beginning of the period		(125,842,737)		(209,360,291)
Cash and cash equivalents at end of the period		188,717,382		189,811,441

The notes are an integral part of the consolidated financial statements at 31 March 2007 and 2006.

The Chief Accountant The Board of Directors

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

FOR THE QUARTERS ENDED AT 31 MARCH 2007 AND 2006

(Amounts expressed in Euro)

		2007	2006
1 - Acquisition or sale of subsidiaries or other businesses
a) Acquisitions
Profimetrics - Software Solutions, SA		-	150,000
b) Amount of other assets and liabilities acquired
Acquisition of shares of Sonae Indústria,S.G.P.S., S.A.		-	414,841
c) Amount of other assets and liabilities sold
Sale of shares of Portugal Telecom, S.G.P.S., S.A.		108,461,473	-
		108,461,473	564,841
2 - Details of cash and cash equivalents
Cash in hand		845,346	318,695
Cash at bank		7,969,162	4,850,595
Treasury applications		180,675,537	185,000,110
Overdrafts		(772,663)	(357,959)
Cash and cash equivalents		188,717,382	189,811,441
Overdrafts		772,663	357,959
Cash assets		189,490,045	190,169,400
3 - Description of non monetary financing activities
a) Bank credit granted and not used		225,441,176	227,941,176
b) Purchase of company through the issue of shares		Not applicable	Not applicable
c) Conversion of loans into shares		Not applicable	Not applicable
4 - Cash flow by segments
	Cash flow from	Cash flow from	Cash flow from
	operating	investing	financing	Net
Activity	activities	activities	activities	cash flows
Mobile network	29,576,057	(30,820,359)	(3,943,843)	(5,188,147)
Fixed network and Internet	5,355,351	(10,029,794)	20,279	(4,654,163)
Multimedia	(2,877,836)	(182,897)	(3,119)	(3,063,852)
Information Systems	(7,241,853)	(31,178)	(139,479)	(7,412,510)
Others	(6,642,977)	113,757,912	(23,985,561)	83,129,375
	18,168,742	72,693,684	(28,051,723)	62,810,703

The notes are an integral part of the consolidated financial statements at 31 March 2007 and 2006.

The Chief Accountant The Board of Directors

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements at 31 March 2007 and 2006

(Amounts expressed in Euro)

SONAECOM, S.G.P.S., S.A. (hereinafter referred to as "the Company" or "Sonaecom") was established on 6 June 1988 under the name Sonae – Tecnologias de Informação, S.A. and has its head office at Lugar de Espido, Via Norte, Maia – Portugal. It is the parent company of the group of companies listed in Notes 2 and 3 ("the Group").

Pargeste, S.G.P.S., S.A.'s subsidiaries in the communications and information technology area were transferred to the Company through a demerger-merger process, executed by public deed dated 30 September 1997.

On 3 November 1999 the Company's share capital was increased, its articles of association were modified and its name was changed to Sonae.com, S.G.P.S., S.A.. Since then the Company's corporate object has been the management of investments in other companies. Also on 3 November 1999, the company's share capital was re-denominated to Euro, being represented by one hundred and fifty million shares with a nominal value of 1 Euro each.

On 1 June 2000, the company carried out a Combined Share Offer, involving the following:

• A Retail Share Offer of 5,430,000 shares, representing 3.62% of the share capital, made in the domestic market and aimed at: (i) employees of the Sonae Group; (ii) customers of the companies controlled by Sonaecom; and (iii) the general public.

• An Institutional Offer for sale of 26,048,261 shares, representing 17.37% of the share capital, aimed at domestic and foreign institutional investors.

In addition to the Combined Share Offer, the Company's share capital was increased under the terms explained below. The new shares were fully subscribed for and paid up by Sonae, S.G.P.S., S.A. (a shareholder of Sonaecom, hereinafter referred to as Sonae). The capital increase was subscribed for and paid up on the date the price of the Combined Share Offer was determined, and paid up in cash, 31,000,000 new ordinary shares of 1 Euro each being issued. The subscription price for the new shares was the same as that fixed for the sale of shares in the aforementioned Combined Share Offer, which was Euro 10.

In addition, Sonae sold 4,721,739 Sonaecom shares under an option granted to the banks leading the Institutional Offer for Sale and 1,507,865 shares to Sonae Group managers and to the former owners of the companies acquired by Sonaecom.

By decision of the Shareholders' General Meeting held on 17 June 2002, Sonaecom's share capital was increased from Euro 181,000,000 to Euro 226,250,000 by public subscription reserved for the existing shareholders, 45,250,000 new shares of 1 Euro each having been fully subscribed for and paid up at the price of Euro 2.25 per share.

On 30 April 2003 the Company's name was changed, by public deed, to SONAECOM, S.G.P.S., S.A..

By decision of the Shareholders' General Meeting held on 12 September 2005, Sonaecom's share capital was increased in Euro 70,276,868, from Euro 226,250,000 to Euro 296,526,868, by the issuance of 70,276,868 new shares of 1 Euro each and with a share premium of Euro 242,455,195, entirely subscribed by France Telecom. The corresponding public deed was executed on 15 November 2005.

By decision of the Shareholders General Meeting held on 18 September 2006, Sonaecom's share capital was increased in Euro 69,720,000, from Euro 296,526,868 to Euro 366,246,868, by the issuance of 69,720,000 new shares of 1 Euro each and with a share premium of Euro 275,657,217, subscribed by 093X – Telecomunicações Celulares, S.A. (EDP) and Parpública – Participações Públicas, SGPS, S.A.(Parpública). The corresponding public deed was executed on 18 October 2006.

The Group's business consists essentially of:

• Mobile telecommunications operations;
• Fixed telecommunications operations and Internet;
• Multimedia;
• Information systems consultancy.

The Group operates, since 30 June 2006 and after the sale of Retailbox sub-group (that operates in England, Germany, France and Brazil), essentially, in Portugal, with one of its subsidiaries (from the information systems consultancy segment) operating in Brazil.

Since 1 January 2001 all Group companies based in the Euro zone have adopted the Euro as their base currency for processing, systems and accounting.

The consolidated financial statements are also presented in Euro, rounded at unit, and the transactions in foreign currencies are included in accordance with the accounting policies detailed below.

1. Basis of presentation

The accompanying consolidated financial statements have been prepared on a going concern basis, based on the accounting records of the companies included in the consolidation (Notes 2 and 3) in accordance with International Financial Reporting Standards ("IAS/IFRS") as adopted by the European Union ("EU"), and including all interpretations of the International Financial Reporting Interpretation Committee ("IFRIC") in force as at 31 March 2007.

For Sonaecom, there are no differences between IFRS as adopted by European Union and IFRS published by the International Accounting Standards Board.

Sonaecom adopted "IAS/ IFRS" for the first time according to SIC 8 (First time adoption of IAS) on 1 January 2003.

On 29 March 2007, the IASB issued a revised IAS 23 Borrowing Costs. The main change from the previous version is the elimination of the option to expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale. Sonaecom used to capitalise borrowing costs as part of the cost of such assets and, as a result, no change is applicable to Sonaecom.

Main accounting policies

The main accounting policies used in the preparation of the attached consolidated financial statements were as follows:

a) Investments in Group companies

Investments in companies in which the Group has direct or indirect voting rights at Shareholders' General Meetings, in excess of 50%, or in which it has control over the financial and operating policies (definition of control used by the Group) were fully consolidated in the attached consolidated financial statements. Third party participations in the shareholders' equity and net results of those companies are reflected separately in the consolidated balance sheet and in the consolidated statement of profit and loss, respectively, under the caption 'Minority interests'.

When losses attributable to minority shareholders exceed minority interests in shareholders' funds of the subsidiaries, the Group absorbs the excess together with any additional losses, except when the minority shareholders have the obligation and are able to cover those losses. If subsidiaries subsequently report profits, the Group appropriates all the profits until the amount of the minority interests in the losses absorbed by the Group is recovered.

When acquiring subsidiaries, the purchase method is used. The results of subsidiaries bought or sold during the year are included in the statement of profit and loss as from the date of acquisition (or of control acquisition) or up to the date of sale (or of control cession). Intra Group transactions, balances and dividends are eliminated.

The expenses incurred with the acquisition of investments in Group companies are considered as part of the acquisition cost.

The fully consolidated companies are listed in Note 2.

b) Financial investments in associated companies

Investments in associated companies (generally investments representing between 20% and 50% of a company's share capital) are recorded using the equity method.

In accordance with the equity method, investments are adjusted annually by an amount corresponding to the Group's share of the net results of associated companies, against a corresponding entry to gain or loss for the year, and by the amount of dividends received, as well as by other changes in the equity of the associated companies, which are recorded by corresponding entry to the caption 'Other reserves'. An assessment of the investments in associated companies is performed annually, with the aim of detecting possible impairment situations.

When the Group's share of accumulated losses of an associated company exceeds the book value of the investment, the investment is recorded at nil value, except when the Group has assumed commitments to the associated company, in which case a provision is recorded for that purpose under the caption 'Provisions for other liabilities and charges'.

Investments in associated companies are listed in Note 3.

c) Tangible assets

Tangible assets are recorded at their acquisition cost less accumulated depreciation and less estimated accumulated impairment losses.

Depreciation is provided on a straight-line monthly basis as from the date the assets are brought into use, by a corresponding charge to the statement of profit and loss caption 'Depreciation and amortisation'.

Impairment losses detected in the market value of tangible assets are recorded in the year in which they arise, by a corresponding charge to the caption 'Depreciation and amortisation' of the statement of profit and loss.

The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:

	Years of useful life
Buildings	50
Other constructions	10 - 20
Network	10 - 20
Other plant and machinery	8
Vehicles	4
Fixtures and fittings	3 - 10
Tools	5 - 8
Other tangible assets	4 - 8

Current maintenance and repair costs of fixed assets are recorded as costs in the year in which they occur. Improvements of significant amount, which increase the estimated useful life of the assets, are capitalised and depreciated in accordance with the remaining estimated useful life of the corresponding assets.

The estimated costs related with the mandatory dismantling and removal of tangible assets, incurred by the Group, are capitalised and amortised according to the useful life of the corresponding assets.

Work in progress corresponds to fixed assets still in the construction/development stage which are recorded at their acquisition cost. These assets are depreciated as from the moment they are completed or they are in condition to be used.

d) Intangible assets

Intangible assets are recorded at their acquisition cost less accumulated amortisation and less estimated impairment losses. Intangible assets are only recognised if it is likely that they will bring future economic benefit to the Group, if the Group controls them and if their value can be reasonably measured.

Intangible assets correspond, essentially, to software (excluding the one included in tangible assets – telecommunication sites' software), industrial property and costs incurred with the mobile network operator licenses (GSM and UMTS) and the fixed network operator licenses.

Amortisation is provided on a straight-line monthly basis, over the estimated useful life of the assets (three to six years) as from the month in which the corresponding expenses are incurred. Mobile and fixed network operator licences are amortised over the period for which they were granted (15 years). The UMTS license is being amortised on a straight-line basis for an 11 year period, which corresponds to the period between the commercial launch date and the maturity date of the license.

Internally-generated intangible assets, namely research and development expenditures, are recognised in net income when incurred. Development expenditures can only be recognised initially as an intangible asset if the Group demonstrates the ability to complete the project and put it in use or available for sale.

Amortisation for the year is recorded in the statement of profit and loss under the caption 'Depreciation and amortisation'.

e) Brands and patents

Brands and patents are recorded at their acquisition cost and are amortised on a straight-line basis over their respective estimated useful life.

f) Goodwill

Differences between the cost of investments in subsidiaries and associated companies and the amount attributed to the fair value of their identifiable assets and liabilities at the time of their acquisition, when positive, are recorded under the caption 'Goodwill', and, when negative, after a reapreciation of its calculation, are recorded directly in the statement of profit and loss. Until 1 January 2004, 'Goodwill' was amortised over the estimated period of recovery of the investments, usually ten years, and the amortisation was recorded in the statement of profit and loss under the caption 'Depreciation and amortisation'. Since 1 January 2004 and in accordance with the IFRS 3 – "Business Combinations", the Group has stopped the amortization of the 'Goodwill'. Impairment losses of goodwill are recorded in the statement of profit and loss for the period under the caption 'Depreciation and amortisation'.

In subsequent acquisitions of financial investments already held by the Group, an amount of Goodwill is registered equal to the difference between the cost of acquisition of such financial investment and the proportional amount of the shareholders funds of the acquired company.

g) Investments

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired.

The classification of the investments is determined at the initial recognition and re-evaluated every quarter.

• a) 'Financial assets at fair value through profit or loss' This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if the adoption of this method allows to reduce or eliminate an accounting mismatch. Derivatives are also registered as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within twelve months of the balance sheet date.
• b) 'Loans and receivables'

Loans and receivables are non-derivative financial assets with fixed or variable payments that are not quoted in an active market. These financial investments arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are recorded as current assets, except when its maturity is greater than twelve months from the balance sheet date, situations when they are classified as non-current assets. Loans and receivables are included in the caption 'trade debtors' and 'other current debtors' in the balance sheet.

c) 'Held-to-maturity investments'

Held-to-maturity investments are non-derivative financial assets with fixed or variable payments and fixed maturities that the Group's management has the positive intention and ability to hold till its maturity.

d) 'Available-for-sale financial assets'

Available-for-sale financial assets are non-derivatives investments that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date.

Purchases and sales of investments are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. The financial assets at fair value through profit or loss are initially recognised at fair value and the transaction costs are recorded in the income statement. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred substantially all the risks and rewards of its ownership.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.

Realised and unrealised gains and losses arising from changes in the fair value of financial assets classified at fair value through profit or loss are recognised in the income statement. Realised and unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-

sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

The fair value of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

h) Financial and operational leases

The lease contracts are classified as financial leases, if, in substance, all risks and rewards associated with the possession of the leased asset are transferred by the lease contract or as operational leases, if, in substance, there is no transfer of risks and rewards associated with the possession of the leased assets.

The lease contracts are classified as financial or operational in accordance with the substance and not with the form of the respective contracts.

Fixed assets acquired under finance lease contracts and the related liabilities are recorded in accordance with the financial method. Under this method the tangible assets, the corresponding accumulated depreciation and liabilities are recorded in accordance with the contractual financial plan at fair value or, if less, at the present value of payments. In addition, interest included in lease payments and depreciation of the tangible assets are recognised as expenses in the statement of profit and loss for the year to which they relate.

Assets under long term rental contracts are recorded in accordance with the operational lease method. In accordance with this method, the rents paid are recognised as an expense, over the rental period.

i) Inventories

Inventories are stated at their acquisition cost net of eventual impairment losses.

Accumulated inventory impairment losses reflect the difference between the acquisition cost and the realisable amount of inventories, as well as the estimated impairment losses due to low turnover, obsolescence and deterioration (Note 15).

j) Trade and other current debtors

Trade debtors and other current debtors are recorded at their nominal value less impairment losses, reflecting their net realisable value.

k) Cash and cash equivalents

Amounts included under the caption 'Cash and cash equivalents' correspond to amounts held in cash, demand and term bank deposits and other treasury applications where the risk of any change in value is insignificant.

The consolidated cash flow statement has been prepared in accordance with IAS 7, using the direct method. The Group classifies, in the caption 'Cash and cash equivalents', investments that mature in less than three months, for which the risk of change in value is insignificant. The caption 'Cash and cash equivalents' in the cash flow statement also includes bank overdrafts, which are reflected in the balance sheet caption 'Short-term loans and other loans'.

The cash flow statement is classified by operating, financing and investing activities. Operating activities include collections from customers, payments to suppliers, payments to personnel and other captions relating to operating activities. Cash flows from investing activities include the acquisition and sale of investments in associated and subsidiaries companies and receipts and payments resulting from the purchase and sale of fixed assets.

Cash flows from financing activities include payments and receipts relating to loans obtained and finance lease contracts.

l) Loans

Loans are recorded as liabilities by the "amortised cost". Any expenses incurred in setting up loans are recorded as a deduction to the nominal debt and recognised during the period of the financing, based on the effective interest rate method.

m) Financial expenses relating to loans obtained

Financial expenses relating to loans obtained are generally recognised as expenses at the time they are incurred. Financial expenses relating to loans obtained directly for the acquisition, construction or production of fixed assets are capitalised as part of the cost of the assets. These expenses are capitalised starting from the time of preparation for the construction or development of the asset. The capitalization is interrupted when the assets are operating or at the end of the production or construction phases or when the associated project is suspended.

n) Derivatives

The Group only uses derivatives in the management of its financial risks to hedge against such risks. The Group does not use derivatives for trading purposes.

The cash flow hedges used by the Group are related to interest rate swap operations to hedge against interest rate risks on loans obtained. The amounts, interest payment dates and repayment dates of the underlying interest rate swaps are identical in all respects to the conditions established for the contracted loans. Changes in the fair value of cash flow hedges are recorded in assets or

liabilities, against the corresponding entry under the caption 'Hedging reserves' in shareholders' funds.

In the cases where the hedge instrument is not effective, the amounts derived from the adjustments to fair value are recorded directly in the profit and loss statement.

o) Provisions and contingencies

Provisions are recognised when, and only when, the Group has a present obligation (either legal or implicit) resulting from a past event, the resolution of which is likely to involve the disbursement of funds by an amount that can be reasonably estimated. Provisions are reviewed at the balance sheet date and adjusted to reflect the best estimate at that date.

Provisions for restructurings are only registered if the Group has a detailed plan and if that plan was already communicated to the parties involved.

Contingent liabilities are not recognised in the consolidated financial statements but are disclosed in the notes, provided that the possibility of a cash outflow affecting future economic benefits is remote.

Contingent assets are not recognised in the consolidated financial statements but are disclosed in the notes when future economic benefits are likely to occur.

p) Income tax

Income tax for the year is determined based on the taxable results of the companies included in the consolidation and takes into consideration deferred taxation.

Current income tax is determined based on the taxable results of the companies included in the consolidation, in accordance with the tax regulations in force in the location of the head office of each Group company.

Deferred taxes are calculated using the liability method and reflect the timing differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes.

Deferred tax assets are only recognised when there is reasonable expectation that sufficient taxable profits will arise in the future to allow such deferred tax assets to be used. At the end of each year a review is made of the recorded and unrecorded deferred tax assets and they are reduced whenever their realisation ceases to be probable, or recorded if it is probable that taxable profits will be generated in the future to enable them to be recovered (Note 9).

Deferred taxes are calculated with the tax rate that is expected to be in effect at the time the asset or liability is used.

Whenever deferred taxes derive from assets or liabilities directly registered in Shareholders' funds, its recording is also made in Shareholders' funds. In all other situations, deferred taxes are always registered in the profit and loss statement.

q) Government subsidies

Subsidies awarded to finance personnel training are recognised as income during the period where the Group incurs the associated costs and are included in the profit and loss statement as a deduction to such costs.

Subsidies awarded to finance investments in tangible assets are registered as deferred income and are included in the profit and loss statement during the estimated useful life of the corresponding assets.

r) Accrual basis and revenue recognition

Expenses and income are recorded in the year to which they relate, regardless of their date of payment or receipt. Estimated amounts are used when actual amounts are not known.

The captions of 'Other non current assets', 'Other current assets', 'Other non current liabilities' and 'Other current liabilities' include expenses and income relating to the current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods. The latest ones will be included by the corresponding amount in the results of the periods that they relate to.

Revenue from telecommunications services is recognised in the period in which it occurs. Such services are invoiced on a monthly basis. Revenues not yet invoiced, from the last invoicing cycle to the end of the month, are estimated and recorded based on actual traffic. Differences between the estimated and actual amounts, which are usually not material, are recorded in the following period.

Sales revenues are recognised in the consolidated profit and loss statement when the significant risks and rewards associated with ownership of the assets are transferred to the buyer and the amount of the corresponding revenue can be reasonably quantified. Sales are recognised net of taxes and discounts.

The income related to pre-paid cards is recognised whenever the minutes are used. At the end of each period the minutes still to be used are estimated and the amount of income associated with those minutes is deferred.

Costs relating to customer loyalty programmes, under which points are awarded by the subsidiary Optimus, are quantified considering the probability of the points being effectively used, and are recognised, as a deduction to income, at the time the points are generated, by a corresponding entry in the caption 'Other current liabilities'.

Non-current financial assets and liabilities are recorded at fair value and, in each period, the financial actualisation to the fair value is recorded in the statement of profit and loss under the caption 'Financial results'.

Dividends are recognised when the right of the shareholders to receive such amounts is appropriately established and communicated.

s) Balance sheet classification

Assets and liabilities due in more than one year from the date of the balance sheet are classified, respectively, as non-current assets and non-current liabilities.

In addition, considering their nature, the deferred taxes and the provisions for other liabilities and charges, are classified as non current assets and liabilities (Notes 9 and 19).

t) Legal reserve

Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in the case of liquidation of the company, but may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.

u) Foreign currency

All assets and liabilities expressed in foreign currency were translated into Euro using the exchange rates in force on the balance sheet date.

Favourable and unfavourable foreign exchange differences resulting from changes in the rates in force at transaction date and those in force at the date of collection, payment or at the balance sheet date are recorded as income and expenses in the consolidated profit and loss statement of the year, in financial results.

Entities operating abroad with organisational, economic and financial autonomy are treated as foreign entities.

Assets and liabilities in the financial statements of foreign entities are translated into Euro using the rates of exchange in force on the balance sheet date and expenses and income in such financial statements are converted into Euro using the average rates of exchange for the period. The resulting exchange differences are recorded in the shareholders' funds caption 'Other reserves'.

Goodwill and adjustments to fair value generated in acquisitions of foreign entities reporting in a functional currency other than Euro are converted into Euro using the exchange rates prevailing on the balance sheet date.

	2007		2006
	31.03.07	Average	31.03.06	Average
Pounds Sterling	1.47102	1.49142	1.43596	1.45725
Brazilian Real	0.36898	0.36207	0.37880	0.37900

The following rates were used for the translation into Euro of the accounts of foreign subsidiaries and associated companies:

v) Assets impairment

Impairment tests are performed at the date of each balance sheet and whenever an event or change of circumstances indicates that the recorded value of an asset may not be recoverable. Whenever the book value of an asset is greater than the amount recoverable, an impairment loss is recognised and recorded in the statement of profit and loss under the caption 'Depreciation and amortisation' in the case of fixed assets and goodwill, under the caption 'Other financial expenses' in the case of financial investments and under the caption 'Provisions and impairment losses', in relation to the other assets. The amount recoverable is the greater of the net selling price and the value of use. Net selling price is the amount obtainable upon sale of an asset in a transaction within

the capability of the parties involved, less the costs directly related to the sale. The value of use is the present value of the estimated future cash flows expected to result from the continued use of the asset and its sale at the end of its useful life. The recoverable value is estimated for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.

For Goodwill and Financial Investments, the recoverable amount is determined based on business plans duly approved by the Board of Directors of the Group and corroborated by reports prepared by independent entities. For accounts receivables, the Group uses historical and statistic information to estimate the amounts in impairment. For inventories, the impairments are calculated based on market values and several indicators of stock rotation.

w) Medium Term Incentive Plans

The Accounting Treatment of Medium Term Incentive Plans is based on IFRS 2 – "Share-based Payments".

Under IFRS 2, when the settlement of plans established by the Group involves the delivery of Sonaecom's own shares, the estimated responsibility is recorded, as a credit entry, under the caption 'Reserves – Medium Term Incentive Plans', within the heading 'Shareholders' funds' and is charged as an expense under the caption 'Staff expenses' in the profit and loss statement.

The quantification of this responsibility is based on fair value and is recognised over the vesting period of each plan (from the award date of the plan until its vesting or settlement date). The total responsibility, at any point of time, is calculated based on the proportion of the vesting period that has "elapsed" up to the respective accounting date.

When the responsibilities associated with any plan are covered by a hedging contract, i.e., when those responsibilities are replaced by a fixed amount payable to a third party and when Sonaecom is no longer the party that will deliver the Sonaecom shares, at the settlement date of each plan, the above accounting treatment is subject to the following changes:

• a) The total gross fixed amounts payable to third parties are recorded in the balance sheet as either 'Other non current liabilities' or 'Other current liabilities';
• b) The part of this responsibility that has not yet been recognised in the profit and loss statement (the "unelapsed" proportion of the cost of each plan) is deferred and is recorded, in the balance sheet as either 'Other non current assets' or 'Other current assets';
• c) The net effect of the entries in (a) and (b) above eliminate the original entry to 'Shareholders' funds';
• d) In the profit and loss statement, the "elapsed" proportion continues to be charged as an expense under the caption 'Staff expenses'.

Equity-settled payments in shares of the parent company are recorded as if they were settled in cash, which means that the estimated liability is recorded in the balance sheet caption 'Other non current liabilities' and 'Other current liabilities' by a corresponding entry to the income statement caption 'Staff expenses', for the cost relating to the deferred period elapsed. The liability is quantified based on the fair value of the shares as of each balance sheet date.

When the liability is covered by a hedging contract, it is recognised in the same way described above, but with the liability being quantified based on the amount fixed in the contract.

In 2003, the Group signed a hedging contract under which, through the establishment of the payment of a fixed amount, it was transferred its liability relating to the Sonaecom share plan to an entity outside the Sonaecom Group. At 31 March 2007 only one of the existing plans was covered by hedging contracts. Therefore, the impact of the share plans of the Medium Term Incentive Plans is recognised in the balance sheet captions 'Other non current assets' and 'Other current assets' and 'Other non current liabilities' and 'Other current liabilities' for the plans covered by hedging contracts, and in the caption 'Reserve - Medium Term Incentive Plans' for the other plans. The cost is recognised in the income statement caption 'Staff expenses'.

x) Subsequent events

Events occurring after the date of the balance sheet which provide additional information about conditions prevailing at the time of the balance sheet (adjusting events) are reflected in the consolidated financial statements. Events occurring after the balance sheet date that provide information on post-balance sheet conditions (non adjusting events), when material, are disclosed in the notes to the consolidated financial statements.

y) Judgements and estimates

The most significant accounting estimates reflected in the consolidated financial statements as at 31 March 2007 and 2006, are as follows:

• a) Useful lives of tangible and intangible assets;
• b) Impairment analysis of goodwill and of tangible and intangible assets;
• c) Recognition of adjustments on assets and provisions;
• d) Assessment of responsibilities associated with customers' loyalty programs.

Estimates used are based on the best information available during the preparation of consolidated financial statements and are based on best knowledge of past and present events. Although future events, are not controlled by the Group neither foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8, using a prospective methodology.

The main estimates and assumptions in relation to future events included in the preparation of consolidated financial statements are disclosed in the correspondent notes.

z) Financial risk management

The Group's activities expose it to a variety of financial risks as market risk, liquidity risk and credit risk.

These risks arise from the unpredictability of financial markets that affect the capacity of project cash flows and profits. The Group financial risk management, subject to a perspective of long term ongoing, seeks to minimize potential adverse effects that derive from that uncertainty, using, every time that is possible and advisable, derivative financial instruments to hedge certain risks exposure ( Note 1. n)).

Market risk

a. Foreign exchange risk

The Group operates internationally and one of its subsidiaries operates in Brazil, so it is exposed to the foreign exchange risk.

The foreign exchange risk management seeks to minimize the volatileness of investments and transactions made in foreign currency and contributes to a lower sensitivity of Group results to changes in foreign exchange rates.

Every time it is possible, the Group uses natural hedges to the amounts exposed, compensating the credits granted and the credits received that are expressed in the same currency. When it is not possible, the Group uses financial instruments of hedging.

b. Price risk

The Group is exposed to the risk of price variation of investments recorded at fair value through profit and losses. This caption is composed by Sonae S.G.P.S., S.A. shares, which were acquired to cover the obligations under the Medium Term Incentive Plans attributed to its employees (Note 1. w) and 24). The price variation of these shares is compensated by the variation of responsibilities associated to those plans.

c. Interest rate risk

The Group only uses derivatives and similar transactions as hedges for interest rate risks considered as relevant. To hedge interest rate risk, three main principles are respected in all instruments selected and used:

• For each derivative or instrument used for hedging a specific transaction, the dates in which interest payments are made should be exactly the same as those in the facility / transaction which is being hedged;
• Perfect match between the base rates: the base rate used in the derivative or instrument should be exactly the same as the one in the facility / transaction which is being hedged;
• At the start of a deal, the maximum cost of debt associated to a facility is known and limited, even in the scenario of an extreme increase or decrease of the market interest rates, and an effort is made so that level is compliant to the company's business plan acceptable cost of funds.

All of Sonaecom's borrowings are currently at variable rates and, as such, interest rate swaps and other derivatives are used as cash flow hedges of future interest payments. Interest rate swaps have the economic effect of converting the respective borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with other parties (Banks) to exchange, at specified limits in pre-determined periods, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

Derivative counterparties are limited to highly rated financial institutions and it is Group policy to give preference to financial institutions that form part of its financing transactions.

In assessing the fair value of the derivatives, the Company uses certain methods, such as option pricing models and estimated discounted value of future cash flows, and makes assumptions that are based on market conditions prevailing at each balance sheet date. Dealer quotes for the specific or similar instruments are used as a benchmark for the assessment.

The fair value of derivatives that are not considered as hedges for the purposes of IAS 39 or that are not sufficiently effective in that coverage (in accordance with the conditions established in that rule), are recognised under Debts to financial institutions. Changes in the fair value of such derivatives are recognised directly in the profit and loss statement of the year.

Liquidity risk

The goal of liquidity risk management is to guarantee, at any moment, the Group's financial capacity to fulfill its commitments that became demandable.

Given the dynamic nature of its activities, the Group needs a flexible financial structure and, for that, uses:

• Medium and long term bank loans;
• Short term credit facilities;
• Rigorous financial plans and monthly treasury reports by company;
• Treasury applications in banks and in group companies;
• Diversification of financing sources.

Credit risks

The Group's exposure to the credit risk is mainly associated to the receivable accounts of its current activities.

The management of this risk seeks to guarantee an effective collection of its credits in the periods negotiated without impact on the financial Group's health. Beyond a previous work of investigation with entities that are suppliers of credit information and risk profiles, the Group has specific departments of risk control, collections and management of processes in litigation.

Companies included in the consolidation

Group companies included in the consolidation, their head offices, main activity, shareholders and percentage of share capital held at 31 March 2007 and 2006, are as follows:

		Percentage of share capital held
				2007			2006
Company (Commercial Brand)	Head Office	Main activity	Shareholder	Direct	Effective*	Direct	Effective*
Parent company:
SONAECOM, S.G.P.S., S.A. ("Sonaecom")	Maia	Management of shareholdings.	-	-	-	-	-
Subsidiaries:
Digitmarket – Sistemas de Informação, S.A. ("Digitmarket" – using the brand name "Bizdirect")	Maia	Development of management platforms and commercialisation of products, services and information, with the internet as its main support.	Sonae.com Sistemas de Informação	75.10% 75.10%		75.10%	75.10%
Enabler – Informática, S.A. ("Enabler")	Maia	Rendering of services relating to the development, commercialisation and implementation of software solutions.	Retailbox	(Sold)		98.50%	71.23%
Enabler Brasil, Ltda. ("Enabler Brazil")	Curitiba Paraná, Brazil	Commercialisation of software developed by the companies or by third parties; provision of technical consultancy services relating to software.	Enabler	(Sold)		99.99%	71.22%
Enabler & Retail Consult, Gmbh ("Enabler Germany")	Germany	Rendering of services in the area of development, commercialisation and implementation of software solutions.	Enabler	(Sold)		85%	60.55%
Enabler UK, Limited ("Enabler UK")	United Kingdom	Rendering of services in the area of development, commercialisation and implementation of software solutions.	Enabler	(Sold)		100%	71.23%
Enabler France ("Enabler FR")	France	Rendering of services in the area of development, commercialisation and implementation of software solutions.	Enabler	(Sold)		100%	71.23%
Mainroad – Serviços em Tecnologias de Informação, S.A. ("Mainroad")	Maia	Rendering of consultancy services in IT areas.	Sonae.com Sistemas de Informação	100%	100%	100%	100%
Miauger – Organização e Gestão de Leilões Electrónicos, S.A. ("Miauger")	Maia	Organisation and management of electronic auctions of products and services on-line.	Sonaecom	100%	100%	100%	100%
M3G – Edições Digitais, S.A. ("M3G")	Lisbon	Digital publishing, electronic publishing and production of Internet contents.	Público	100%	99%	100%	99%
* Sonaecom effective participation

				Percentage of share capital held
				2006		2005
Company (Commercial Brand)	Head Office	Main activity	Shareholder	Direct	Effective*	Direct	Effective*
Novis Telecom, S.A. ("Novis")	Maia	Installation, maintenance and operation of information processing and telecommunications equipment, network	Sonaecom	58.33%	58.33%	58.33%	58.33%
		management and supply of value-added information and services.	Sonae Matrix	41.67%	41.67%	41.67%	41.67%
Optimus – Telecomunicações, S.A. ("Optimus")	Maia	Rendering of mobile telecommunications services and the establishment, management and operation of	Sonae Telecom	49.06%	49.06%	49.06%	49.06%
		telecommunications networks.	Sonaecom	50.94%	50.94%	20.18%	20.18%
Per-Mar – Sociedade de Construções, S.A. ("Per-Mar")	Maia	Purchase, sale, renting and operation of property and commercial establishments.	Optimus	100%	100%	100%	69.24%
Público – Comunicação Social, S.A. ("Público")	Oporto	Editing, composition and publication of periodical and non-periodical material.	Sonaetelecom BV	99%	99%	99%	99%
Retailbox BV ("Retailbox")	Amsterdam	Management of shareholdings.	Sonaetelecom BV		(Sold)		72.32%
Optimus Towering – Exploração de Torres de Telecomunicações, S.A. ("Optimus Towering" )	Maia	Implementation, installation and exploitation of towers and other sites for the instalment of telecommunications equipment.	Optimus	100%	100%	100%	69.24%
Saphety Level – Trusted Services, S.A. (Saphety) (a)	Maia	Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; trade, development and representation of software.	Sonae.com Sistemas de Informação	100%	100%	-	-
Sonae Matrix Multimédia, S.G.P.S., S.A. ("Sonae Matrix")	Maia	Management of shareholdings in the area of multimedia trade.	Sonaecom	100%	100%	100%	100%
Sonae Telecom, S.G.P.S., S.A. ("Sonae Telecom")	Maia	Management of shareholdings in the area of mobile telecommunications.	Sonaecom	100%	100%	100%	100%
Sonae.com - Sistemas de Informação, S.G.P.S., S.A. ("Sonae.com Sistemas de Informação")	Maia	Management of shareholdings in the area of corporate ventures and joint ventures.	Sonaecom	100%	100%	100%	100%
Sonaecom BV	Amsterdam	Management of shareholdings.	Sonaecom	100%	100%	100%	100%
Sonaetelecom BV	Amsterdam	Management of shareholdings.	Sonaecom	100%	100%	100%	100%
We Do Consulting – Sistemas de Informação, S.A. ("We Do")	Maia	Rendering of consultancy services in the area of software, including systems integration.	Sonae.com Sistemas de Informação	99.08%	99.08%	96.46%	96.46%
* Sonaecom effective participation (a) Company created in December 2006.

			Percentage of share capital held
				2007		2006
Company (Commercial Brand)	Head Office	Main activity	Shareholder	Direct	Effective*	Direct	Effective*
Wedo do Brasil Soluções Informáticas, Ltda. ("We Do Brazil")	Rio de Janeiro	Commercialisation of software and hardware. Rendering of consultancy and technical assistance.	We Do	99.91%	98.99%	99.89%	96.35%

* Sonaecom effective participation

All the above companies were included in the consolidation in accordance with the full consolidation method under the terms of IAS 27 (majority of voting rights, through the ownership of shares in the companies). In July 2006, agreements with EDP and Parpública were celebrated, in the scope of which these companies compromise to exchange their participation in Optimus of 25.72% and 5.04%, respectively, for a participation in Sonaecom. As a result of these agreements Sonaecom controls 100% of the shares of Optimus, and incorporate the totality of the results since 31 July 2006, as well as reported, at that date,the correspondent goodwill.

2. Investments in associated companies

At 31 March 2007 and 2006, this caption included investments in associated companies, which head offices, main activities, shareholders, percentage of share capital held and book value was as follows:

				Percentage of share capital held
				2007		2006		Book value
Company (Commercial brand)	Head Office	Main activity	Shareholder	Direct	Effective*	Direct	Effective*	2006	2005
Associated companies:
Net Mall, S.G.P.S., S.A. ("Net Mall")	Maia	Management of shareholdings.	Sonae.Com Sistemas de Informação	39.51%	39.51%	39.51%	39.51%	(a)	(a)
Sociedade Independente de Radiodifusão Sonora, S.A. ("S.I.R.S." – using the brand name " Rádio Nova")	Oporto	Sound broadcasting. Radio station.	Público	45%	45%	45%	45%	(a)	(a)
Unipress – Centro Gráfico, Lda. ("Unipress")	V.N. Gaia	Trade and industry of graphic design and publishing	Público	40%	40%	40%	40%	735,613	714,427
Profimetrics – Software Solutions, S.A. (Profimetrics) (b)	Maia	Development of software solutions to optimize the retail sales	Sonae.com Sistemas de Informação	30%	30%	30%	30%	(a)	150,000
* Sonaecom effective participation (a) Investment recorded at a nil book value (b) Company created in March 2006.								735,613	864,427

The associated companies were included in the consolidated financial statements in accordance with the equity method, as explained in Note 1. b).

3. Changes in the Group

During the periods ended 31 March 2007 and 2006 the following changes occurred in the composition of the Group:

4. a) Acquisitions

		2007
				Current %
Purchaser	Subsidiary	Date	% acquired	shareholding
Sonae.com SI	We Do	Jan-07	0.70%	98.36%
Sonae.com SI	We Do	Feb-07	0.66%	99.02%
Sonae.com SI	We Do	Mar-07	0.06%	99.08%

During the period ended 31 March 2007 and as a result of the above mentioned acquisitions, an additional Goodwill of Euro 177,778 was recorded (Note 7).

		2006
				Current %
Purchaser	Subsidiary	Date	% acquired	shareholding
Sonae.com SI	We Do	Mar-06	0.99%	96.46%

During the period ended 31 March 2006 and as a result of the above mentioned acquisitions, an additional Goodwill of Euro 124,824 was recorded (Note 7).

4. b) Incorporations

					Current %
Year	Shareholder	Subsidiary	Date	Amount	shareholding
2006	Sonaecom	Sonaecom BV	Feb-06	20,000	100%
2006	Sonae.com SI	Profimetrics	Mar-06	500,000	30%

4. c) Sales

					%
Year	Seller	Subsidiary	Date	% Sold	Shareholding
2006	Net Mall	Global S, SGPS, SA	Jan-06	64.73%	-

The sale of Net Mall generated a gain in Sonaecom Group of Euro 1.

5. Tangible Assets

The movement in tangible assets and corresponding accumulated depreciation and impairment losses in the periods ended 31 March 2007 and 2006 was as follows:

	Land	Buildings and other constructions	Plant and machinery	Vehicles	Fixtures and fittings	Tools	Other tangible assets	Work in progress	Total
GROSS ASSETS Balance at 31 December
2006	1,391,593	223,133,165	744,209,079	53,271	134,075,541	1,087,839	2,567,599	22,560,357	1,129,078,444
Additions	-	978,239	813,990	13,522	106,991	-	8,270	24,275,820	26,196,832
Disposals	-	(73,098)	(189,545)	(30,506)	(10,024)	-	-	(9,972)	(313,145)
Transfers and writte-offs	-	2,977,268	23,367,827	19,321	1,336,126	-	-	(26,989,057)	711,485
Balance at 31 March 2007	1,391,593	227,015,574	768,201,351	55,608	135,508,634	1,087,839	2,575,869	19,837,148	1,155,673,616
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES: Balance at 31 December
2006	-	108,987,153	418,800,773	48,768	103,280,214	1,021,794	2,168,000	-	634,306,702
Depreciation for the period	-	5,439,213	19,845,409	507	3,595,227	4,899	54,463	-	28,939,718
Reversal of impairment losses in the period	-	(8,863)	(120,207)	-	(79,516)	(228)	(16)	-	(208,830)
Disposals	-	(5,394)	(37,805)	(1,672)	(6,282)	-	-	-	(51,153)
Transfers and writte-offs	-	(26,643)	19,265	-	(36,278)	(21)	(1)	-	(43,678)
Balance at 31 March 2007	-	114,385,466	438,507,435	47,603	106,753,365	1,026,444	2,222,446	-	662,942,759
Net value	1,391,593	112,630,108	329,720,302	8,005	28,728,883	61,395	353,423	19,837,148	492,730,857

	Land	Buildings and other constructions	Plant and machinery	Vehicles	Fixtures and fittings	Tools	Other tangible assets	Work in progress	Total
GROSS ASSETS Balance at 31 December
2005	1,391,593	193,802,186	669,946,802	168,785	132,463,176	1,046,912	2,769,153	11,914,444	1,013,503,051
Additions	-	3,510,253	1,180,896	33,416	362,439	-	10,500	26,549,350	31,646,854
Disposals	-	(551,542)	(193,812)	(51,006)	(85,930)	(2,933)	(1,763)	(98,618)	(985,604)
Transfers and writte-offs	-	4,159,302	19,714,269	9,541	1,997,734	-	109	(26,447,074)	(566,119)
Balance at 31 March 2006	1,391,593	200,920,199	690,648,155	160,736	134,737,419	1,043,979	2,777,999	11,918,102	1,043,598,182
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES: Balance at 31 December
2005	-	89,408,263	350,360,883	102,913	93,059,285	1,010,003	2,129,329	-	536,070,676
Depreciation for the period	-	4,620,453	16,817,635	6,135	3,882,639	3,711	150,004	-	25,480,577
Reversal of impairment losses in the period	-	-	-	-	(6,767)	-	(2,671)		(9,438)
Disposals	-	(63,673)	(128,494)	(42,398)	(47,354)	(2,933)	(558)	-	(285,410)
Transfers and writte-offs	-	(15,520)	(63,313)	3,285	127,878	(21)	(42,280)	-	10,029
Balance at 31 March 2006	-	93,949,523	366,986,711	69,935	97,015,681	1,010,760	2,233,824	-	561,266,434
Net value	1,391,593	106,970,676	323,661,444	90,801	37,721,738	33,219	544,175	11,918,102	482,331,748

The additions to Tangible assets during the period include: assets associated with the UMTS operation (Universal Mobile Telecommunications Service); HSDPA (Kanguru Express); ULL assets (unbundling of the local loop); and assets related with the Triple Play project.

The acquisition cost of Tangible assets held by the Group under finance lease contracts amounted to Euro 9,378,039 and Euro 12,110,102 as of 31 March 2007 and 2006, respectively and their net book value as of those dates amounted to Euro 5,019,816 and Euro 6,942,003, respectively.

Tangible assets in progress at 31 March 2007 and 2006 were made up as follows:

	2007	2006
Development of mobile network	10,536,852	5,259,603
Development of fixed network	6,477,410	4,992,328
Information systems	2,687,498	1,478,988
Other projects in progress	135,388	187,183
	19,837,148	11,918,102

The development of fixed network includes Euro 6,359,892 related to the Triple Play project.

At 31 March 2007 and 2006, the amounts of commitments to third parties relating to investments to be made were as follows:

	2007	2006
Technical investments	25,150,299	37,855,144
Investments in information systems	9,167,867	15,996,842
	34,318,166	53,851,986

6. Intangible assets

The movement in Intangible assets and in the corresponding accumulated amortisation and impairment losses in the periods ended 31 March 2007and 2006 was as follows:

	Brands and	Intangible assets
	patents	Software	in progress	Total
GROSS ASSETS:
Balance at 31 December 2006	147,400,303	190,159,744	7,986,808	345,546,855
Additions	5,148	150,355	3,048,825	3,204,328
Disposals	-	(2,291)	(630)	(2,921)
Transfers and writte-offs	61,505	1,548,717	(2,321,674)	(711,452)
Balance at 31 March 2007	147,466,956	191,856,525	8,713,329	348,036,810

ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES:

Balance at 31 December 2006	31,677,199	147,204,682	-	178,881,881
Depreciation for the period Reversal of impairment losses in the	3,315,357	4,375,531	-	7,690,888
period	(236)	(131,636)	-	(131,872)
Disposals	-	(2,291)	-	(2,291)
Transfers and writte-offs	(148)	43,981	-	43,833
Balance at 31 March 2007	34,992,172	151,490,267	-	186,482,439
Net value	112,474,784	40,366,258	8,713,329	161,554,371

	Brands and patents Software		Intangible assets in progress	Total
GROSS ASSETS:
Balance at 31 December 2005	147,155,167	172,425,905	7,085,344	326,666,416
Additions	11,453	103,821	3,541,718	3,656,992
Disposals	(6,853)	-	(426,892)	(433,745)
Transfers and writte-offs	5,553	2,492,388	(1,993,740)	504,201
Balance at 31 March 2006	147,165,320	175,022,114	8,206,430	330,393,864
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES:
Balance at 31 December 2005	18,483,941	132,907,337	-	151,391,278
Depreciation for the period	3,298,790	3,712,024	-	7,010,814
Disposals	(1,725)	-	-	(1,725)
Transfers and writte-offs	(9,279)	61,060	-	51,781
Balance at 31 March 2006	21,771,727	136,680,421	-	158,452,148
Net value	125,393,593	38,341,693	8,206,430	171,941,716

At 31 March 2007 and 2006, the Group has recorded under the heading 'Intangible assets' the amounts of Euro 111,802,442 and Euro 124,579,864, respectively, that corresponds to the investments net of depreciations made in the development of the UMTS network, including Euro 78,757,563 (amount of Euro 87,758,427 in 2006) related to the license and Euro 26,315,789 (amount of Euro 29,323,308 in 2006) related to the agreement reached in 2002 between Oni Way and the other three mobile telecommunication operators in Portugal with UMTS licenses.

The intangible assets in progress, at 31 March 2007 and 2006, were mainly composed by software development.

Intangible and tangible assets include interest and other financial expenses incurred, directly related to the construction of certain items of work in progress. At 31 March 2007 and 2006 such expenses amounted to Euro 13,314,243 and Euro 12,553,129, respectively. The amount capitalised on the periods ended 31 March 2007 and 2006 were Euro 217,733 and Euro 99,528, respectively. An interest capitalization rate of 4.49% was used in 2007 (3.224% in 2006), which corresponds to the average interest rate supported by the Group.

7. Goodwill

At 31 March 2007 and 2006, the movements occurred in goodwill were as follows:

	2007	2006
Opening balance	506,902,772	285,468,452
Increase of participations (Note 4. a))	177,778	124,824
Closing balance	507,080,550	285,593,276

In accordance with IFRS 3, the Group suspended the amortization of the 'Goodwill' from 1 January 2004.

Goodwill at 31 March 2007 and 2006 was made up as follows:

	2007	2006
Optimus	389,902,620	165,081,139
Novis	95,189,755	95,189,755
Público	20,000,000	20,000,000
WeDo	1,857,389	1,517,539
SIRS	72,820	72,820
Permar	47,253	47,253
Optimus Towering	10,713	10,713
Retailbox	-	2,000,505
Enabler	-	1,041,263
Enabler UK	-	560,642
Enabler DE	-	71,647
	507,080,550	285,593,276

8. Investments available for sale

At 31 March 2007 and 2006, this caption included investments classified as available for sale and was made up as follows:

		2007			2006
	Gross amount	Accumulated impairment losses (Note 15)	Net amount	Gross amount	Accumulated impairment losses (Note 15)	Net amount
Despegar.com	2,539,229	(2,539,229)	-	2,539,229	(2,539,229)	-
Altitude, SGPS, S.A.	1,000,000	-	1,000,000	1,000,000	-	1,000,000
Lusa – Agência de Notícias de Portugal, S.A.	197,344	-	197,344	197,344	-	197,344
SESI – Sociedade de Ensino Superior e Investigação, S.A.	-	-	-	146,248	(146,248)	-
NP – Notícias Portugal, Cooperativa de Utentes de Serviços de Informação, C.R.L.	7,482	-	7,482	7,482	-	7,482
Others	2,494	-	2,494	2,494	-	2,494
	3,746,549	(2,539,229)	1,207,320	3,892,797	(2,685,477)	1,207,320

During the period ended 31 March 2007, the movements in investments available for sale were as follows:

	2007	2006
Opening balance	112,317,225	1,207,320
Fair value adjustments recorded under reserves	(5,121,876)	-
Sales	(108,461,474)	-
Capital gain recorded under profit and loss statement (Note 18)	2,473,445	-
Closing balance	1,207,320	1,207,320

The sale and respective gain recognized in the period relate to the sale of 1% of the share capital of Portugal Telecom, S.G.P.S., S.A..

9. Deferred tax assets

Deferred tax assets at 31 March 2007 and 2006, in the amount of Euro 62,819,612 and Euro 68,827,031, respectively, result mainly from timing differences relating to tax losses carried forward and non tax deductible provisions.

The movements in deferred tax assets in the periods ended 31 March 2007 and 2006 were as follows:

	2007	2006
Opening balance	61,786,654	66,239,165
Impact on results
Tax losses carried forward	240,352	(3,474,693)
Recognition of deferred taxes, not recorded in previous years as, at that time, the existence of future taxable profits was considered to
be uncertain (Optimus and Digitmarket)	1,014,498	6,700,000
Temporary differences between the tax and accounting value of fixed assets	(220,847)	(637,441)
Sub-total (Note 19)	1,034,003	2,587,866
Others	(1,045)	-
Closing balance	62,819,612	68,827,031

At 31 March 2007 and 2006 assessments were made of the deferred taxes to be recognised. Potential deferred tax assets were recorded to the extent that future taxable profits were expected to be generated against which the tax losses and deductible tax differences could be used. These assessments were made based on the business plans of the Group companies involved, periodically reviewed and updated.

The rates used at 31 March 2007 and 2006 to calculate the deferred tax assets relating to tax losses carried forward were 25% and 27.5%, respectively. The rates used at 31 March 2007 and

2006 to calculate deferred tax assets resulting from temporary differences were 26.5% and 27.5%, respectively. The change in the tax rate between 2006 and 2007 was a consequence of the publication of the Local Finances Law in the beginning of 2007, which changed the form of calculation of the Municipal Surcharge.

In accordance with the tax returns and other information prepared by the companies that have registered deferred tax assets, the detail of such deferred tax assets by nature at 31 March 2007 were as follows:

Nature	Optimus	We Do	Público	Digitmarket	Mainroad	Total
Tax losses:
To be used until 2008	-	223,723	-	-	-	223,723
To be used until 2009	3,412,433	292,870	-	-	-	3,705,303
To be used until 2010	-	79,046	-	203,338	16,045	298,429
To be used until 2011	-	196,644	-	210,662	31,676	438,982
To be used until 2012	-	-	1,343,916	-	184,279	1,528,195
	3,412,433	792,283	1,343,916	414,000	232,000	6,194,632
Provisions not accepted for tax purposes and other temporary differences	7,821,248	525,436	-	-	-	8,346,684
Adjustments in the conversion to IAS/ IFRS	33,324,421	19,550	29,421	-	-	33,373,392
Differences between the tax and accounting value of fixed assets and others	14,904,904	-	-	-	-	14,904,904
Total	59,463,006	1,337,269	1,373,337	414,000	232,000	62,819,612

At 31 March 2007 and 2006, the Group has other situations where potential deferred tax assets could result which were not recognised since it was not expected that sufficient taxable profits could be generated in the future to cover those losses:

	2007	2006
Tax losses	92,375,068	98,670,955
Temporary differences (mainly provisions not accepted for tax purposes)	20,896,545	23,160,828
Adjustments in the conversion to IAS/IFRS	2,275,537	4,444,764
	115,547,150	126,276,547

The reconciliation between the earnings before taxes and the taxes recorded in the periods ended 31 March 2007 and 2006 is as follows:

	2007	2006
Earnings before taxes	(6,781,116)	2,992,933
Income tax rate (26.5% and 27.5%)	1,796,996	(823,057)
Deferred tax assets not recognised in the individual accounts and/or
resulting from consolidation adjustments	(1,699,843)	(3,165,555)
Adjustments to taxable income of the current year	(55,711)	137,427
Deferred tax assets not recognised in previous years	1,014,498	6,700,000
Movements in the temporary differences between the tax and
accounting value of assets	(220,848)	(637,441)
Income taxation recorded in the year (Note 35)	835,092	2,211,374

Portuguese Tax Authorities can review the income tax returns of the Company and of its subsidiaries for a period of four years (ten years for Social Security till 31 December 2000 and five years after that date), except when tax losses have been generated, tax benefits have been granted or when any review, claim or impugnation is in course. Consequently, tax returns of each year, since the year 2003 (inclusive) are still subject to such review. The Board of Directors believe that any correction that may arise as a result of such review would not produce a significant impact in the attached financial statements.

10. Other non current assets

At 31 March 2007 and 2006 this caption was comprised mainly by loans granted to associated companies and was made up as follows:

		2007			2006
		Accumulated impairment			Accumulated impairment
	Gross amount	losses (Note 15)	Net amount	Gross amount	losses (Note 15)	Net amount
FINANCIAL ASSETS:
Loans granted to companies recorded under the equity method:
Rádio Nova	-	-	-	118,500	(118,500)	-
		-		118,500	(118,500)	-
Other loans granted:
S.E.S.I.	-	-	-	24,316	(24,316)	-
	-	-	-	24,316	(24,316)	-
NON FINANCIAL ASSETS:
Medium Term Incentive Plans (Notes 1. w)
and 24)	-	-	-	3,823,403	-	3,823,403
	-	-	-	3,823,403	-	3,823,403
	-	-	-	3,966,219	(142,816)	3,823,403

The loans granted are recorded at their nominal value and are subject periodically to impairment tests.

The associated companies Profimetrics and Rádio Nova are included in the consolidation under the equity method. Since the proportion of the Group in the accumulated losses of these companies is greater than the recorded amount of the investment, and due to the fact that the Group committed itself in relation to these associated companies, a provision for other liabilities and charges was recorded, which covers the potential losses that could arise from the non recoverability of those loans.

11. Investments recorded at fair value through profit and loss

During the periods ended 31 March 2007 and 2006, the movements in this heading were as follows:

	2007	2006
Balance at the beginning of the year	849,375	1,321,690
Acquisitions in the period	-	414,842
Disposals in the period	-	(273,820)
Increases/ reductions to fair value (Note 18)	101,250	321,699
	950,625	1,784,411

At 31 March 2007, 'Investments recorded at fair value through profit and loss' correspond to 562,500 shares of Sonae, S.G.P.S., S.A., acquired to fulfil future obligations under the Medium Term Incentive Plans (1,120,074 shares in December 2005) and it is recorded based on closing share price of Euronext at the balance sheet date.

Those shares were classified, at the initial moment, as investments recorded at fair value through profit and loss because it eliminates an accounting mismatch, in the profit and loss statements, related to the responsibilities associated to the Medium Term Incentive Plans .

12. Cash and cash equivalents

At 31 March 2007 and 2006, the detail of cash and cash equivalents was as follows:

2007 2006
845,346 318,695
7,969,162 4,850,595
180,675,537 185,000,110
189,490,045 190,169,400
(772,663) (357,959)
188,717,382 189,811,441

	2007	2006
Funds placed in Sonae:
Sonaecom	-	163,473,004
Bank term deposits:
Sonaecom BV	112,980,000	-
Optimus	65,586,000	14,765,000
WeDoBrasil	1,162,533	2,462,279
Mainroad	585,000	575,000
Sonaecom	222,004	75,000
Digitmarket	140,000	510,000
Novis	-	1,710,000
WeDo	-	450,000
Enabler	-	389,827
Miauger	-	130,000
Optimus Towering	-	100,000
Sonae.com SI	-	65,000
Others	-	295,000
	180,675,537	185,000,110

At 31 March 2007 and 2006, the heading 'Treasury applications' had the following breakdown:

During the period ended 31 March 2007, the above referred treasury applications bear interests at an average rate of 3.635%.

13. Loans

At 31 March 2007 and 2006, the heading Loans had the following breakdown:

a) Medium and long-term loans net of short-term portion

				Type of	Amount outstanding
Subsidiary	Issue denomination	Limit	Maturity	reimbursement	2007	2006
	"Obrigações Sonaecom SGPS 2005"	-	Jun-13	Final	150,000,000	150,000,000
Sonaecom SGPS	Costs associated with setting-up the financing	-	-	-	(3,247,130)	(3,705,990)
					146,752,870	146,294,010
	European Investment Bank (a)	324,458,200	Jun-09	30% - Jun 08 70% - Jun 09	324,458,200	324,458,200
	Revolving credit facility (syndicate)	125,541,800	Jun-09	Final	-	-
Optimus
	Costs associated with setting-up the financing	-	-	-	(9,440,196)	(13,962,543)
	Fair value of swaps	-	-	-	114,510	275,830
					315,132,514	310,771,487
					461,885,384	457,065,497

(a) As a guarantee of the EIB loans, the banks participating in the Optimus syndicated credit facility have issued a bank guarantee in favour of the EIB.

b) Short-term loans and other loans

			Amount outstanding
Subsidiary	Lender	Type	2007	2006
Various	Various	Bank overdrafts	772,663	357,959
			772,663	357,959

These loans bear interest at market rates, indexed to the Euribor of the respective term and were all contracted in Euro. The spread applicable to the long term financings is 87.5 basis points in the case of the "Sonaecom SGPS 2005" Bonds and, currently, 55 basis points in the Optimus syndicated loan (in this case, the spread may vary based on the level of Net Debt to EBITDA of that subsidiary).

All of the above loans are unsecured and the fulfilment of the obligations under these loans is exclusively guaranteed by the underlying activities and the companies respective cash flows.

At 31 March 2007 and 2006, the repayment schedule of medium and long term loans and bonds was as follows:

Maturity year	2007	2006
2008	97,337,460	97,337,460
2009	227,120,740	227,120,740
2013	150,000,000	150,000,000

The following interest rate hedging instruments were outstanding at 31 March 2007 and 2006:

Subsidiary	Hedged loan	Notional amount	Expiry date	Base rate	Fixed rate contracted	Fair value of the derivative transactions
Optimus	European	55,000,000	Dec-07	Euribor 3m	4,75% (a)	(114,510)	-
Investment Bank			4.10%	-	(275,830)
		55,000,000				(114,510)	(275,830)

(a) This rate corresponds to the cap (maximum rate) contracted and effective after 15 September 2006. The rate effectively paid corresponds to the simple average of the 2 year swap rates verified during the period (4.134% in the last period of exchange).

14. Other non current financial liabilities

At 31 March 2007 and 2006, this caption was made up of accounts payable to fixed assets suppliers related to leasing contracts that are due in more than one year in the amount of Euro 1,316,850 and Euro 2,037,689, respectively.

At 31 March 2007 and 2006, accounts payable to fixed assets suppliers related to leasing contracts are due as follows:

	2007		2006
	Lease payments	Present value of lease payments	Lease payments	Present value of lease payments
2006	-	-	2,269,705	2,156,609
2007	1,422,572	1,350,361	1,016,728	928,985
2008	957,718	906,046	683,590	636,090
2009	477,035	457,943	475,657	457,253
2010	228,719	220,614	236,931	229,540
2011	27,907	27,831	-	-
	3,113,951	2,962,795	4,682,611	4,408,477
Interests	(151,156)	-	(274,134)	-
	2,962,795	2,962,795	4,408,477	4,408,477
Short term liability
(Note 16)	-	(1,645,945)	-	(2,370,788)
	2,962,795	1,316,850	4,408,477	2,037,689

15. Provisions and accumulated impairment losses

The movements in provisions and in accumulated impairment losses in the periods ended 31 March 2007 and 2006 were as follows:

2007
Heading	Opening balance	Transfers	Increases	Utilisations	Decreases	Closing balance
Accumulated impairment losses on accounts receivables	61,060,155	(194,000)	2,978,271	(1,271,317)	(12,704)	62,560,405
Accumulated impairment losses on inventories	6,122,085	-	249,000	-	(31,000)	6,340,085
Accumulated impairment losses on investments available for sale (Note 8)	2,539,229	-	-	-	-	2,539,229
Provisions for other liabilities and charges	20,078,571	194,000	1,031,492	(109,121)	(34,506)	21,160,436
	89,800,040	-	4,258,763	(1,380,438)	(78,210)	92,600,155

		2006
Heading	Opening balance	Transfers	Increases	Utilisations	Decreases	Closing balance
Accumulated impairment losses on accounts receivables	64,905,431	-	125,726	(2,996,753)	(10,367)	62,024,037
Accumulated impairment losses on inventories	7,134,249	-	785,000	(1,154,452)	-	6,764,797
Accumulated impairment losses on investments available for sale (Note 8)	2,685,477	-	-	-	-	2,685,477
Accumulated impairment losses on other non current assets and in associated companies investments (Notes 3 and 10)	986,956	-	-	-	-	986,956
Provisions for other liabilities and charges	5,092,476	(100,943)	4,240,477	(128,500)	-	9,103,510
	80,804,589	(100,943)	5,151,203	(4,279,705)	(10,367)	81,564,777

The increase of 'Provisions for other liabilities and charges' includes the amount of Euro 653,300 associated with the dismantling of sites (Euro 3,285,860 in 2006), as foreseen in IAS 16 (Note 1.c.)). As such, the total amount included under increase of provisions and of impairment losses, registered against a corresponding entry in the profit and loss statement, corresponds to Euro 3,605,463 (Euro 1,865,343 in 2006).

The heading utilisations refer, essentially, to the use of provisions by the subsidiary Optimus, which were registered against an entry in customers' current accounts.

At 31 March 2007 and 2006, the breakdown of the provisions for other liabilities and charges were as follows:

	2007	2006
Dismantling of sites	15,758,440	6,169,060
Legal processes	3,832,553	1,891,246
Indemnities	498,280	652,500
Others	1,071,163	390,704
	21,160,436	9,103,510

16. Other current financial liabilities

At 31 March 2007 this caption includes the amount of Euro 1,645,945 (Euro 2,370,788 in 2006) related to the short term portion of lease contracts (Note 14).

17. External supplies and services

'External supplies and services' for the periods ended 31 March 2007 and 2006 are made up as follows:

	2007	2006
Interconnection costs	52,939,124	49,656,391
Commissions	12,962,814	13,915,932
Specialised works	12,345,966	14,374,814
Rents	7,670,830	7,641,021
Advertising and publicity	6,035,719	5,734,608
Leased lines	5,863,140	4,591,811
Energy	2,012,302	1,800,763
Travelling costs	898,584	1,552,101
Other supplies and services	13,180,461	12,375,578
	113,908,940	111,643,019

The commitments assumed by the Group in 31 March 2007 related with operational leases are as follows:

Minimum payments of operational leases

2007	3,011,702
2008	3,343,754
2009	1,933,256
2010	736,548
2011	37,362
	9,062,622

18. Financial results

Net financial results for the periods ended 31 March 2007 and 2006 are made up as follows:

	2007	2006
Financial results related to associated companies:
Losses on associated companies	(87,573)	-
Gains on associated companies	-	28,766
	(87,573)	28,766
Other financial expenses:
Interest expenses	(11,748,602)	(3,887,220)
Other loans	(6,507,134)	-
Bank loans	(5,123,534)	(3,707,202)
Swap interests	(68,444)	(91,654)
Leasing interests	(33,317)	(60,817)
Bank overdrafts	(12,747)	(3,235)
Other interests	(3,426)	(24,312)
Foreign exchange losses	(27,018)	(73,497)
Other financial expenses	(1,475,050)	(1,458,121)
Set up costs (Note 13)	(1,277,509)	(1,142,741)
Swap fair value (Note 13)	(7,048)	(59,417)
Others	(190,493)	(255,963)
	(13,250,670)	(5,418,838)
Other financial income:
Interest income	6,535,494	1,420,174
Foreign exchange gains	91,866	100,340
Adjustments to fair value on investments recorded at fair value
through profit and loss (Note 11)	101,250	321,699
Gains with sale of Investments available for sale	2,473,445	-
Other financial income	-	9,372
	9,202,055	1,851,585

'Interest income' includes, mainly, interest earned on the treasury applications granted to Sonae and on bank deposits (Note 12).

19. Income taxation

Income taxes recognised during the periods ended 31 March 2007 and 2006 are made up as follows ((costs)/gains):

(376,492)
2,587,866
2,211,374

20. Related parties

During the periods ended 31 March 2007 and 2006, the balances and transactions with related parties mainly relate to the normal operational activity of the Group (providing communications and consultancy services) and to the granting and obtaining loans.

The most significant balances and transactions with related parties at 31 March 2007 and 2006 were as follows:

		Balances at 31 March 2007
	Accounts receivable	Accounts payable	Treasury applications	Accruals	Loans obtained
Sonae	52,247	31,974	222,004	751,305	-
Modelo Continente Hipermercados, S.A.	3,246,842	1,722,472	-	55,973	-
France Telecom	2,810,591	5,520,840	-	2,726	-
Sonae Investments BV	-	-	-	(2,371,169)	-
	6,109,680	7,275,286	222,004	(1,561,165)	-
		Balances at 31 March 2006
	Accounts receivable	Accounts payable	Treasury applications	Accruals	Loans obtained
Sonae	50,161	28,797	163,473,004	1,397,729	-
Modelo Continente Hipermercados, S.A.
France Telecom	3,216,083 1,698,985	337,893 3,671,755	- -	(615,732) 165,522	- -
Sonae Investments BV	-	-	-	(5,327,551)	-
	4,965,229	4,038,445	163,473,004	(4,380,032)	-

		Transactions at 31 March 2007
	Sales and services rendered	Supplies and services received	Interest and similar income/ (expense)	Supplementary income
Sonae Modelo Continente	97,898	42,667	650,965	-
Hipermercados, S.A.	381,918	1,104,491	-	60,256
France Telecom	633,477	1,716,533	-	-
	1,113,293	2,863,691	650,965	60,256
		Transactions at 31 March 2006
	Sales and	Supplies and	Interest and similar
	services	services	income/	Supplementary
	rendered	received	(expense)	income
Sonae Modelo Continente	80,327	46,748	1,104,347	-
Hipermercados, S.A.	3,740,032	362,065	-	55,439
France Telecom	626,055	2,406,214	-	-
	4,446,414	2,815,027	1,104,347	55,439

21. Guarantees provided to third parties

Guarantees provided to third parties at 31 March 2007 and 2006 were as follows:

Company	Beneficiary	Description	2007	2006
Optimus	European Investment Bank	Loan	324,458,200	324,458,200
Sonaecom	BBVA – Portugal, ING Belgium Portugal and Millennium BCP	Commercial paper	70,000,000	70,000,000
Optimus	ANACOM	UMTS License	2,493,989	2,493,989
Optimus	Direcção de Contribuições e Impostos (Portuguese tax authorities)	VAT Reimbursements	1,650,000	-
Optimus e Público	Direcção de Contribuições e Impostos (Portuguese tax authorities)	VAT - Liquidation	598,000	598,000
Público	Tribunal de Trabalho de Lisboa (Lisbon Labour Court)	Execution action n. 199A/92	271,511	271,511
Optimus, Novis e Digitmarket	Hewlett Packard	Finance lease and services provider contracts	159,859	171,536
Público	Fazenda Pública do Porto (Oporto Public Treasury)	Tax process n. 3190/98	209,493	209,493
We Do e Enabler (2006)	API (Portuguese Investment Agency)	Application to PRIME subsidies	184,004	468,120
Optimus e Novis	Direcção Geral do Tesouro (Portuguese tax authorities)	IRC – Witholding tax on payments to non-residents	164,000	164,000
Novis	Direcção de Contribuições e Impostos (Portuguese tax authorities)	VAT Reimbursements	-	108,372
Novis	Governo Civil de Santarém (Santarém Government Civil)	Guarantee the fulfilment of legal obligations associated with a public contest launched	119,703	119,703
Novis	Câmara Municipal de Coimbra (Coimbra Municipality)	Performance bond - works	101,403	101,403
Optimus	Governo Civil de Lisboa (Lisbon Government Civil)	Guarantee the fulfilment of legal obligations	98,195	98,195
Novis	Câmara Municipal de Lisboa (Lisbon Municipality)	Performance bond - works	85,652	91,560
Novis	Câmara Municipal de Braga (Braga Municipality)	Performance bond - works	45,416	45,416
Novis	Câmara Municipal de Elvas (Elvas Municipality)	Performance bond - works	28,142	28,142
Novis	Câmara Municipal de Caldas da Rainha (Caldas da Rainha Municipality)	Performance bond - works	19,952	19,952
Various	Others		623,717	520,456
			401,311,236	399,968,048

22. Information by business segment

The following business segments were identified for the periods ending 31 March 2007 and 2006:

• Mobile network
• Fixed network and Internet
• Multimedia
• Information systems

The remaining activities of the Group and corporate services have been classified as unallocated.

Inter-segment transactions at 31 March 2007 and 2006 were eliminated in the consolidation process.

Due to the immateriality of the assets and transactions of the Group outside Portugal, segment information by geographical markets is not presented.

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties and are mainly related to interconnection, interest on treasury applications and management fees.

Overall information by business segment at 31 March 2007 and 2006 can be summarised as follows:

	Mobi le Ne	twor k	Fixed Netw ork a	nd In terne t	Mult	imed ia	Infor matio	n Sys tems	Othe	r	Sub-	total	Elimi	natio ns	Tota	l
	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006	31 M arch 2007	31 M arch 2006
Reve nues :
Sales and servi ende red ces r	142, 773, 317	141, 226,8 32	54,0 32,49 8	44,5 06,49 2	7,17 5,526	8,72 3,418	14,9 09,64 0	22,1 00,58 0	1,80 5,477	1,93 8,410	220, 696,4 58	218, 495,7 32	(21,7 3) 52,63	(21,6 6) 00,24	198, 943,8 25	196, 895,4 86
Othe ratin r ope g rev enue s	8,43 2,179	8,92 9,82 1	1,01 8,373	1,42 3,143	69,6 49	129, 796	192, 104	526, 301	77,7 29	94,7 02	9,79 0,034	11,1 03,76 2	(8,46 ) 0,610	(9,83 ) 4,215	1,32 9,424	1,26 9,547
Tota l reve nues	151, 205,4 96	150, 156,6 53	55,0 50,87 1	45,9 29,63 5	7,24 5,175	8,85 3,214	15,1 01,74 4	22,6 26,88 1	1,88 3,206	2,03 3,112	230, 486,4 92	229, 599,4 94	(30,2 3) 13,24	(31,4 1) 34,46	200, 273,2 49	198, 165,0 34
Depr eciat ion a nd am ortis ation e/(lo ss) be Net i fore and inter ests ncom	(31,6 1) 18,69	(28,1 4) 95,69	(4,73 9) 7,93	(3,80 ) 6,750	(166 ,636)	(223 ,005)	(332 ,923)	(416 ,693)	(82,8 75)	(83,3 06)	(36,9 4) 39,06	(32,7 8) 25,44	308, 458	234, 057	(36,6 6) 30,60	(32,4 1) 91,39
for t he se taxes t gmen	3,337 ,783	16,1 54,36 1	(4,50 ) 0,477	(8,31 ) 5,938	(1,34 ) 8,212	(2,14 ) 3,169	911, 018	1,49 3,43 1	(1,53 ) 6,777	(684 ,322)	(3,13 ) 6,665	6,50 4,362	491, 737	27,0 58	(2,64 ) 4,928	6,53 1,420
Net i ntere sts	(2,42 ) 0,854	(1,86 ) 6,919	(765 ,242)	(513 ,832)	(27,6 33)	(43,2 00)	171, 725	148, 986	(2,14 ) 3,996	(179 ,288)	(5,18 ) 6,000	(2,45 ) 4,252	(27,1 08)	(12,7 94)	(5,21 ) 3,108	(2,46 ) 7,046
Gains and losse s in a ssoci ated anies comp	-	-	-	-	-	-	-	-	-	-	-	-	(87,5 73)	28,7 66	(87,5 73)	28,7 66
Othe r fina ncial resul ts	(1,25 ) 2,613	(1,25 ) 8,958	(4,27 8)	(5,46 3)	(2,44 3)	(5,95 1)	(60,0 48)	15,7 12	2,21 8,41 1	146, 426	899, 029	(1,10 ) 8,233	265, 464	8,02 6	1,16 4,49 3	(1,10 ) 0,207
Incom e tax ation	1,10 2,358	2,81 0,854	(10,8 34)	(11,9 60)	(5,15 6)	(5,40 3)	(248 ,815)	(579 ,965)	(2,46 1)	(2,15 1)	835, 092	2,21 1,374	-	-	835, 092	2,21 1,374
ome/ (loss) Cons olida ted n et inc for t he ye ar Attri buta ble to :	766,6 74	15,8 39,33 8	(5,28 1) 0,83	(8,84 3) 7,19	(1,38 ) 3,444	(2,19 3) 7,72	773, 880	1,07 8,164	(1,46 3) 4,82	(719 ,335)	(6,58 ) 8,544	5,15 3,252	642, 520	51,0 56	(5,94 ) 6,024	5,20 4,307
Shar ehold f Par ent C ers o ompa ny	766, 674	15,8 39,3 38	(5,28 1) 0,83	(8,84 3) 7,19	(1,38 4) 3,44	(2,19 3) 7,72	773, 880	1,07 8,16 4	(1,46 3) 4,82	(719 ) ,335	(6,58 4) 8,54	5,15 3,25 2	584, 294	(5,00 7) 6,66	(6,00 0) 4,25	146, 584
Mino rity in teres ts	-	-	-	-	-	-	-	-	-	-	-	-	58,2 26	5,05 7,723	58,2 26	5,05 7,72 3
Asse ts:
Fixed d Goo dwill ts an asse	550, 502,2 77	566, 309,9 06	112, 291,8 81	95,6 07,30 8	2,18 7,259	2,37 8,225	13,0 21,76 4	15,0 91,07 7	2,03 7,120	2,31 3,228	680, 040, 301	681, 699,7 43	481, 325,4 77	258, 166,9 97	1,16 1,365 ,778	939, 866,7 40
Inven torie s	17,7 67,06 3	25,1 03,20 6	1,84 3,045	2,48 8,467	1,46 4,847	1,10 2,349	3,91 6	87,4 30	-	-	21,0 78,87 1	28,7 81,45 2	-	-	21,0 78,87 1	28,7 81,45 2
Finan cial in vestm ents	1,28 2,025	1,28 2,026	-	-	1,09 7,695	979, 194	2,49 4	2,49 5	1,23 8,635 ,273	650, 184,5 45	1,24 1,017 ,487	652, 448,2 60	(1,23 ,554) 9,074	(650 513) ,376,	1,94 2,933	2,07 1,747
Othe ent a ssets r non curr	61,1 27,18 6	71,9 03,84 4	-	685, 382	1,37 3,335	1,74 3,166	1,98 3,269	1,59 0,782	500, 474, 309	639, 016, 130	564, 958,0 99	714, 939,3 04	(502 487) ,138,	(640 672) ,390,	62,8 19,61 2	74,5 48,6 32
Othe rent asset s of t he se t r cur gmen	297, 513,3 04	255, 694,6 66	75,8 40,30 7	68,4 90,53 6	9,72 9,832	9,52 3,196	30,8 36,73 0	37,9 04,39 2	140, 241,0 04	187, 478,4 37	554, 161,1 77	559, 091,2 27	(124 726) ,967,	(148 535) ,211,	429, 193,4 51	410, 879,6 92
	928, 191,8 55	920, 293,6 48	189, 975,2 33	167, 271,6 93	15,8 52,96 8	15,7 26,13 0	45,8 48,17 3	54,6 76,17 6	1,88 1,387 ,706	1,47 8,992 ,340	3,06 1,255 ,935	2,63 6,959 ,986	(1,38 ) 4,85 5,290	(1,18 ) 0,81 1,723	1,67 6,400 ,645	1,45 6,148 ,262
Liabi lities : Liabi lities of th ment	571, 108,2 00	535, 705, 223	172, 567, 112	154, 617,2 67	17,6 88,68 9	20,3 44,1 13	24,2 53,54 8	30,1 73,64 3	395, 947,9 42	294, 934, 127	1,18 1,565 ,491	1,03 5,774 ,373	(395 284) ,025,	(271, 57) 694,6	786,5 40,20 7	764, 079,7 16
e seg	571, 108,2 00	535, 705, 223	172, 567, 112	154, 617,2 67	17,6 88,68 9	20,3 44,1 13	24,2 53,54 8	30,1 73,64 3	395, 947,9 42	294, 934, 127	1,18 1,565 ,491	1,03 5,774 ,373	(395 284) ,025,	(271 657) ,694,	786, 540,2 07	764, 079,7 16

23. Earnings per share

Earnings per share, basic and diluted, are calculated by dividing the consolidated net income of the period attributable to the Group (Euro 6,004,250 negative in 2007 and Euro 146,584 in 2006) by the average number of shares outstanding during the periods ended 31 March 2007 and 2006 (366,246,868 in 2007; 296,526,868 in 2006).

24. Medium Term Incentive Plans

In June 2000, Sonaecom Group created a discretionary Medium Term Incentive Plan for more senior employees, based on Sonaecom options and shares and Sonae S.G.P.S., S.A. shares. The vesting occurs three years after the award of each plan, assuming that the employees are still employed in the Group. In some annual plans, beneficiaries can chose between options or shares. Options are valued using the Black Scholes options pricing Model.

		The Sonaecom plans outstanding at 31 March 2007 can be summarized as follows:

		Vesting period		Exercise period		At 31 March 2007
	Share price at award date *	Award date	Vesting date	From	To	Aggregate number of participants	Number of options/ shares
Sonaecom options
2002 Plan	1.694	31-Mar-03	10-Mar-06	13-Mar-06	09-Mar-07	-	-
2003 Plan	-	-	-	-	-	-	-
2004 Plan	-	-	-	-	-	-	-
2005 Plan	-	-	-	-	-	-	-
Sonaecom shares
2003 Plan	3.19	31-Mar-04	09-Mar-07	-	-	348	1,176,640
2004 Plan	3.96	31-Mar-05	10-Mar-08	-	-	369	1,060,279
2005 Plan	4.093	10-Mar-06	09-Mar-09	-	-	395	939,314
2006 Plan	4.697	09-Mar-07	10-Mar-10	-	-	429	1,102,460
Sonae SGPS shares
2003 Plan	0.93	31-Mar-04	09-Mar-07	-	-	12	364,164
2004 Plan	1,17	31-Mar-05	10-Mar-08	-	-	13	362,611
2005 Plan	1.34	10-Mar-06	09-Mar-09	-	-	13	184,575
2006 Plan	1.69	09-Mar-07	10-Mar-10	-	-	12	246,482

* Average share price in the month prior to the award date, except for Sonae SGPS shares, priced on the award date.

Sonaecom signed agreements to cover the execution and hedging of its Medium Term Incentive Plans and related obligations and acquired Sonae SGPS shares with the same purpose. The agreement means that Sonaecom's liabilities are limited to a maximum of Euro 4,555,807, with the exception of the two plans of 2006 and in 2007. This value is recorded in the captions 'Other non current liabilities' (Euro 290,087) and 'Other current liabilities' (Euro 4,265,720), for long term and short-term obligations, respectively.

Sonaecom has entered into mirror agreements with its subsidiaries to transfer the corresponding liabilities to each subsidiary.

For the Sonaecom's share plans attributed in 2006 and in 2007, the Group acquired own shares in order to cover the execution and hedging. The total responsibility calculated with the share price at award date is Euro 1,395,161 and was recorded in 'Reserves for Medium Term Incentive Plans'.

For the plans attributed in 2006 and in 2007 that were not hedged, the total responsibility calculated with the share price at balance date is Euro 124,144 for Sonae SGPS plan and was recorded in 'Other non current liabilities'.

The costs of the Option and Share Plans are recognised in the accounts over the period between the award and the vesting date of those shares and options. The costs recognised on previous years and in the period ended at 31 March 2007, are as follows:

Amount
16,537,840
1,530,170
(8,882)
(9,145,896)
(4,030,065)
1,183,917
8,028
6,075,112
(4,679,951) (1,395,161)

25. Others matters

(i) As of 31 March 2007, accounts receivable from customers and payable to suppliers include Euro 37,177,291 and Euro 29,913,608, respectively, and 'Other current assets' and 'Other current liabilities' include Euro 411,649 and Euro 6,856,200, respectively, resulting from a dispute between the subsidiary Optimus and the operator TMN – Telecomunicações Móveis Nacionais, S.A., in relation to interconnection tariffs, already recorded on the year ended 31 December 2001. The Company has considered the most penalising tariffs in the consolidated financial statements. In the lower court, the decision was favourable to Optimus but the higher courts decided that the case should be tried again.

(ii) In the Arbitration Court proceeding imposed to resolve the conflict between Maxistar and the other shareholders of Optimus - for breach of a clause of the Shareholders' Agreement, Maxistar was condemned to pay an indemnity of Euro 2,344,350 plus legal interest calculated until the date of payment or, alternatively, to subject itself to a purchase option over its participation in Optimus at 70% of its actual value. Maxistar has appealed against the decision of the Arbitration Court but that appeal was already rejected in the lower courts. In consequence of this rejection, Maxistar appeals to the 'Tribunal da Relação de Lisboa'.

As a way to execute the amounts due to be paid by Maxistar, and after having informed Maxistar of their preference for the payment in cash, some shareholders have proposed an execution action. Before the decision of the Arbitration Court, Maxistar paid those shareholders, as a way of avoiding the execution, a total amount of Euro 4,068,048 (capital plus interest), of which Euro 2,183,899 was paid to Sonaecom.

The Sonaecom' s management still does not expect Maxistar's appeal to be upheld.

26. Commitments associated to "Information Society"

At the time Optimus was awarded its UMTS license, it committed to contribute to the promotion and development of the information society in Portugal, under the conditions contained in its formal bid documents. Although Optimus has already made investments in this respect, the Board of Directors of Optimus, and the Board of Directors of Sonaecom, believes that a substantial change in circumstances has occurred since these commitments were first made, and as such, believes that the original commitments should be renegotiated with the Regulator and the Government. Accordingly, discussions have been opened with ANACOM regarding this issue but no conclusions have yet been reached. As a consequence, it is the understanding of the Board of Directors of Optimus that, as of today, it is not possible to accurately quantify these commitments under the UMTS license and that such quantification will only be possible once the Regulator has taken a formal position on the subject. Assuming that a decision can be taken in the short term, the resulting obligations will be recorded in tangible assets, as an additional cost of the UMTS license, and will be amortised over the remaining period of the license.

Additionally, the acquisition of spectrum use rights from ONIWAY could, according to some interpretations, imply some responsibilities to Optimus related to commitments associated to Information Society assumed by ONIWAY. Sonaecom does not agree with those interpretations. Anyway, those eventual responsibilities were assumed by ONIWAY and guaranteed by its shareholders (BCP, EDP and GALP).

These consolidated financial statements were approved and authorized for publication by the Board of Directors on 24 April 2007.

These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS/IFRS) 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.

In accordance with no.3 article 250, the Securities and Exchange Commission (CMVM) has authorized Sonaecom not to publish the individual accounts. The latter may be viewed, together with all other Company accounts, at the Company's head offices, in accordance with the Companies Code (Código das Sociedades Comerciais).

SAFE HARBOUR

This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that are not historical facts.

These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, the telecommunications industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or similar expressions.

Although these statements reflect our current expectations, which we believe are reasonable, investors and analysts are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forwardlooking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.

Report available in Sonaecom's institutional website www.sonae.com

Media and Investor Contacts

Isabel Borgas Public Relations Manager isabel.borgas@sonae.com Tel: 351 93 100 20 20

Patrícia Mendes Investor Relations Manager patricia.mendes@sonae.com Tel: 351 93 100 22 23

Sonaecom SGPS, SA Rua Henrique Pousão, 432 – 7º piso 4460-841 Senhora da Hora Portugal