The Economic Importance of Telecommunications in Portugal

2 To analyze the impact on the economy of investment in telecommunications Aims of the Study To determine the importance of telecommunications by sector To develop scenarios for the evolution of the telecommunications sector

3 Scenarios Basic Scenario Basic Scenario Optimistic Scenario Optimistic Scenario Market Segments Investment Operators Structure of Market Demand Technology Regulatory Framework

4 Basic and Optimistic Investment Scenarios, Billions* PTE Note: These forecasts are not inflation-linked * 1 billion = 1 thousand million (TN) Investment Scenarios PTE billion PTE billion

5 The Economic Impact of Telecommunications InflationUnemployment Real GDP ConsumptionProductivity Salary Levels

6 Cumulative effect on GDP: 2.1% The Economic Impact of Liberalization on the Portuguese Economy ( ) Optimistic Scenario Annual productivity growth: 4.4%

7 Economic base shifts towards services Sectorial Analysis Financial Services and Insurance - two sectors with high tele-intensity Growth of tele-intensity index Tele-intensity index for services 1.64%

8 The tele-intensity of the Portuguese Economy Insurance 83% Banking 69% Distribution 55% Tele-intensity 4,9% 2,3% 1,9%

9 Growth of tele-intensity index Making Economic Benefits a Reality Productivity gains and innovation Development of necessary infrastructure Attracting investment by multinationals Attracting companies providing telecommunications services Attracting investment by multinationals Attracting companies providing telecommunications services Public sector as catalyst

10 Questions to the Panel What is the role of the State in this process? And the Operators: how can they drive innovation and competitiveness in the economy? How can Portugal maximize the potential benefits of liberalization?

The Economic Importance of Telecommunications in Portugal