EXHIBIT 10.2
STANDARD CONCESSION AGREEMENT
FOR DOMESTIC LONG-DISTANCE
SWITCHED, FIXED-LINE TELEPHONE SERVICE
(EMBRATEL)
The National Telecommunications Agency ANATEL (Agencia Nacional de
Telecomunicacoes), hereinafter referred to as ANATEL, a Brazilian federal
agency, responsible for granting concessions as provided in Federal Law No.
9,472 of July 16, 1997, the General Telecommunications Law GTL, represented
herein by its President, Xxxxxx Xxxxxxx Xxxxxxxxx, [identification], and its
Counsellor **** [identification], acting in accordance with Resolution No. ****
of its Board of Directors, on the one hand, and [name and identification of the
concessionaire], represented by its authorized representative, hereinafter
referred to as the Concessionaire, hereby enter into this Concession Agreement
as provided in Art. 207 of the above-mentioned General Telecommunications Law,
which shall be governed by the legal provisions referred to above and the
following provisions:
CHAPTER I - PURPOSE
CLAUSE 1.1. - The subject matter of this Agreement is the concession
of public Domestic Long-Distance Switched Fixed-line Telephone Service in the
geographic area defined in clause 2.1, as provided in the General Concession
Plan.
SOLE PARAGRAPH - This concession includes public Switched Fixed-line
Telephone Service in border or frontier areas as provided by regulations issued
by ANATEL as provided in the General Concession Plan.
CLAUSE 1.2. - Switched Fixed-line Telephone Service is the
telecommunications service which, through the transmission of voice and other
signals, is used for communications between fixed and determined points, using
processes of telephony.
CLAUSE 1.3. - With the prior approval of ANATEL, the Concessionaire
may establish and carry out useful or convenient activities related to providing
the service which is the subject matter of this concession.
SOLE PARAGRAPH - Services and useful or convenient activities shall be
considered to be related to the subject matter of this Concession if, in the
view of ANATEL, they may be considered an inherent part of the platform for the
service granted hereby, and not a new type of service, as provided by
regulation.
CLAUSE 1.4. - The Concessionaire is entitled to establish, expand and
operate the trunk lines, networks and switching centers required to implement
the Concession and operate it as a business, as provided by regulation.
CLAUSE 1.5. - The provision of the service granted hereby may not be
separated from the obligations to fulfill the universal service and quality
objectives provided for in this Agreement.
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CLAUSE 1.6. - The Concessionaire must provide to all applicants and
customers the installations that are necessary for the supply of the service
granted hereby, as provided by regulation.
CLAUSE 1.7. - The Concessionaire must provide free access to emergency
services, as provided by regulation.
CHAPTER II - SERVICE AREA
CLAUSE 2.1. - The geographical area of the service which is the
subject matter of this concession is the territory in the Sector number(s) ***
set forth in Annex 3 to the General Concession Plan.
CHAPTER III - TERM OF THE AGREEMENT AND CONDITIONS FOR EXTENSIONS
CLAUSE 3.1. - This concession, which is granted without charge, shall
expire on December 31, 2005, with a guaranteed one-time extension of twenty
years, as provided in clauses 3.2, 3.3 and 3.4.
CLAUSE 3.2. - This concession shall be extended once, at the request
of the Concessionaire, for 20 (twenty) years, in return for consideration,
provided the Concessionaire complies with the terms set forth in this Agreement,
and the new Agreement may include new conditions and establish new universal
service and quality objectives, in light of the conditions prevailing at the
time of the extension, and establish, in the case of universal service
objectives, supplementary resources, as provided in Art. 81 of Law No. 9,472 of
1997.
(S) 1 - Thirty six (36) months before the expiration date provided in
clause 3.1, ANATEL shall make available for public comment its proposals for new
conditions and new quality and universal service objectives, which shall be
submitted to the President of the Republic for approval by Decree, as provided
in Art. 18, paragraph III of Law No. 9,472 of 1997.
(S) 2 - In order to obtain the extension provided for by this clause,
the Concessionaire must indicate its interest the at least 30 (thirty) months
before the expiration date provided in clause 3.1.
CLAUSE 3.3. - In order to extend this concession as provided in the
preceding clause, the Concessionaire shall pay a fee every two years during the
extension period corresponding to 2% (two percent) of its revenue for the year
prior to the payment, net of income taxes and payroll taxes, derived from
Switched Fixed-line Telephone Service.
(S) 1 - The amount referred to in the preceding paragraph shall be
calculated on the basis of the net revenue generated through the execution of
the service plans, both basic and supplemental, which are the subject matter of
this concession.
(S) 2 - The percentage referred to in the first paragraph of this
clause shall always be calculated on the basis of revenue, net of income tax and
payroll tax deductions, generated
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between January and December of the previous year as shown in the financial
statements prepared in accordance with corporate law and basic accounting
principles, approved by the management of the Concessionaire and audited by
independent auditors, and payment shall be due on April 30 of the year following
the year for which the fee was determined.
(S) 3 - The first fee payment shall be due on April 30, 2007,
calculated on the basis of net revenue from January 1 and December 31, 2006, and
subsequent payments shall be due every 24 (twenty four) months, calculated on
the basis of revenue from the preceding year.
(S) 4 - Late payment of the fee provided for in this clause shall be
subject to a fine of 0.33% (zero point thirty three percent) per day, up to a
maximum of 10% (ten percent), plus the SELIC reference rate for federal
securities, to be levied upon the amount owed based on the number of days it is
past due.
CLAUSE 3.4. - The extension of the duration of this Agreement shall
entail the extension of the right to use those radio frequencies referred to in
clause 4.1 which are required to continue providing the service which is the
subject matter of this concession.
SOLE PARAGRAPH - The return of radio frequencies to ANATEL that are
not required to continue providing services shall not change the amount of the
extension fee as determined in clause 3.3.
CHAPTER IV - MANNER, FORM AND TERMS OF SERVICE
CLAUSE 4.1. - The use of radio frequencies to provide the service
which is the subject matter of this concession shall be authorized by ANATEL, in
exchange for payment and without exclusive rights, unless otherwise stated in
the regulations, in accordance with the provisions of Articles 83 and 163 of Law
No. 9,472 of 1997.
(S) 1 - The Concessionaire shall have the nonexclusive right to use
the radio frequencies authorized prior to the signing of this Agreement, which
shall not be contingent upon the payment of any fee, with the exception of audit
fees, in accordance with the terms set forth in the respective station operation
licenses.
(S) 2 - The right to use the radio frequencies referred to in this
clause does not preclude the prerogative granted to ANATEL by Art. 161 of Law
No. 9,472 of 1997.
(S) 3 - The use of new radio frequencies that may be required by the
Concessionaire shall be authorized in exchange for payment, in observance of the
procedures defined by ANATEL for such authorizations.
(S) 4 - The use of the radio frequencies required under the terms of
the preceding paragraph shall be authorized for the same amount of time as this
Concession, and any extension of their use must be made in exchange for payment,
independently of the fee payment referred to in clause 3.3 herein.
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CLAUSE 4.2. - The Concessionaire agrees to provide the service which
is the subject matter of the concession in such a way as to comply fully with
the applicable universal service and continuity requirements inherent to the
provision of a public service, in accordance with the criteria, formulas and
parameters set forth in this Agreement.
SOLE PARAGRAPH - Failure to comply with the obligations pertaining to
the universalization and continuity of service shall result in the application
of the penalties provided for in this Agreement, entitle ANATEL to issue an
intervention decree and, depending upon the circumstances and seriousness of the
situation, or in the event that issuing an intervention decree is unsuitable,
ineffective, unfairly benefits the Concessionaire or useless, lead to the
forfeiture of the concession, as set forth in clause 26.4.
CLAUSE 4.3. - The Concessionaire shall operate the service which is
the subject matter of the concession on its own behalf and at its own risk,
under the system of full and fair competition established by Law No. 9,472 of
1997, and by the General Concession Plan, and shall be remunerated by the rates
charged and any additional or incidental revenue it receives under the terms of
this Agreement.
SOLE PARAGRAPH - The Concessionaire shall not be entitled to any type
of exclusive right, nor shall it claim any rights as to the admission of new
providers of the same service, whether in the public or private sector.
CLAUSE 4.4. - Throughout the duration of the concession, the
Concessionaire agrees to maintain its commitments to quality, availability and
supply of the service granted hereby, as stated in this Agreement, regardless of
the competitive environment in the geographic area where it operates the
service.
CLAUSE 4.5. - The Concessionaire agrees to conserve and maintain in
perfect operating condition all of the goods, equipment and facilities used to
provide the service granted hereby; to maintain and repair them; and to promote,
when appropriate, their replacement when required, either due to wear and tear
or to technological obsolescence; and to promote the repairs and modernizations
required to provide and maintain proper service, as set forth in this Agreement.
CHAPTER V - RULES FOR THE ESTABLISHMENT, EXPANSION, MODIFICATION AND
MODERNIZATION OF SERVICE
CLAUSE 5.1. - The expansion and modernization of the service granted
hereby, while observing the goals and criteria set forth in this Agreement, are
fundamental tenets of this concession.
SOLE PARAGRAPH - ANATEL may modify the objectives regarding the
establishment, expansion and modernization of the service granted hereby,
provided it respects the right of the Concessionaire to not be forced to sustain
additional expenses which cannot be recovered through the revenue resulting from
compliance with such objectives and through the efficient operation of the
service.
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CLAUSE 5.2. - Changes to the terms under which the service granted
hereby is provided may only be decided by ANATEL, or with its prior express
approval.
CLAUSE 5.3. - Modernization of the service granted hereby shall be
sought by the continual introduction of equipment, processes and means capable
of providing users with service compatible with the current technologies
available in the market.
CHAPTER VI - CRITERIA AND INDICATORS OF QUALITY AND CONTINUOUS SERVICE
CLAUSE 6.1. - A fundamental xxxxx of this Concession is the provision
of adequate quality service by the Concessionaire, meaning service which is
satisfactory in terms of consistency, efficiency, security, contemporaneity,
universal availability, courtesy and reasonable rates.
(S) 1 - Consistency is characterized by the continuous provision of
the service granted hereby, in strict observance of the standards laid down by
ANATEL.
(S) 2 - Efficiency is characterized by the application and
preservation of the parameters set forth in this Agreement, and by the service
granted hereby provided to users within the timeframes provided for in this
Agreement.
(S) 3 - Security is characterized by the confidentiality of data
regarding use of the service granted hereby by users, as well as the complete
safeguarding of all information communicated within the ambit of providing such
service, in accordance with Chapter XIV.
(S) 4 - Contemporaneity is characterized by the up-to-date nature of
the equipment, facilities and techniques used to provide the service granted
hereby, achieved by incorporating technological advances, which clearly benefit
users, occurring during the term of the concession, in keeping with the
provisions of this Agreement.
(S) 5 - Universal availability is characterized by the provision of
the service granted hereby to each and every user without discrimination,
whereby the Concessionaire commits itself to provide the service to whomever
requests it, at the location indicated by the latter, under the terms of this
Agreement and as provided by regulation.
(S) 6 - Courtesy is characterized by respectful and immediate
assistance given to all users of the service granted hereby, as well as by full
compliance with the obligation to inform and assist promptly and politely all
those who, regardless of whether they are users, request information or
arrangements, or make any other type of request, under the terms set forth in
this Agreement.
(S) 7 - The principle of reasonable rates is characterized by the
Concessionaire's efforts to charge rates lower than the maximum rates determined
by ANATEL.
CLAUSE 6.2. - The Concessionaire must comply with the parameters and
indicators of the General Plan on Quality.
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SOLE PARAGRAPH - The Concessionaire must annually release a chart
demonstrating the objectives and parameters, established and realized, of the
General Plan on Quality and the General Plan on Universal Service,
notwithstanding the requirement to supply this data whenever ANATEL so requests.
CLAUSE 6.3. - The continuity of the service granted hereby, an
essential element of the system under which it is provided, is characterized by
the provision of service without interruption, while taking into account
suspension of service due to default on the part of the user under the terms set
forth in clause 8.3 of this Agreement and Art. 3, paragraph VII of Law No. 9,472
of 1997.
SOLE PARAGRAPH - Consistency shall not be considered to have been
violated in the event the service granted hereby is interrupted because of an
emergency situation, technical problems or circumstances involving the security
of installations. The affected users are to be notified and, when appropriate,
explanatory notification is to be given to ANATEL.
CLAUSE 6.4. - The Concessionaire may not, under any circumstances,
interrupt the service granted hereby on the allegation that ANATEL or the
federal government have not complied with any obligation, and the Concessionaire
may not invoke any exception arising from breach of contract.
CLAUSE 6.5. - In addition to managing and monitoring quality
indicators, ANATEL shall periodically evaluate the degree of customer
satisfaction with the service granted hereby, and may release the following
results concerning the Concessionaire:
I - Customer service, especially with regard to availability,
promptness, politeness, speed and effectiveness in responding to
requests and complaints;
II - Rates charged and discounts offered;
III - Technical quality of the service provided; and
IV - Adequacy of the services offered in relation to users' needs.
CHAPTER VII - UNIVERSAL SERVICE OBJECTIVES
CLAUSE 7.1. - Universal service is an essential aspect of the system
under which the service granted hereby is provided. It is characterized by the
provision of uniform and nondiscriminatory assistance to all users, and by the
Concessionaire's achievement of the objectives set forth in the General Plan on
Universal Service, approved by Executive authority, under the terms of Article
18, paragraph III and Article 80 of Law No. 9,472 of 1997, and those of Annex 2
of this Agreement.
CLAUSE 7.2. - With the exception of clause 7.4 of this Agreement and
in keeping with the General Plan on Universal Service, approved by Executive
Authority under the terms of Article 18, paragraph III and Article 80 of Law No.
9,472 of 1997, the implementation of the
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universal service objectives provided for in this Agreement shall be financed
exclusively through the operation of the service by the Concessionaire, which
shall not be entitled to any compensation or subsidy.
CLAUSE 7.3. - The Concessionaire agrees to implement those universal
service objectives which are not provided for in this Agreement, but which may
be required by ANATEL, in compliance with the provisions of (S) 2 , Art. 2 of
the General Plan on Universal Service, approved by Decree No. 2,592 of May 15,
1998, and the following procedure shall be observed when defining compensation
amounts and criteria:
I - ANATEL shall consult the Concessionaire regarding the total cost
of implementing the planned additional objectives, the extent to which
they cannot be amortized by operating revenue, and by which specific
payments they are covered. The objectives to be achieved, the
technologies selected, and the location and timeframe of
implementation are to be specifically indicated;
II - Should the stated timeframe for consultation lapse without a
response by the Concessionaire, ANATEL shall take the necessary steps
in order to determine the charges and expenses involved in
implementing the additional objectives, and estimate the corresponding
revenue generated;
III - Should the Concessionaire issue a response following
consultation, ANATEL shall determine whether the expenses and
estimated revenue presented are adequate and reasonable, taking into
account available technologies, the cost of materials and labor, the
geographical, social and economic characteristics of the market demand
to be met, market prices, and other variables it considers relevant;
IV - In the event ANATEL does not consider the proposed expenses
and/or estimated revenue to be reasonable, it may, with justification,
make the Concessionaire responsible for implementing the additional
objectives, and determine the amount of compensation, in accordance
with the provisions of Chapter XXX; and
V - Should ANATEL consider the amount of compensation to be adequate
and reasonable, it shall confirm to the Concessionaire that the latter
is charged with implementing such additional objectives, under the
terms of the compensation proposal issued by the Concessionaire.
(S) 1 - Upon following the procedure set forth in this clause, should
ANATEL consider the implementation of the specific universal service objective
by the Concessionaire to be unsuitable or unfeasible, it shall contract such
undertaking out to another party, which it may do by granting specific and
defined parts of the service, in accordance with the economic parameters derived
from the procedures provided for in this clause.
(S) 2 - At the discretion of ANATEL, the procedure provided for in
this clause may also be used to determine the amounts to be compensated
utilizing the resources of the Fund
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for Universal Telecommunications Services, when it fulfills the objectives set
forth in the General Plan on Universal Service, approved by Executive authority,
under the terms of Article 18, paragraph III and Article 80 of Law No. 9,472 of
1997.
(S) 3 - The use of resources of the Fund for Universal
Telecommunications Services, pursuant to the preceding paragraph, excludes the
utilization of the benefits provided for in (S) 2, Article 10 of the General
Concession Plan, except in the case of compensation to ANATEL for amounts it has
used from said Fund, in addition to the compensation owed.
CLAUSE 7.4. - The adoption of the procedures provided for in the
preceding clause is the prerogative of ANATEL, which may adopt them at its
discretion and in keeping with the best interests of the public, and the
Concessionaire shall not have the right to choose how it prefers to implement
the aforementioned universal service objectives.
CHAPTER VIII - RULES GOVERNING THE SUSPENSION OF SERVICE DUE TO NONCOMPLIANCE,
OR AT THE REQUEST OF THE USER
CLAUSE 8.1. - Subscribers of the service which is the subject matter
of this concession may request, at any time, the suspension of such service, and
the Concessionaire must respond to their request within the timeframe to be
established by ANATEL, which shall be no greater than 48 (forty eight) hours,
unless postponed by the subscriber.
SOLE PARAGRAPH - The Concessionaire may not demand payment for the
suspension of service referred to above.
CLAUSE 8.2. - Subscribers in compliance with their contract with the
Concessionaire may request the suspension of their service, as provided by
regulation.
CLAUSE 8.3. - The Concessionaire may only proceed to suspend the
service of a subscriber who is at least 30 (thirty) days in default of payment,
such debt resulting directly from the use of the service granted hereby, and in
compliance with the procedures set forth by regulation published by ANATEL.
Subscribers must be allowed time to challenge the amounts claimed from them.
(S) 1 - The Concessionaire must give subscribers at least 15 (fifteen)
days' notice prior to suspension of service.
(S) 2 - Failure to pay amounts outstanding that are not directly
related to the service which is the subject matter of this concession, in
accordance with the sole paragraph of clause 10.6, shall not be cause for the
cancellation of service provided for in this clause.
CLAUSE 8.4 - The Concessionaire shall also guarantee subscribers the
right to block access temporarily or permanently to available conveniences or
features, as well as to premium services, provided they so request, as provided
by regulation.
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CLAUSE 8.5 - In the event the default of the subscriber exclusively
involves the nonpayment of services supplied by a provider of Switched, Fixed-
line Telephone Service other than the service conceded herein, and which is
billed jointly with the Concessionaire's services, the disconnection must follow
the specific procedure laid down in regulation by ANATEL.
CHAPTER IX - NUMBERING PLAN
CLAUSE 9.1. - As provided by regulation, the Concessionaire agrees to
obey the Numbering Regulations for Switched, Fixed-line Telephone Service
published by ANATEL, and must guarantee subscribers portability of access codes
within the timeframe defined in such Regulations.
(S) 1 - The Concessionaire shall assume all expenses required to
conform to the Numbering Regulations referred to above.
(S) 2 - The expenses pertaining to the investments required in order
to enable portability of access codes shall be shared by the Concessionaire and
the other providers of telecommunications services, whether in the public or
private sector.
(S) 3 - The expenses pertaining to the administration of the process
of assigning and holding access codes pursuant to the Numbering Regulations
shall be borne by the Concessionaire, under the terms of the Numbering
Administration Regulations.
CHAPTER X - RATE AND PAYMENT STRUCTURE
CLAUSE 10.1. - The Concessionaire is required to offer all users the
Basic Domestic Long-Distance Service Plan, as provided in Annex 2, which is an
integral part of this Agreement.
SOLE PARAGRAPH - The Basic Domestic Long-Distance Service Plan shall
be the sole plan for the entire area referred to in clause 2.1 and must state,
under the terms set forth by ANATEL, maximum amounts for each item of the rate
structure defined for the provision of Switched, Fixed-line Telephone Service.
Said amounts shall be revised and adjusted, in accordance with applicable
standards.
CLAUSE 10.2. - The Concessionaire may offer its subscribers
Supplemental Domestic Long-Distance Service Plans with rate criteria different
from those in the Basic Domestic Long-Distance Service Plan.
(S) 1 - Subscribers shall be guaranteed the right to switch between
the various Domestic Long-Distance Service Plans offered by the Concessionaire,
as provided by regulation.
(S) 2 - The Concessionaire is free to propose the rate structure for
the Supplemental Domestic Long-Distance Service Plans, provided it complies with
clause 10.1 of this Agreement.
(S) 3 - The Concessionaire is required to offer its Supplemental
Domestic Long-Distance Service Plans, approved by ANATEL, to users in a
nondiscriminatory manner.
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(S) 4 - Supplemental Domestic Long-Distance Service Plans must be
authorized by ANATEL before being offered to the general public.
(S) 5 - ANATEL must decide whether to approve Supplemental Domestic
Long-Distance Service Plans within 15 (fifteen) days of their having been
submitted, and they shall be considered to have been approved if ANATEL makes no
decision within this timeframe.
CLAUSE 10.3. - The Concessionaire may offer discounts on the rates for
Domestic Long-Distance Service Plans provided it does so in an egalitarian and
nondiscriminatory manner. The Concessionaire shall not reduce amounts
subjectively and must observe the principles of fair competition.
SOLE PARAGRAPH - The Concessionaire agrees to give its users ample and
prior notice of discounted rates for the service, and to communicate its notice
of discounted rates to ANATEL within 7 (seven) days after the rate reduction
takes effect.
CLAUSE 10.4. - The Concessionaire agrees to publicize the rates
charged for the service which is the subject matter of the concession, in the
manner required by ANATEL.
CLAUSE 10.5. - When new services, conveniences or features are
introduced in relation to the service granted hereby, the Concessionaire shall
submit its proposed rates to ANATEL for approval, without which no rate or price
may be charged.
CLAUSE 10.6. - Billing documents issued by the Concessionaire must be
presented in a detailed, clear, explanatory and self-evident manner, and must
distinguish the type and quantity of each service provided to the user, as
provided by regulation.
SOLE PARAGRAPH - The Concessionaire may list the amounts owed by the
subscriber within the billing document for premium services, as well as for
other conveniences or features related to the service granted hereby, provided
it does so in a clear and explicit manner.
CLAUSE 10.7. - The Concessionaire shall collect network usage fees
from other providers of telecommunications services, in keeping with the
standards published by ANATEL.
CLAUSE 10.8 - The Concessionaire shall offer a discount to those
subscribers affected by any discontinuance of the service granted hereby,
provided the subscriber was not the cause of discontinuance, and the discount
shall be prorated for the period during which the interruption occurred, as
provided by regulation.
CHAPTER XI - RATE ADJUSTMENTS
CLAUSE 11.1. - The rates listed in the Basic Domestic Long-Distance
Service Plan Annex 2, may be adjusted by applying the formula below. This may
be done no more than once every 12 (twelve) months, at the initiative of ANATEL
or the Concessionaire, in keeping with the rules of economic legislation in
force.
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(5 24 Mij\to\) 5 24 Mij\to\
(X X Xxx\t\ x -----) less than (1-k) Ft X X Xxx\to\ x -----
(i equal to x x equal to l TM ) or equal to i equal to x x equal to l TM
---------------------------------------------------------------------------------------------------------
Let:
--------------------------------------------------------------------------------
GPI - DA\t\
Rij\t\ less than Rij\to\ x 1.05 x ----------
or equal to GPI - DA\to\
--------------------------------------------------------------------------------
Where:
Rij\t\ - proposed rate for the Basic Domestic Long-Distance Service Plan during
the j period at the rate for distance i, net of taxes.
Rij\to\ - current rate for the Basic Domestic Long-Distance Service Plan during
the j period at the rate for distance i, net of taxes.
Mij\to\ - minutes of domestic long-distance service through the Basic Domestic
Long-Distance Service Plan, during the j period at distance i, since the last
rate adjustment or, in the case of the first adjustment, since April 1, 1998.
TM - total minutes of domestic long-distance service through the Basic Domestic
Long-Distance Service Plan since the last rate adjustment or, in the case of the
first adjustment, since April 1, 1998.
i = distance rate for domestic long-distance service indicated in the Rate
Structure.
j = billing period for domestic long-distance service indicated in the Rate
Structure.
\t\ = proposed date of adjustment.
\to\ = date of the last adjustment or, in the case of the first adjustment,
April 1, 1998.
and
GPI-DA\t\
F\t\ = ---------
GPI-DA\to\
Where:
GPI-DA = General Price Index, Domestic Availability, issued by the Xxxxxxx
Xxxxxx Foundation, or its successor index.
k = transfer factor.
(S) 1 - The transfer factor shall be applied during the duration of
the concession in the following manner:
I - Until December 31, 2000 it shall be equal to 0.02 (zero point zero
two); and
II - From January 1, 2001 until December 31, 2003, it shall be equal
to 0.04 (zero point zero four).
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III - From January 1, 2004 to December 31, 2005, it shall be equal to
0.05 (zero point zero five).
(S) 2 - In the event the adjustment period includes different transfer
factor values, a weighted average must be calculated thereof taking into account
the months during which each transfer factor value occurred.
(S) 3 - In the event an adjustment takes place after more than twelve
months have gone by, the formula including the transfer factor must be applied
progressively, taking into account twelve-month periods, and then any remaining
months.
(S) 4 - After 2005, new transfer factor values may be determined by
ANATEL in the event this Agreement is extended, depending upon the conditions
which exist at that time.
CLAUSE 11.2. - Network usage fees shall be adjusted by applying the
following formulas:
--------------------------------------------------------------------------------------------------------------
(5 24 Mijto) 5 24 Mij/to/
(E E TU - RIUij/t/ x -----) less than (1-k) Ft E E TU - RIUij/to/ x -------
(i equal to x x equal to l TM ) or equal to i equal to x x equal to l TM
---------------------------------------------------------------------------------------------------------------
Let:
--------------------------------------------------------------------------------
GPI - DA/t/
TU - RIUij/t/ less than or equal to TU - RIUij/to/ x 1.05 x ----------
GPI - DA/to/
--------------------------------------------------------------------------------
Where:
TU-RIUij/t/ - proposed rate for use of the long-distance network during the j
period for distance i, net of taxes.
TU-RIUij/to/ - current rate for use of the long-distance network during the j
period for distance i, net of taxes.
Mj/to/ - Minutes of use of the long-distance network of the Concessionaire
during the j period for distance i, since the last rate adjustment or, in the
case of the first adjustment, since April 1, 1998.
TM - Total Minutes of use of the long-distance network of the Concessionaire
since the last rate adjustment or, in the case of the first adjustment, since
April 1, 1998.
/t/ = date of the proposed adjustment.
/to/ = date of the last adjustment or, in the case of the first adjustment,
April 1, 1998; and
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GPI-DA/t/
Ft = ---------
GPI-DA/to/
Where:
GPI-DA = General Price Index, Domestic Availability, issued by the Xxxxxxx
Xxxxxx Foundation, or its successor index.
k = transfer factor.
(S) 1 - The transfer factor shall be applied during the duration of
the concession in the following manner:
I - Until December 31, 2000 it shall be equal to 0.02 (zero point zero
two);
II - From January 1, 2001 until December 31, 2003, it shall be equal
to 0.04 (zero point zero four);
III - From January 1, 2004 until December 31, 2005, it shall be equal
to 0.05 (zero point zero five);
(S) 2 - In the event the adjustment period includes different transfer
factor values, a weighted average must be calculated thereof taking into account
the months during which each transfer factor value occurred.
(S) 3 - In the event an adjustment takes place after more than twelve
months have gone by, the formula including the transfer factor must be applied
progressively, taking into account twelve-month periods, and then any remaining
months.
(S) 4 - After 2005, new transfer factor values may be determined by
ANATEL in the event this Agreement is extended, depending upon the conditions
which exist at that time.
CHAPTER XII - SAFEGUARDING THE ECONOMIC WELLBEING OF THE CONCESSIONAIRE AND
REVISION OF RATES
CLAUSE 12.1. - Preserving a fair balance, under a fully competitive
system, between the service provided by the Concessionaire and its remuneration
is a basic xxxxx of this Agreement. It is forbidden for any party to unjustly
enrich itself at the expense of any other party or the users of the service,
under the terms set forth in this Chapter.
(S) 1 - The Concessionaire shall not be required to suffer any damages
resulting from this Agreement, unless they result from any of the following
factors:
I - From its negligence, ineptitude or oversight in operating the
service granted hereby;
II - From the normal risks of business activity;
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III - From the inefficient management of its business, including the
payment of operating and administrative expenses which are
incompatible with the parameters demonstrated in the market; or
IV - From its failure to take advantage of existing opportunities in
the market, including expanding, extending and increasing the service
provided.
(S) 2 - The Concessionaire is prohibited from unjustly profiting from
any economic gain not resulting directly from its operational efficiency,
especially that which results from the issuance of new rules governing the
service granted hereby.
(S) 3 - The Concessionaire is entitled to restructure its initial
obligations and compensation scheme in the event that a force majeure or other
disaster significantly affects the operation of the service granted hereby.
However, the actions of private-sector service providers in such a situation
shall serve as the standard of reasonable conduct.
(S) 4 - When evaluating the appropriateness of the restructuring
addressed in the preceding paragraph, it shall be taken into account whether,
among other factors, the Insurance Plan provided for in clause 23.1 covers the
event which caused the initial economic situation to change.
CLAUSE 12.2. - The economic basis of the Agreement shall be re-
established when it can be demonstrated that none of the factors listed in (S) 1
of the previous clause have occurred. This shall preferably be accomplished by
the revision of rates, or through any other mechanism which, in the view of
ANATEL, is capable of correcting the situation.
(S) 1 - The revision of rates precludes any other mechanism used to
deter unjust enrichment by any party, which is displaced by the event to which
the rate revision refers.
(S) 2 - A single, complete and final measure shall be taken in order
to correct the event that gave rise to the distortion.
CLAUSE 12.3. - Independent of clause 12.1, revising the rates listed
in the Basic Domestic Long-Distance Service Plan in favor of the Concessionaire
or the users shall be called for, under the terms of Art. 108 of Law No. 9,472
of 1997, in the following specific situations:
I - Unilateral modification of this Agreement imposed by ANATEL,
involving significant upward or downward variations in expenses or
income, for instance, when the raising or lowering of rates is
required in order to prevent any of the parties from making
unjustified profits;
II - A change in tax law subsequent to the signing of this Agreement
which involves an increase or reduction in the potential profitability
of the Concessionaire;
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III - Supervening events resulting from acts of governance or the
Administration which demonstrably affect the expenses of the
Concessionaire;
IV - Specific changes in legislation which have a direct impact upon
the income of the Concessionaire in such a way as to affect the
continuity or quality of the service provided;
V - Legislative changes which benefit the Concessionaire, including
those which grant or cancel exemptions, reductions, discounts or any
other tax or rate-related privileges, in keeping with the provisions
of (S) 3, Art. 108 of Law No. 9,472 of 1997.
(S) 1 - When reviewing rates, any damage or profit losses sustained by
the Concessionaire shall not be taken into account if they result from the free
operation of the service granted hereby under competitive conditions, or from
the inefficient management of its business.
(S) 2 - The revision scenario anticipated in paragraph II of this
clause shall not be applicable in the event the change in the tax law involves
the creation, elimination, increase or lowering of incidental taxes on the
Concessionaire's income or profits, and not involving and administrative or
operational tax.
(S) 3 - The rate revision scenarios anticipated by this clause shall
not apply if the events leading to the revision are already covered by the
Insurance Plan provided for in clause 23.1.
(S) 4 - The Concessionaire's contributions to the Fund for Universal
Telecommunications Services and to the Fund for the Development of
Telecommunications Technology shall not occasion the revision of rates.
CLAUSE 12.4. - Rate revisions shall not be applicable if the cause
motivating the Concessionaire's request can be neutralized through the efficient
operation of the service granted hereby, market expansion, or the generation of
alternative or supplementary revenue in associated with the subject matter of
this Agreement, in keeping with current competitive conditions.
SOLE PARAGRAPH - Reductions in revenue which result from discounts or
rate reductions shall not occasion the revision of rates.
CLAUSE 12.5. - The rate revision procedure may be initiated at the
request of the Concessionaire, or by a decision of ANATEL.
(S) 1 - In the event the revision procedure is initiated by the
Concessionaire, the following requirements must be observed:
15
I - The request must be accompanied by a technical or expert report
demonstrating the precise impact of the occurrence upon the
determination of rates or the estimated revenue of the Concessionaire;
II - The request must be accompanied by all documents required to
substantiate the claim;
III - The Concessionaire must explain its claim for rate revision, and
report on the impact and possible rate-balancing alternatives;
IV - The Concessionaire shall bear all expenses for the research and
studies needed to fully back its claim.
(S) 2 - Rate-revision procedures initiated by ANATEL must be
communicated to the Concessionaire, allowing it time to respond, and shall be
accompanied by copies of the reports and studies carried out in order define the
circumstances occasioning the revision.
(S) 3 - The rate-revision procedure shall be concluded within 120 (one
hundred twenty) days, unless it becomes necessary to extend it in order to
conclude the proceedings.
(S) 4 - The request must be approved by ANATEL, and the Concessionaire
must fully divulge the new maximum amounts of the revised rates, under the terms
stated in this Agreement.
CHAPTER XIII - ALTERNATIVE, SUPPLEMENTARY AND ANCILLARY REVENUE
CLAUSE 13.1. - The Concessionaire may obtain other, alternative
sources of revenue, provided this does not involve noncompliance with the
standards set forth in the General Telecommunications Services Regulations and
other standards published by ANATEL.
SOLE PARAGRAPH - The Concessionaire and its affiliates may not make
the provision of the service granted herein contingent upon the consumption of
any other service, nor may they offer advantages to users who benefit from
services in addition to the service that is the subject matter of this
Agreement, including those provided by third parties.
CLAUSE 13.2. - ANATEL may order the Concessionaire to offer users
conveniences or features related to the subject matter of the concession, in
which case the parties must adjust the unit prices of said services, taking into
account market parameters and the right to fair compensation.
CHAPTER XIV - RIGHTS AND PRIVILEGES OF USERS AND OTHER SERVICE PROVIDERS
CLAUSE 14.1. - In accordance with the rules and guidelines set forth
in this Agreement, users of the service granted by this concession are entitled
to the following rights:
16
I - To access and use the service in accordance with the standards of
quality, regularity and efficiency provided for by this Agreement, in
its annexes and according to current standards;
II - The possibility of requesting the suspension or cancellation of
the service provided by the Concessionaire;
III - To receive nondiscriminatory treatment with regard to the terms
of access and use of the service;
IV - To obtain adequate information regarding the terms under which
the service is provided and the rates charged;
V - The inviolability and secrecy of communications, respecting
constitutional and legal provisions regarding the privacy of
telecommunication;
VI - To arrange, without charge, for their access code not to be
disclosed, by placing a request with the Concessionaire's customer
service department;
VII - The non-suspension of service unless requested, except in the
case of nonpayment of the debt resulting directly from its use, or
noncompliance with the duties set forth in Art. 4 of Law No. 9,472 of
1997;
VIII - Prior notification of any and all changes to the terms of
service that affect them directly or indirectly;
IX - Confidentiality of billing documents and the use of their
personal information by the Concessionaire;
X - To receive an efficient and prompt response from the
Concessionaire to their complaints, under the terms provided for in
clause 15.7;
XI - To lodge claims or petitions against the Concessionaire with
ANATEL and consumer rights organizations;
XII - To receive compensation for harm sustained due to the violation
of their rights;
XIII - Compliance with the terms of the Subscription Agreement which
they entered into for the service;
XIV - Freedom to choose their domestic and international long distance
carrier;
XV - Respect for their right to portable access codes, in accordance
with the provisions of the Numbering Regulations published by ANATEL;
and
17
XVI - Not to be required to consume services or acquire goods or
equipment in which they have no interest, as well as not to be
compelled to satisfy certain conditions in order to receive the
service which is the subject matter of this concession, as provided by
regulation.
(S) 1 - The Concessionaire shall comply with the duty to safeguard the
privacy inherent to telephone service and the confidentiality of data and
information. Moreover, it shall employ the means and technology to guarantee
users this right.
(S) 2 - Upon the order of judicial authorities, the Concessionaire
shall make available the technological resources required to access private
telecommunications, as provided by regulation.
CLAUSE 14.2. - In addition to the rights referred to in the preceding
clause, other providers of telecommunications services shall be guaranteed the
following rights:
I - To interconnect with the Concessionaire's network under
nondiscriminatory business and operating conditions, under technically
suitable conditions, and at equally-applied and fair prices which
strictly consider the necessity of offering the service, in accordance
with the regulations published by ANATEL;
II - To receive the service requested from the Concessionaire without
any kind of discrimination, at market prices or prices negotiated
between the parties, and at any discount which may apply owing to
savings from bulk consumption, in accordance with regulation;
III - To obtain all information required to provide the service they
themselves operate, including billing information, except as regards
the Concessionaire's right to protect its trade secrets, as well as
the rights of third parties.
(S) 1 - Conflicts between the Concessionaire and other service
providers shall be resolved administratively by ANATEL, under the terms of
regulations to be published by ANATEL.
(S) 2 - ANATEL shall always oversee the relations between the
Concessionaire and the carriers using the service granted herein, in such a way
as to discourage conduct that may involve unfair harm to any of the parties, or
that undermines economic order and free competition. In these instances, once it
has exercised its authority, it shall notify the Administrative Council of
Economic Defense XXXX of such conduct, in the manner provided for in Art. 19,
paragraph XIX of Law No. 9,472 of 1997.
CLAUSE 14.3. - In accordance with regulation, all users shall be
guaranteed the right to receive and use premium services, which must be provided
in adequate technical condition, and at equally-applied and fair prices. The
Concessionaire is prohibited from blocking or restricting the use of the service
granted herein in any way.
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SOLE PARAGRAPH - A premium service is understood to be any activity
that enhances the service which is the subject matter of this concession, but
should not be confused with new features related to access, storage,
presentation, transfer or recovery of information.
CHAPTER XV - RIGHTS, PRIVILEGES AND OBLIGATIONS OF THE CONCESSIONAIRE
CLAUSE 15.1. - In addition to the other obligations arising from this
Agreement and inherent to the provision of the service granted hereby, it is the
duty of the Concessionaire:
I - To provide the service granted hereby in strict compliance with
the provisions of this Agreement, and to comply fully with the
regulations published by ANATEL;
II - To install all equipment and facilities needed to provide the
service which is the subject matter of the concession and ensure its
continuity, contemporaneity, expansion and universality, following the
specifications set forth in this Agreement;
III - To keep the telecommunications network in optimum operating
condition, with quantities, configurations and locations which are
proper and sufficient to provide suitable service;
IV - To provide the financial resources required to comply with the
standards for universal service and continuity set forth in this
Agreement, and to provide adequate service;
V - To provide ANATEL, in the manner and as often as provided by
regulation, with reports and information of a technical, operational,
business, accounting and financial nature, as well as to provide it
with all requested data and elements regarding the service granted
hereby;
VI - To maintain all public-use lines, whether permanent or temporary,
in the manner prescribed in this Agreement;
VII - To submit to audits by ANATEL and allow its agents access to its
company facilities as well as to its accounting records;
VIII - To keep separate accounting records for each department, as
well as to keep an up-to-date inventory of the goods and components
that make up the fixed assets of the company;
IX - To maintain a system for providing service and information to
users, under the terms of clause 15.7;
X - To safeguard the assets involved in providing the service granted
hereby;
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XI - To submit to ANATEL for prior approval the draft as well as all
changes, amendments or variations applicable to the Standard Agreement
entered into with subscribers;
XII - To submit for prior approval from ANATEL the operating
agreements or service, partnership or joint-venture agreements it
wishes to sign with foreign entities;
XIII - To send for publication in the ANATEL library copies of the
agreements and contracts pertaining to the provision of service to
Brazilian and non-Brazilian providers of telecommunications services;
XIV - To divulge, directly or through third parties, the access
numbers of its own subscribers and other subscribers to Switched,
Fixed-line Telephone Service providers, whether in the public or
private sector, in the concession area with the exception of those
subscribers who specifically request that their personal information
not be given out;
XV - To provide a list of its subscribers to whomever it wishes, at
prices and within timeframes which are reasonable, and in a
nondiscriminatory manner;
XVI - To rigorously respect the secrecy and confidentiality of
telecommunications, in accordance with legal and contractual
obligations;
XVII - To respect the privacy of users as regards billing documents
and all personal information pertaining to them;
XVIII - To comply, at its own expense and in accordance with the
provisions of clause 7.2 of this Agreement, with all universal service
objectives which are expressly stated herein;
XIX - To implement any projects for the expansion and universalization
of service which may be ordered by ANATEL, in conformity with the
established level of compensation, timeframe and terms of
implementation, in accordance with the provisions of clause 7.3;
XX - To submit to ANATEL for prior approval any and all changes it
wishes to make to its bylaws regarding company spin-offs, mergers,
transformations and incorporations, as well as any transfer of
control, or change in its capital stock;
XXI - To guarantee interconnection with its network to any other
telecommunications service provider, in keeping with specific
regulation and the standards of this Agreement;
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XXII - To make its billing and collection services available to other
providers of Switched, Fixed-line Telephone Services, and charge them
fair and compatible prices under the terms of this Agreement and the
regulations;
XXIII - To respect all the rights of other telecommunications service
providers and refrain from any discriminatory conduct towards them or
attempt to obstruct their activity;
XXIV - To use equipment with certification either issued or accepted
by ANATEL, whenever required to do so by regulation;
XXV - To comply with the norms and technical standards in force in
Brazil, refraining from any discriminatory practice with regard to
goods and equipment manufactured therein;
XXVI - In the case of disasters, to make available to civil defense
authorities and agents all requested facilities, systems and access
thereto, with a view to providing them with support or protecting
affected populations;
XXVII - To give priority to assisting the President of the Republic,
his official representatives, his support team and staff, as well as
to foreign heads of state making official visits or trips through
Brazilian territory, for whom it shall make available the means
required to communicate adequately, in keeping with the regulations
published by ANATEL;
XXVIII - To pay the fee set by ANATEL in the event the duration of the
concession is extended, under the terms of (S) 1, Art. 207 of Law No.
9,472 of 1997, and clause 3.3 of this Agreement;
XXIX - To pay all inspection and operating costs for its
installations, as provided by regulation;
XXX - To publish annually, regardless of the legal system to which it
is subject, the balance sheet and year-end financial statements, as
set forth in the legislation in force and the regulations published by
ANATEL;
XXXI - To comply with current Brazilian standards as regards the use
of non-Brazilian labor, including in positions requiring advanced
qualifications;
XXXII - To compensate users for damages which have in fact resulted
from the failure to provide service which would have been expected in
view of the continuity guidelines and universal service objectives
provided for in this Agreement;
XXXIII - When entering into contracts for management services,
including technical assistance, with non-Brazilian entities not to
spend more than the
21
following amounts, as a percentage of the annual revenue from
Switched, Fixed-line Telephone Service:
a) 1% (one percent) per year, until 12/31/2000;
b) 0.5% (zero point five percent) per year, from 01/01/2001 until
12/31/2002; and
c) 0.2% (zero point two percent) per year, as of 01/01/2003;
XXXIV - To comply with agreements between Brazil and other countries
and international organizations, in the manner laid down by ANATEL;
and
XXXV - To comply with the contracts entered into with TELEBRAS, the
subject matter of which is the provision of services by the Research
and Development Center CPqD or its successor.
SOLE PARAGRAPH - Decisions concerning paragraph XXXIII of this clause
and involving service and technical assistance contracts between the
Concessionaire and third parties with ties to the majority shareholders, must be
made at extraordinary shareholder meetings, and the Concessionaire must state in
its corporate bylaws, until 12/31/98, that preferred stock shall have voting
rights in such decisions, without detriment to the provisions of (S) 1, Article
115 of Law No. 6,404, of December 15, 1976.
CLAUSE 15.2. - Without detriment to the other provisions set forth in
this Agreement, and those privileges guaranteed by law, the Concessionaire has
the following rights:
I - To operate the conceded service within the framework of its
corporate strategy, and to define freely its investments, in
accordance with the regulations published by ANATEL and the provisions
of this Agreement
II - To appoint a representative to monitor the inspection activities
of ANATEL;
III - To interrupt, according to the terms of Clause 8.3 of this
Agreement, the service granted hereby, or not fulfill the service
requests, of subscribers who fail to fulfill their contractual
obligations towards the Concessionaire;
IV - To request arbitration proceedings under the circumstances and in
the manner prescribed by Chapter XXX of this Agreement;
V - To operate the service granted hereby under business conditions
without being subject to changes involving unjustified enrichment of
the government or users, under the terms provided for in Chapter XII;
VI - To request the revision of the rates applied to the conceded
service, in the manner provided for in this Agreement;
22
VII - To request that ANATEL keep confidential the information it
gathers during its inspection/audit activities, under the terms
provided for in this Agreement;
VIII - To use equipment and infrastructure which do not belong to it
when carrying out services, in accordance with clause 21.1 of this
Agreement; and
IX - To contract with third parties to develop activities that are an
inherent part of, incidental to or which supplement the service
granted hereby, as well as to implement associated projects.
CLAUSE 15.3. - For as long as this Agreement is in force, the
Concessionaire shall be solely liable, with regard to third parties, for the
actions of its personnel, employees and contractors involved in the provision of
Switched, Fixed-line Telephone Service, as well as for the use of equipment,
installations and networks, and the government and ANATEL are held exempt from
all claims and/or indemnities.
CLAUSE 15.4. - The Concessionaire may not obstruct works in the public
interest, regardless of their nature, in the event it becomes necessary to
remove installations or telephone networks in order to render feasible
interventions promoted, either directly or indirectly, by any body or
organization of the public Administration.
CLAUSE 15.5. - The Concessionaire must execute agreements directly
with each Municipal government in the areas it operates the service granted
hereby, as well as with other public service utilities, as regards the location
of the poles and cross bars used to hang aerial lines and cables, and the
underground conduits and pipes used to run cables under streets and public
parks.
(S) 1 - The Concessionaire shall make arrangements with the holders of
public or private property over or under which it has to run conduits or pipes,
or install supports to hold said conduits and pipes, and shall obtain the
corresponding consent or easements for such purposes.
(S) 2 - The Concessionaire must seek arrangements with the respective
municipal authorities in order to maintain conditions required to overcome
interference in the network required to provide the service granted hereby,
including the felling and pruning of trees.
CLAUSE 15.6. - Under the terms of the provisions of Art. 73 of Law No.
9,472 of 1997, the Concessionaire may use poles, pipes, conduits and easements
belonging to or controlled by other providers of telecommunications services or
other public utilities.
(S) 1 - The use of the facilities referred to in the preceding
paragraph must be carried out in a nondiscriminatory way, and at fair and
reasonable prices.
(S) 2 - The Concessionaire must make the facilities it owns or
controls, referred to in the first paragraph of this clause, available to the
other providers of telecommunications
23
services, classified by ANATEL as public utilities, and do so in accordance with
the same conditions provided for in the preceding paragraph.
(S) 3 - In the event the Concessionaire does not reach an agreement
with other service providers regarding the use of the facilities referred to in
this clause, it shall be ANATEL's duty, either alone or together with other
involved regulatory bodies, to define the conditions of said use.
CLAUSE 15.7. - During the entire duration of this concession, the
Concessionaire shall maintain a user information and service center operating 24
(twenty-four) hours a day, capable of receiving and processing requests,
complaints and claims from users, either in person or via any form of long
distance communication.
(S) 1 - The Concessionaire must make available to all users the
addresses and access codes of its information and service center, which are
required to be listed in the Standard Contract entered into with service
subscribers.
(S) 2 - The Concessionaire must make available and announce an
easy-to-dial, toll-free number for users to make requests via telephone.
(S) 3 - All requests, claims or complaints made by users, by whatever
means, must be assigned an order number, which shall be given to the concerned
party so that he or she can be assisted.
(S) 4 - The user shall be informed, within the timeframe defined in
the General Plan on Quality, of the measures taken in response to his or her
request, claim or complaint.
(S) 5 - In the event that ANATEL notes that users are having
difficulty obtaining access to the information and service center, it may order
the Concessionaire to increase the availability of access, or risk being found
guilty of not complying with the obligation provided for in this clause.
CLAUSE 15.8. - When hiring services and acquiring equipment and
materials associated with the provision of the service which is the subject
matter of this Agreement, the Concessionaire commits itself to field offers from
independent suppliers, including those which are state-run, and to base its
decisions, with regard to the various offers submitted, on the objective
criteria of price, conditions of delivery and technical specifications set forth
in the relevant regulations.
(S) 1 - In the event of equivalent offers, the Concessionaire agrees
to use as the deciding criteria, the preference of services offered by companies
located in Brazil, and equipment and materials produced in Brazil, particularly
those produced using Brazilian technology. The issue of equivalent offers shall
be automatically decided if, cumulatively:
I - The price in Brazil of the domestic product is lower than or equal
to that of the imported product, tax included;
24
II - The delivery schedule meets the Concessionaire's needs; and
III - The technical specifications established by relevant regulation
are met and the product has certification that has either been issued
or accepted by ANATEL, when applicable.
(S) 2 - Services are understood to mean those relating to research and
development, planning, setting up and physically installing, operating,
maintaining, supervising and performing evaluation tests of telecommunication
systems.
(S) 3 - ANATEL shall formulate regulations governing the execution of
the provisions in this clause, including applicable penalties.
CLAUSE 15.9. - With the exception of changes which have received prior
approval from ANATEL, the Concessionaire shall fulfill its commitments regarding
the expansion and conformity of the domestic underwater and land cables listed
in Annex 3 - Optical Routes, of this Agreement.
SOLE PARAGRAPH - The discontinuance of fiber-optic cable routes, as
well as changes to the profile of the Concessionaire's domestic routes and
networks, is contingent upon the prior approval of ANATEL.
CLAUSE 15.10. - The Concessionaire agrees to maintain and expand the
domestic fiber-optic network, thereby connecting all the capitals of the
Brazilian States by December 31, 2003.
(S) 1 - All the capitals of the Brazilian States must be
interconnected by December 31, 2000, with the exception of Boa Vista, Cuiaba,
Macapa, Manaus, Porto Velho and Rio Xxxxxx.
(S) 2 - ANATEL may exempt the Concessionaire from the first
requirement of this clause if the Concessionaire makes such a request and
commits itself to achieving interconnection among the State capitals, within the
indicated timeframes, using alternative means based on digital technology, and
with capacity and quality which are fully compatible with the needs of users and
the market to be served.
CHAPTER XVI - OBLIGATIONS AND PREROGATIVES OF ANATEL
CLAUSE 16.1. - In addition to the prerogatives that are an inherent
part of its function as a regulatory body, and other obligations under this
Agreement, ANATEL shall be responsible for:
I - Overseeing and monitoring the provision of the service granted
hereby and the safeguarding of revertible assets, ensuring compliance
with the standards, specifications and instructions set forth in this
Agreement and its annexes;
25
II - Carrying out site visits to inspect the adequacy of installations
and equipment, and ordering any necessary rectifications, repairs,
removals, reconstruction or replacements, at the expense of the
Concessionaire;
III - Continually regulating the execution of the conceded service;
IV - Intervening when necessary in the execution of the service
granted hereby in order to ensure its regularity and faithful
compliance with the Agreement and relevant legal standards;
V - Applying the penalties provided for by regulation of the service
and specifically, by this Agreement;
VI - Reviewing the Supplemental Domestic Long-Distance Service Plans
submitted by the Concessionaire;
VII - Authorizing the adjustment of rates and revising them, under the
terms of, and in accordance with, the provisions of this Agreement;
VIII - Acting within the limits set forth in this Agreement to prevent
the parties from unjustified enrichment, under the terms of this
Agreement;
IX - Ensuring the high quality of the service granted hereby,
accepting, processing and resolving complaints and claims from users,
and informing them, within ninety days, of the measures taken to curb
infringements upon their rights;
X - Declaring the termination of the Concession in the cases provided
for in this Agreement;
XI - Guaranteeing interconnectivity, and settling any disputes which
arise between the Concessionaire and other service providers;
XII - Ensuring compliance with the universal service objectives
provided for in this Agreement, and with any objectives set forth in
future Objectives Plans;
XIII - Continually overseeing the relations between the Concessionaire
and other providers of telecommunications services, and settling any
disputes arising among them;
XIV - Discouraging conduct by the Concessionaire that runs contrary to
the system of free competition, in keeping with the legal authority of
the Administrative Council of Economic Defense - XXXX;
XV - Submitting to the President of the Republic, at the request of
the Concessionaire and through the intermediary of the Ministry of
Communications, proposals for declarations of public interest, with a
view to exercising eminent
26
domain or implementing public easements over the property needed to
establish or maintain the service which is the subject matter of this
Agreement;
XVI - Auditing the service granted hereby under the terms set forth in
this Agreement; and
XVII - Collecting fees for FISTEL and adopting the measures provided
for in current legislation.
CHAPTER XVII - THE CONCESSIONAIRE
CLAUSE 17.1. - The Concessionaire is a company incorporated under
Brazilian law, as a corporation (sociedade anonima), with the sole purpose of
operating the service that is the subject matter of this concession, with the
exception of those services provided for under the terms of (S) 3, Art. 207 of
Law No. 9,472 of 1997.
SOLE PARAGRAPH - In the event that changes to the Concessionaire's
bylaws are approved, the documents formalizing such changes shall be sent to
ANATEL for filing, and shall be fully incorporated into this Agreement.
CLAUSE 17.2. - The Concessionaire and those entities which control it
agree to maintain, for the entire duration of the concession and its extension,
all of the service conditions and capabilities which existed at the time this
Agreement entered into force.
CLAUSE 17.3. - The Concessionaire and those entities which control it
agree to ensure the actual existence on Brazilian territory, during the
concession period and the extension thereof, of centers for decision-making and
the implementation of strategic, managerial and technical decisions involved in
carrying out this Agreement, as well as to ensure this obligation is reflected
in the make-up and decision-making processes of its governing bodies.
SOLE PARAGRAPH - The Concessionaire must include provisions in its
bylaws, until December 31, 1998, which guarantee compliance with the provisions
of the preceding paragraph.
CHAPTER XVIII - ASSIGNMENT OF THE CONCESSION AND CHANGE OF CONTROL OF THE
CONCESSIONAIRE
CLAUSE 18.1. - Assignment of the concession, or the change of direct
or indirect control over the Concessionaire, may only be authorized by ANATEL,
in keeping with the General Concession Plan and Art. 202 of Law No. 9,472 of
1997, provided that:
I - The assignee fulfills all of the requirements established under
the terms of Art. 200 of Law No. 9,472 of 1997; and
II - The assignment or change does not undermine competition, or
threaten the execution of this Agreement or the general standards for
the protection of economic order.
27
SOLE PARAGRAPH - Failure to comply with any provision of this clause
shall result in the forfeiture of this concession.
CLAUSE 18.2. - The capital stock of the Concessionaire may be pledged
freely, and such an assignment does not affect its control.
SOLE PARAGRAPH - If the pledging of stock results in the taxation of
the assets of the Concessionaire, provisions must be made in the financing
agreements in order to submit the creditors, in the event of foreclosure, to the
rules set forth in this Chapter.
CHAPTER XIX - INSPECTION SYSTEM
CLAUSE 19.1. - ANATEL shall carry out inspections of the service
granted herein in order to ensure compliance with the prerequisites of universal
service and continuity, which are an inherent part of the public service being
provided. It shall also ensure fulfillment of the objectives and commitments set
forth in this Agreement.
(S) 1 - The inspections to be performed by ANATEL shall involve
inspecting and monitoring the Concessionaire's activities, equipment and
facilities, which in turn requires complete access to all of the
Concessionaire's or third parties' data and information.
(S) 2 - The information gathered during its inspection activities
shall be published by its library, with the exception of information which, at
the Concessionaire's request, is considered by ANATEL to be confidential in
nature.
(S) 3 - Any information judged confidential in nature under the terms
of the preceding paragraph shall only be used in proceedings related to this
Agreement, and any requests for further dissemination of such information,
whether broad or restricted, must be made to ANATEL, or whomever it has
indicated.
CLAUSE 19.2. - The Concessionaire, through the intermediary of a named
representative, may monitor any and all of ANATEL's inspection activities. It
may not obstruct or prevent said inspection activities, at the risk of being
subject to the penalties provided for in this Agreement.
CHAPTER XX - REPORTING OBLIGATIONS OF THE CONCESSIONAIRE
CLAUSE 20.1. - As provided by regulation, the Concessionaire must
periodically send ANATEL statistical and status reports on all services
provided, including, among other elements, figures on the expansion and scope of
the telephone network. The Concessionaire must also report on the technological
status of the equipment used.
CHAPTER XXI - CONCESSION-RELATED ASSETS
CLAUSE 21.1. - The assets related to this concession consist of all
assets owned by the Concessionaire and required to provide the service conceded
herein, especially those
28
classified as such in Annex 1 Classification of Revertible Assets Used to
Provide Domestic Long-Distance, Switched, Fixed-Point Telephone Service.
(S) 1 - Concession-related assets also include permits that have been
granted for the use of the radio frequency spectrum and, where applicable, usage
rights for orbital positions, in accordance with Articles 48 and 161 of Law No.
9,472 of 1997 and the provisions of clause 4.1 of this Agreement.
(S) 2 - With regard to concession-related assets, the Concessionaire
must receive the prior and express consent of ANATEL for the direct use of
equipment, infrastructure, software systems, or any other type of asset that is
not its property, in order to provide the service conceded herein. ANATEL may
exempt it from this requirement in the cases and circumstances provided for by
regulation.
(S) 3 - If the continuity of service is at risk, or there is an
impediment to the reversion of a concession-related asset, ANATEL may withhold
authorization to use third-party assets, or require that the corresponding
Agreement contain a clause stipulating that the owner agrees, in the event of
termination of the concession, to uphold the Agreement and transfer to ANATEL
the rights pertaining thereto.
CHAPTER XXII - THE SYSTEM OF REVERSION
CLAUSE 22.1. - In the event of the termination of the concession, all
concession-related assets shall revert automatically to ANATEL, as indicated in
Chapter XXI above, and the Concessionaire shall retain its right to the
compensation provided for by law and this Agreement.
SOLE PARAGRAPH - Within 180 (one hundred eighty) days following the
termination of the concession, an inventory shall be taken of the assets
pertaining thereto, and an Asset Restitution and Reversion Statement shall be
drawn up, with a detailed account of the condition of said assets. One or more
representatives of the Concessionaire shall be authorized to monitor the
foregoing.
CLAUSE 22.2. - The Concessionaire commits itself to remit revertible
assets in a perfect state of operation, utilization and maintenance, except as
regards normal wear and tear through usage.
SOLE PARAGRAPH - Revertible assets shall be transferred to ANATEL free
of any charge or encumbrance, while taking into account the scenario stated in
paragraph 2 of the following clause.
CLAUSE 22.3. - The reversion of assets, as addressed in Chapter XXI
above, which occurs at the end of the contractual term, shall be carried out
without compensation, except as provided for in this clause.
(S) 1 - The Concessionaire shall only be compensated if, upon the
termination of the Concession, there exist partially-amortized assets, the
acquisition of which had been
29
previously authorized by ANATEL, or which were acquired prior to the signing of
this Agreement, for the purpose of guaranteeing reliable, up-to-date service.
(S) 2 - In place of or in addition to the compensation provided for in
the preceding paragraph, ANATEL may allow the assignment of assets that have
been pledged as security for its own financing needs, and assume any financed
portion which is still outstanding.
CLAUSE 22.4. - Upon termination of the Concession, ANATEL shall assess
the assets referred to in clause 21.1, and may refuse the reversion of assets it
considers dispensable to, or useless in the operation of the service granted
hereby. The Concessionaire is guaranteed the right to contest the foregoing,
including by way of reports or studies prepared and presented at its expense,
demonstrating the need for reversion.
SOLE PARAGRAPH - In the event the Concessionaire disagrees with
ANATEL's decision regarding the provisions of this clause, recourse to the
dispute-resolution process provided for in this Agreement shall be allowed.
CHAPTER XXIII - INSURANCE PLAN
CLAUSE 23.1. - During the entire time the concession is in force, the
Concessionaire must subscribe, with an appropriate Insurance Company registered
with the corresponding regulatory body of the insurance industry, to the
insurance policies listed below in order to ensure effective and comprehensive
coverage of the inherent risks involved in carrying out all of the activities
contemplated within this Agreement.
I - Comprehensive insurance against material damage, covering the
loss, destruction or damage of any and all assets associated with the
concession. Said insurance must provide blanket coverage, in
accordance with international standards;
II - Business interruption insurance which covers, at a minimum,
variations in the Concessionaire's income resulting from accidents, or
changes in the operating terms of the Agreement, which affect
operating costs and which are not covered by insurance against
material damage, provided that taking out this type of insurance is
allowed by Brazilian standards and expressly authorized by the
Brazilian Reinsurance Institute - IRB or an equivalent organization;
and
III - Insurance covering the achievement of the quality and universal
service requirements provided for in this Agreement (i.e., a
performance bond, a letter of credit and the amount kept as a deposit)
with a value corresponding to 10% of the estimated annual amount
invested in order to achieve the objectives provided for in this
Agreement.
(S) 1 - The Concessionaire must arrange to have its insurance policies
include the requirement that the Insurer inform the Concessionaire and ANATEL,
in writing and with at least 10 (ten) days' notice, of any information which may
entail the complete or partial
30
cancellation of the policies taken out, a reduction in coverage, an increase in
deductibles, or a lowering of the values covered.
(S) 2 - Policies taken out in order to comply with the provisions of
this clause may not contain obligations, restrictions or provisions which
contradict the provisions of this Agreement or regulations, and must contain an
express statement by the Insurer that it is completely familiar with this
Agreement, specifically as regards the limits of the Concessionaire's rights.
(S) 3 - In the event the Concessionaire fails to comply with the
requirement to keep the required insurance policies in effect, then ANATEL,
notwithstanding its ability to order intervention in or the termination of this
concession, may then take out said insurance and directly pay for the
corresponding premiums, at the expense of the Concessionaire.
(S) 4 - Every year, by the end of the month of January, the
Concessionaire must submit a certificate issued by the insurers, confirming that
all the premiums due for the preceding year have been paid, and that the
policies have taken full effect or been renewed. In the latter case, any new
policy terms are also to be submitted.
(S) 5 - The policies referred to in this clause must comply with the
following deadlines for presentation and activation:
I - The policy referred to in item I of the first paragraph of this
clause must be presented within 90 (ninety) days as of the signing of
this Agreement, and must take immediate effect;
II - The policy referred to in item II of the first paragraph of this
clause must be presented by November 30, 1999, and take effect as of
January 1, 2000; and
III - The policy referred to in item III of the first paragraph of
this clause must be presented by November 30, 2000, and take effect as
of January 1, 2001.
(S) 6 - ANATEL may change the coverage or the presentation deadlines
for the policies referred to in this clause so as to adapt said requirements to
the regulations published by the Private Insurance Commission - SUSEP, or to the
terms established by the Brazilian Reinsurance Institute - IRB. It may also do
so if standards are published which interfere with the contracting of the
insurance referred to herein, or if the market is not ample or competitive
enough to allow the insurance to be taken out at a reasonable cost.
CHAPTER XXIV - INTERCONNECTION
CLAUSE 24.1. - The Concessionaire is required to allow, facilitate,
provide and implement the interconnection of other telecommunications service
providers' networks with the network it operates, whether they are in the public
or private sector, and whenever they so request. In so doing, it shall enforce
and observe the regulations published by ANATEL pertaining thereto.
31
CLAUSE 24.2. - The network usage fees required as of the signing of
this Agreement are those listed in Administrative Ruling No. 2,505 of December
20, 1996, issued by the Ministry of Communications, and may be updated and
reviewed in keeping with the provisions of this Agreement as provided by
regulation.
CLAUSE 24.3. - The Concessionaire shall enjoy the same rights, and
observe the same terms of interconnection, as the ones applying to other service
providers.
SOLE PARAGRAPH - The Concessionaire must maintain the elements of its
network for interconnection at the most technically advanced level possible, in
accordance with ANATEL regulations.
CHAPTER XXV - PENALTIES
CLAUSE 25.1. - In the execution of this Agreement, the Concessionaire
shall be subject to the following penalties, notwithstanding other penalties
provided for by regulation, which shall be applied by way of justified decisions
by ANATEL, and the former shall be guaranteed the right to defend itself under
the terms of the Internal Regulations.
I - For violations of the provisions of this Agreement resulting in
non-fulfillment of universal service objectives, there shall be a fine
of up to R$50,000,000.00 (fifty million Brazilian reais);
II - For acts or omissions contrary to the provisions set forth in
this Agreement, and which cause harm to competitors in the
telecommunications industry, there shall be a fine of up to
R$50,000,000.00 (fifty million Brazilian reais);
III - For any violation of contractual provisions which results in the
non-fulfillment of quality of service objectives or guidelines, there
shall be a fine of up to R$40,000,000.00 (forty million Brazilian
reais);
IV - For any other act or omission not covered by the preceding
paragraphs, and which involves the violation of users' rights as set
forth in this Agreement, or which causes them harm, there shall be a
fine of up to R$30,000,000.00 (thirty million Brazilian reais);
V - For any act or omission which violates the provisions of clause
15.8 of this Agreement, involving the hiring of services and the
acquisition of equipment and materials manufactured in Brazil, there
shall be a fine of up to R$30,000,000.00 (thirty million Brazilian
reais);
VI - For any act or omission which obstructs or hinders the inspection
activities of ANATEL as provided for in this Agreement, there shall be
a fine of up to R$20,000,000.00 (twenty million Brazilian reais);
32
VII - For any act, omission or negligence which threatens the security
of the facilities, there shall be a fine of up to R$15,000,000.00
(fifteen million Brazilian reais);
VIII - For any act or omission which brings harm or poses a risk to
concession-related assets or equipment, there shall be a fine of up to
R$10,000,000.00 (ten million Brazilian reais); and
IX - For failure to comply with any express requirement in this
Agreement, with the exception of the requirements stated in the
preceding paragraphs, for which penalties have already been
determined, there shall be a fine of up to R$10,000,000.00 (ten
million Brazilian reais).
(S) 1 - The infraction specified in paragraph I of this clause shall
be characterized by the failure of the Concessionaire to fulfill its
obligations, within the timeframes set forth in this Agreement, with regard to
the expansion and increased availability of the service granted hereby by
supplying public telephones and assistance to localities, in keeping with the
provisions of the General Plan on Universal Service. When applying the penalty,
the following factors shall be taken into consideration, in addition to the
general principles laid forth in this Chapter:
a) The difference between the objective defined in the Agreement and
its degree of implementation;
b) The possibility for the Concessionaire catch up on the
implementation schedule, at its own expense;
c) The harm done to the policy reflected in the General Plan on
Universal Service;
d) The harm done to the intended direct beneficiaries of the
unfulfilled objectives; and
e) Any attenuating circumstances of a technical or economic nature
which may lessen the responsibility of the Concessionaire,
although not exonerate it.
(S) 2 - The seriousness of the infraction indicated in paragraph II of
this clause shall be defined solely on the basis of the general criteria
indicated in clause 25.2, and shall be characterized by conduct of the
Concessionaire which, directly or indirectly, could inflict harm upon its
competitors in the industry, particularly:
a) Obstructing or hindering the option to use another provider of
the service or domestic and international long distance service.
b) Refusing to provide interconnection to a provider of
telecommunications services;
33
c) Obstructing or hindering the activity of providers of premium
services;
d) Placing conditions upon the availability of the conceded service,
or offering advantages to users in exchange for their acquiring
services other than the service which is the subject matter of
this Agreement;
e) Supplying any telecommunications service that is not a purpose of
the concession or authorized by ANATEL;
f) Failing to uphold quality standards regarding interconnection;
and
g) Delaying the supply of information vital to the activities of
other service providers, especially involving user-related
information.
(S) 3 - The infraction specified in paragraph III of this clause shall
either be characterized by repeatedly providing service which is below the
quality parameters defined in the General Plan on Quality, or by demonstrably
contravening the quality indicators listed in Chapter VI. In the first case,
the following are considered particularly serious infractions:
a) Failure to allocate the human and material resources required to
maintain minimum quality standards in the operation and
maintenance of the service granted hereby; and
b) Negligence in modernizing the network which impacts the quality
of service.
(S) 4 - The seriousness of the infraction indicated in paragraph IV of
this clause shall be defined on the basis of the number of users affected and on
the damage caused. It shall be characterized by the violation, whether directly
or indirectly, through commission or omission, of an obligation stipulated in
this Agreement, and which does not involve a violation of duties pertaining to
universal service and quality, but rather a violation of the rights of users,
particularly:
a) Interruption of service for periods longer than allowed by the
General Plan on Quality, except under the circumstances indicated
in the sole paragraph of clause 6.3;
b) Refusal to provide the conceded service to any interested party;
c) Failure to fulfill the duty of providing information to users;
d) Breach of the secrecy of telecommunications, outside of legally-
mandated circumstances, even in the case of breaches committed by
third parties using facilities over which the Concessionaire has
responsibility;
e) Failure to maintain a user information and service center as
stipulated in this Agreement;
34
f) Charging rates or prices which are against the rules stipulated
in this Agreement and as provided by regulation; and
g) Restricting the right to freely choose among Domestic Long-
Distance Service Plans.
(S) 5 - The penalty provided for by paragraph V of this clause shall
be characterized by a verifiable violation of the obligation indicated in clause
15.8, and its seriousness shall be determined in accordance with regulatory
provisions.
(S) 6 - The seriousness of the infraction indicated in paragraph VI of
this clause shall be defined on the basis of the significance of the inspection
activity obstructed, and shall be characterized by a violation committed by the
Concessionaire or its employees, whether directly or indirectly, through
commission or omission, which impedes or hinders the inspection activities
carried out by ANATEL, by its employees, or even by users, particularly:
a) The refusal of the Concessionaire to comply with requests for
information made by ANATEL regarding the conceded service or the
assets allocated to it;
b) Hindering the actions of ANATEL's inspectors;
c) Failure to fulfill the publicity obligations provided for in this
Agreement, or as provided by the regulation; and
d) Failure to send, or to send in a timely manner, information,
data, reports or documents which, as determined by regulation or
this Agreement, should have been conveyed to ANATEL.
(S) 7 - The seriousness of the infraction indicated in paragraph VII
of this clause shall be defined on the basis of the degree of risk posed, and
shall be characterized by conduct of the Concessionaire which runs counter to
the rules set forth in this Agreement and as provided by regulation, violates
norms and standards of technical safety, or which poses a risk to the facilities
allocated to the conceded service, particularly:
a) The use of equipment not certified by ANATEL to provide the
service, when such certification is required;
b) Failure to allocate the human and material resources required to
maintain minimum safety standards in the operation and
maintenance of the service; and
c) Failure to take the precautions recommended for the service
conceded herein.
(S) 8 - The seriousness of the infraction indicated in paragraph VIII
of this clause shall be defined on the basis of the significance, the economic
importance and the
35
indispensability of the assets involved, and shall be characterized by conduct
of the Concessionaire which runs counter to the provisions of this Agreement or
the regulations, and which could pose a risk to assets or equipment associated
with this concession, or make their reversion difficult, particularly:
a) Failure to keep inventory and records of the assets referred to
in clause 21.1;
b) The direct use of the assets of third parties in providing the
service, without prior authorization from ANATEL, or without a
regulatory dispensation; and
c) Negligence in maintaining revertible assets, as provided by
regulation.
(S) 9 - The penalty provided for in paragraph IX of this clause shall
be called for in the case of a demonstrable violation of a contractual
obligation which is not included among the preceding paragraphs, particularly
the violation indicated in paragraph XXXI of clause 15.1.
(S) 10 - The penalty provided for in paragraph II above is of a
contractual nature and shall be applied by ANATEL regardless of any measures
taken by the Administrative Council of Economic Defense - XXXX.
(S) 11 - Failure to pay any fine which has been determined under the
provisions in this clause, and within the timeframe determined by ANATEL, shall
constitute a serious violation, and shall occasion intervention in the affairs
of the Concessionaire, under the terms set forth in Chapter XXVIII. It shall
also entail payment of a late fee of 0.33% (zero point thirty-three percent) per
day, up to a maximum of 10% (ten percent), plus the SELIC reference rate for
federal securities, to be levied upon the amount owed on the basis of the number
of days it is past due.
CLAUSE 25.2. - When applying the contractual fines provided for in
this Chapter, the rules stated in Title VI, Book III of Law No. 9,472 of 1997,
and those provided by regulation, shall be observed.
(S) 1 - When defining the seriousness of penalties and determining
fines, ANATEL shall take the following factors into account:
I - Whether the severity of the punishment is in proportion to the
seriousness of the violation, while also taking into account the
number of users affected;
II - The damage inflicted upon the service and users as a result of
the infraction;
III - Any advantage which the Concessionaire has reaped as a result of
the infraction;
IV - The market share of the Concessionaire in its geographical
service area;
36
V - The economic and financial situation of the Concessionaire,
especially its potential to generate revenue, and its assets;
VI - The Concessionaire's past record;
VII - Whether the violation is a repeat offense, that being a repeat
of a violation of the same nature after having received notification
previously; and
VIII - Whether the infraction involved aggravating or attenuating
circumstances.
(S) 2 - Regardless of the specific ranking criteria provided for in
each paragraph of the preceding clause, and others provided for by regulation,
penalties shall be ranked using the following scale:
I - The infraction shall be considered minor if it results from
unintentional or excusable conduct of the Concessionaire, and from
which it does not benefit;
II - The infraction shall be considered moderately serious if it
results from inexcusable conduct, but which does not provide the
Concessionaire with any benefit or gain, or affect a significant
number of users; and
III - The infractions shall be considered serious if ANATEL finds
evidence that:
a) The Concessionaire has acted in bad faith;
b) The infraction has resulted in a direct or indirect benefit for
the Concessionaire;
c) The Concessionaire's infraction is a repeat offense;
d) A significant number of users were affected; and
e) There were circumstances of the kind anticipated in (S) 10 of the
preceding clause.
(S) 3 - At ANATEL's discretion, in the case of first-time occurrences
of infractions classified as minor, it may apply the disciplinary measure of
issuing a warning to the Concessionaire, which shall be formally notified of the
sanction, regardless of the publication of the ruling in the Official Journal.
(S) 4 - When applying the disciplinary measures provided for in this
Chapter, the Disciplinary Proceedings provided for in the Internal Regulations
of ANATEL shall be observed.
(S) 5 - In the case of the infractions provided for in paragraph IV of
clause 25.1, ANATEL may reduce the amount the Concessionaire would pay in fines
from the amount to be paid as compensation to the affected users, and the
compensation criteria, the payment schedule and the maximum amount of the
abatement shall be stated within the sentencing document.
37
(S) 6 - The measure provided for in the preceding paragraph may only
be adopted if it can be proved that respecting the rights or demands of users
shall not exonerate the Concessionaire from its liability for other civil
damages owed.
CLAUSE 25.3. - The fines provided for in this clause shall be applied
notwithstanding scenarios involving intervention or declaration of forfeiture,
as provided for in this Agreement.
SOLE PARAGRAPH - In the event of complete or partial failure to carry
out an adjustment, or unjustified delays of over 120 (one hundred twenty) days
in complying with the objectives set forth in this Agreement, the Concessionaire
shall be subject to a declaration of forfeiture of the Concession, under the
terms set forth in clause 26.4.
CLAUSE 25.4. - The amounts of the fines provided for in this Chapter
shall be adjusted annually by applying the GPI-DA, and the first adjustment
shall take place one year after the signing of this Agreement.
CHAPTER XXVI - TERMINATION OF THE CONCESSION
CLAUSE 26.1. - The Concession Agreement shall be considered terminated
in the event of the following:
I - Expiration of the concession period for the service granted
hereby, in the event it has not been extended under the terms of this
Agreement;
II - Expropriation, in accordance with Art. 113 of Law No. 9,472 of
1997;
III - Forfeiture, under the terms set forth in Article 114 of Law No.
9,472 of 1997 and in this Agreement;
IV - Amicable or judicial rescission, under the terms of Art. 115 of
Law No. 9,472 of 1997; and
V - Annulment.
(S) 1 - Upon termination of the concession, the rights and duties
pertaining to the provision of the conceded service shall revert to ANATEL,
along with the assets referred to in clause 22.1, and the Concessionaire shall
retain the right to the compensation provided for by law and within this
Agreement.
(S) 2 - Following the termination of the concession, ANATEL shall
undertake all necessary inventories, assessments and settlements within 180 (one
hundred eighty) days of taking over the service granted hereby, except in the
case of expiration of the agreement, in which case these steps are to be taken
in advance by ANATEL.
(S) 3 - If the concession is terminated prior to its contractual
expiration date, ANATEL may do the following, notwithstanding other suitable
measures:
38
I - Make temporary use of fixed and intangible assets, and avail
itself of the personnel required to continue providing the service
granted hereby; and
II - Maintain the Contracts signed between the Concessionaire and
third parties for the duration and under the terms initially agreed
upon.
CLAUSE 26.2. - Reversion upon the expiration of the Agreement shall be
carried out without compensation, except under the circumstances provided for in
clause 22.3.
CLAUSE 26.3. - Under the terms of Art. 113 of Law No. 9,472 of 1997,
expropriation is understood to be the repossession of the service by ANATEL
during the concession period, due to extraordinary motives of public interest,
by way of a specific authorizing law and subsequent to the payment of
compensation.
CLAUSE 26.4. - In the circumstances listed below, the forfeiture of
this Agreement may be declared by an act of the Board of Directors of ANATEL,
preceded by administrative proceedings which guarantee the Concessionaire an
ample defense:
I - Transfer of corporate control, spin-offs, mergers or
transformation of the Concessionaire, as well as raising or lowering
its capital stock without the prior approval of ANATEL;
II - Improper assignment of the Agreement;
III - Failure to fulfill a commitment to an assignment, as referred to
in clause 18.1 of this Agreement and Art. 87 of Law No. 9,472 of 1997;
IV - Bankruptcy or dissolution of the Concessionaire;
V - Noncompliance with insurance coverage requirements, in violation
of the obligations provided for in clause 23.1, which, in the judgment
of ANATEL, cannot be dealt with through intervention; and
VI - The occurrence, under the terms of Art. 114, paragraph IV of Law
No. 9,472 of 1997, of any of the situations stipulated by clause 28.1,
and in which intervention, in the judgment of ANATEL would be
inappropriate, ineffective or even unjustly favorable to the
Concessionaire.
(S) 1 - Intervention shall be judged unnecessary in the event the
demand for the service which is the subject matter of the concession may be met,
through authorization, by other providers in a regular and immediate fashion.
(S) 2 - Declaring forfeiture shall not preclude the application of
appropriate penalties, under the terms of this Agreement, for infractions
committed by the Concessionaire, nor shall it prejudice the right to
compensation defined under the terms of the following Chapter.
39
CLAUSE 26.5. - The Concessionaire shall be entitled to contractual,
judicial or amicable rescission in the event that, due to acts or omissions of
government authorities, the execution of the Agreement becomes excessively
onerous, under the terms of Art. 115 of Law No. 9,472 of 1997.
SOLE PARAGRAPH - The introduction or increase of competition among the
various providers of the service which is the subject matter of the concession
does not constitute a motive for the rescission of the Agreement, since the
Concessionaire clearly takes this concession with the knowledge that it will be
carrying out its activities without any kind of reserved or exclusive market.
CLAUSE 26.6. - Annulment shall be decreed by ANATEL in the event that
irremediable and serious irregularities are discovered in this Agreement.
CHAPTER XXVII - COMPENSATION
CLAUSE 27.1. - For the purposes of calculating compensation owed by
ANATEL to the Concessionaire, in the cases expressly provided for in this
Agreement, the following shall be observed:
I - Expiration of the contract term: No compensation shall be due,
unless it is proved that the absence of payment results in the
unjustified enrichment of the government through the reversion of
assets which have not been completely amortized, in accordance with
the provisions of clause 22.3;
II - Expropriation: In keeping with the provisions of Art. 113 of Law
No. 9,472 of 1997, compensation, which shall be paid prior to
expropriation, must correspond to the value of the assets which are
reverting to the granting authority, minus depreciation;
III - Forfeiture: Independently of the application of penalties and
the indemnification of damage resulting from breach of contract, under
the terms of the Agreement, the Concessionaire may only claim
compensation if it is proved that the government will be unjustly
enriched through the reversion of assets that have not been completely
amortized or depreciated, after deducting the value of the damage
incurred and of imposed fines, in addition to any unmet financial
obligations;
IV - Amicable or judicial rescission: No compensation shall be due,
unless otherwise determined by a court ruling; and
V - Annulment: Compensation shall only be due if it is proved that the
Concessionaire did not act illegally, and such compensation shall
correspond solely to the actual value of the assets which revert to
the government, calculated on the date the annulment is decreed, on
the condition that said assets have not yet been fully amortized.
40
(S) 1 - The temporary amount to be advanced by ANATEL in cases of
expropriation shall be calculated in the manner prescribed by the specific
authorizing legislation.
(S) 2 - In the event that forfeiture is brought about through the
demonstrated fault of the Concessionaire, it shall also occasion:
a) retention of the credits stemming from the Agreement, including
the appropriation of revenue from the payments made by users of
the service;
b) liability for prejudice caused to the government and to the
users;
c) the levying of fines under the terms provided for in this
Agreement and current legislation; and
d) loss of the insurance guarantee provided for in clause 23.1.
(S) 3 - Except in cases of expropriation, the appropriate compensation
for other instances of termination of the Agreement shall be calculated under
the terms of this chapter and divided into installments equal to the number of
months the concession would have been in effect. The first installment shall be
paid one year after the termination of the Agreement.
(S) 4 - The responsibility for paying the various types of
compensation may be transferred by ANATEL to the provider that takes over the
operation of the service granted hereby from the Concessionaire. However, ANATEL
shall reassume the payment obligation in the event the new provider is more than
90 (ninety) days behind in its payments.
CHAPTER XXVIII - INTERVENTION
CLAUSE 28.1. - In the event the continuity and security of the service
granted hereby is jeopardized through the fault of the Concessionaire,
especially in the situations indicated below, then ANATEL, at its discretion and
in the public interest, may decree its intervention in the affairs of the
Concessionaire by way of a specific and justified act of its Board of Directors.
I - Unjustified paralysis of the service granted hereby, that being
the interruption of service under circumstances not anticipated by
this Agreement, and which are not attributed to causes which ANATEL
considers justifiable;
II - Inadequacy or repeated insufficiencies of the service provided,
characterized by noncompliance with the quality parameters provided
for in this Agreement and by regulation, even after warnings issued by
ANATEL to rectify the situation by a certain deadline;
III - Poor administrative practices that jeopardize the continuity of
the service granted hereby;
41
IV - Recurrence of violations defined as serious under the terms of
clause 25.1 above;
V - Non-fulfillment of universal service objectives, that being the
unjustified failure to comply with the timetable for implementing the
universal service requirements of this Agreement;
VI - Unjustified withholding of interconnection, understood as
refusing, delaying or postponing the negotiation or implementation of
a connection to its network, at the request of another service
provider, and in compliance with the terms of interconnection
determined by ANATEL;
VII - Violation of economic order, characterized by unfair trade
practices; and
VIII - Failure to provide reports to ANATEL, or obstruction of
inspection activities, which may presuppose the occurrence of any of
the events anticipated in the previous paragraphs.
CLAUSE 28.2. - The intervention decree must state the timeframe,
motives, goals and scope, in addition to designating the intervening party.
SOLE PARAGRAPH - The duration and scope of the intervention must be
compatible with and in proportion to the cause for the intervention.
CLAUSE 28.3. - The intervention shall be preceded by administrative
proceedings initiated by ANATEL, during which the full rights of defense of the
Concessionaire shall be guaranteed.
SOLE PARAGRAPH - If immediate intervention is indispensable, it may be
decreed as a precaution by ANATEL, without a prior declaration by the
Concessionaire, in which case the proceedings must be initiated immediately as
of the date of the decree, and concluded within one hundred eighty days, during
which time the Concessionaire may exercise its full rights of defense.
CLAUSE 28.4. - The intervention decree shall neither affect the
regular course of business of the Concessionaire, nor its normal functioning. It
shall, however, occasion the immediate dismissal of its management.
CLAUSE 28.5. - The function of temporary administrator may fall to an
executive of ANATEL, a specifically appointed person, collegial body or a
company, and the Concessionaire shall assume the cost of remuneration.
(S) 1 - ANATEL may have recourse the intervening party to act on its
behalf.
(S) 2 - The temporary administrator shall issue reports and be
responsible for its acts.
42
(S) 3 - For acts of alienation and disposal of the assets of the
Concessionaire, the temporary administrator requires the prior authorization of
ANATEL.
CLAUSE 28.6. - Intervention shall not be decreed if ANATEL deems it
unnecessary.
SOLE PARAGRAPH - Intervention shall be deemed unnecessary under the
circumstances set forth in (S) 1 of clause 26.4 above, as well as under those
provided for in Art. 114, paragraph IV of Law No. 9,472 of 1997.
CHAPTER XXIX - ADMINISTRATIVE EXPROPRIATIONS AND IMPOSITIONS
CLAUSE 29.1. - In the event public easements or expropriations need to
be carried out in order to implement, provide or update the service granted
hereby, such tasks shall be handled entirely by the Concessionaire, and ANATEL
must submit proposals to the President of the Republic requesting the issuance
of declarations of public interest.
CHAPTER XXX - ARBITRATION
CLAUSE 30.1. - Any disputes that may arise over the application and
interpretation of the terms of the concession shall be resolved by ANATEL
through the exercise of its function as a regulatory body, in accordance with
the provisions of Articles 8 and 19 of Law No. 9,472 of 1997. The Concessionaire
may only evoke the arbitration proceeding provided for in this Chapter if it
disagrees with a ruling by ANATEL on the following topics:
I - Infringement of the right of the Concessionaire to protect its
economic situation, as set forth in Chapter XII;
II - Rate revision, as provided for in Chapter XII; and
III - Compensation owed upon the termination of this Agreement,
including reverted assets.
SOLE PARAGRAPH - The submission of any issue to arbitration does not
exempt ANATEL and the Concessionaire from the obligation to comply fully with
this Agreement, nor does it permit the interruption of the activities associated
with the concession.
CLAUSE 30.2. - Arbitration proceedings shall be initiated when one
party sends notice to the other, requesting the establishment of the Arbitration
Tribunal provided for in this Chapter, and detailing the issue which is the
topic of controversy.
SOLE PARAGRAPH - ANATEL may reject the establishment of the
Arbitration Tribunal if it can justifiably demonstrate that the dispute is not
included in the list of topics provided for in clause 30.1.
CLAUSE 30.3 - The Arbitration Tribunal shall be composed of 5 (five)
members, appointed as follows:
43
I - 2 (two) members, and their respective alternates, chosen by the
Board of Directors of ANATEL from among specialists in the areas
pertaining to the disputed matter, and who are not ANATEL employees.
At least one of them, who shall preside over the proceedings, shall
have specific knowledge of the legal regulation of telecommunications;
II - 2 (two) members, and their respective alternates, chosen by the
Concessionaire, from among specialists in the areas pertaining to the
disputed matter, and who are not ANATEL employees. At least one of
them shall have specific knowledge of the legal regulation of
telecommunications; and
III - 1 (one) member, and his or her respective alternate, chosen by
the members referred to in the preceding paragraphs.
(S) 1 - The Arbitration Tribunal may be assisted by whatever technical
experts it finds suitable to appoint.
(S) 2 - The Tribunal shall be considered constituted on the date when
all arbitrators accept their appointments and notify both parties of their
acceptance.
(S) 3 - The Tribunal shall adjudicate on the basis of established law,
and its rulings shall have cogent force, independent of judicial homologation.
CLAUSE 30.4 - If it has not been rejected by ANATEL, or if such
arguments have been overcome, the Proceedings dealt with in this Chapter shall
be initiated, and the following procedures shall be observed:
I - The parties shall have 10 (ten) days as of receiving the notice
discussed at the beginning of the preceding clause in which to choose
the members of the Arbitration Tribunal, which shall be established as
soon as all of its members demonstrated their accepted;
II - In the event one of the parties fails to act, or offers
resistance to the establishment of the Arbitration Tribunal, the other
party may avail itself of the right provided for in Art. 7 of Law No.
9,307 of September 23, 1996;
III - Once the Arbitration Tribunal has been established, the parties
shall each have 25 (twenty-five) days to present their arguments
concerning the disputed matter and may use this opportunity to present
reports, surveys, and opinions, as well as any other documents or
information which they feel are relevant in supporting their position;
IV - Once the briefs have been presented, the Tribunal shall analyze
the arguments and may, at the request of one of its members, order the
elaboration of reports, surveys or opinions, and request information
or documents from the parties. In addition, the Tribunal may make any
other investigation or take any
44
other measures it deems necessary to obtain optimal information about
the disputed matter;
V - During the gathering of the items referred to in the preceding
paragraph, the parties shall always be permitted to make and refute
arguments in keeping with the principles of informality, consensus and
celerity which shall govern the proceeding;
VI - Once the preliminary fact-finding period has been declared
closed, the parties shall be granted a common 15 (fifteen) day period
in which to present their closing arguments;
VII - Once the period mentioned above has elapsed, regardless of the
presentation of the final arguments, the Tribunal shall issue its
ruling within 30 (thirty) days;
VIII - The ruling of the Arbitration Tribunal may not be appealed,
except for petitions for reconsideration, which are only suitable in
cases when a ruling is approved with a mere one-vote majority; and
IX - Invalidation of arbitration proceedings shall only be allowed
under the circumstances provided for in Art. 32 of Law No. 9,307/96.
SOLE PARAGRAPH - The expense of the arbitration process, including the
cost of reports, opinions and surveys, as well as the fees of the Tribunal
members, shall either be charged to the Concessionaire or to ANATEL, depending
upon the ruling of the Arbitration Tribunal.
CHAPTER XXXI - APPLICABLE LEGAL SYSTEM
CLAUSE 31.1. - Without prejudice to the norms inherent in the
Brazilian legal system, this concession is governed by Law No. 9,472 of July 16,
1997 and by the regulations resulting therefrom, particularly those issued by
Executive Authority in accordance with the provisions of Art. 18 of the above-
mentioned Law, and they always take precedence over conflicting standards.
CLAUSE 31.2. - When providing the service conceded herein, national
telecommunications policy and the regulations of ANATEL must be observed and
considered an integral part of this Agreement, particularly the following
related documents:
I - General Concession Plan;
II - General Plan on Universal Service;
III - General Plan on Quality;
IV - General Regulations for Telecommunications Services;
45
V - Regulations for Switched, Fixed-line Telephone Service;
VI - General Regulations for Interconnection;
VII - Numbering Regulations for Switched, Fixed-line Telephone
Service;
VIII - Numbering Administration Regulations; and
IX - Regulations for Compensation for Network Usage of Providers of
Switched, Fixed-line Telephone Service.
CLAUSE 31.3. - When interpreting the standards and provisions
contained within this Agreement, general rules of interpretation and the
standards and principles of Law No. 9, 472 of 1997 must be taken into account,
in addition to the documents referred to in the preceding item.
CHAPTER XXXII - VENUE
CLAUSE 32.1. - In order to resolve disputes stemming from this
Agreement which cannot be resolved through the dispute-resolution process in
Chapter XXX Arbitration, the Federal District Court of Brasilia (Foro da Secao
Judiciaria da Justica Federal de Brasilia, Distrito Federal) shall have
competent jurisdiction.
CHAPTER XXXIII - FINAL AND GENERAL PROVISIONS
CLAUSE 33.1. - The Agreement signed herewith shall enter into force as
soon as its abstract is published in the official government daily journal
(Diario Oficial da Uniao).
SOLE PARAGRAPH - The Concessionaire shall have 6 (six) months as of
the publication of the regulations referred to in clause 31.2, which are
expected to have been completely published by December 31, 1998, before being
required to comply fully with the obligations set forth in this Agreement.
In order to signify their full acceptance of the provisions and terms
of this Agreement, the parties hereby execute it in triplicate, before witnesses
who also execute it, in order that this Agreement take legal and judicial
effect.
Brasilia, May 26, 1998.
ANATEL:
__________________________
__________________________
Concessionaire:
__________________________
__________________________
46
Witnesses:
__________________________
Name:
ID:
__________________________
Name:
ID:
47
ANNEX 1
CLASSIFICATION OF REVERTIBLE ASSETS USED
TO PROVIDE
DOMESTIC LONG-DISTANCE,
SWITCHED, FIXED-LINE TELEPHONE SERVICE
a) Infrastructure and equipment used for switching and transmission, including
public terminals;
b) Infrastructure and equipment used in the external network;
c) Infrastructure and equipment used for energy and air conditioning;
d) Infrastructure and equipment used by assistance and service centers;
e) Infrastructure and equipment used in operations support systems;
f) Other items required to provide the service.
48
ANNEX 2
BASIC DOMESTIC LONG-DISTANCE SERVICE PLAN
1 - GENERAL
1.1 - The Basic Domestic Long-Distance Service Plan is governed by the
administrative rulings cited in this annex, by other regulations in effect and
any succeeding regulations.
1.2 - The rates presented are maximums, net of payroll and income taxes.
2 - USAGE OF DOMESTIC LONG-DISTANCE, SWITCHED, FIXED-LINE TELEPHONE SERVICE
2.1 - The billing structure for Domestic Long-Distance Service takes into
account the distance between the billing areas where a call is originated and
where it is received, the duration of the call, the type of call made, and the
time of day of the call.
2.2 - The locations which are the centers of the billing areas have been
approved by Administrative Decree No. 195 of March 30, 1994, issued by the
Ministry of Communications.
2.3 - The billing unit is one tenth of a minute (i.e., six seconds), in
accordance with Administrative Decree No. 219 of April 2, 1997, issued by the
Ministry of Communications.
2.4 - The minimum billed increment is one minute for direct-dialed calls and
three minutes for manual calls, as set forth in Standard No. 003/81 and restated
by Administrative Decree No. 297 of November 29, 1995, issued by the Ministry of
Communications.
2.5 - The Basic Rate (BR) of this service, as determined by Administrative
Decree No. 226 of April 3, 1997, issued by the Ministry of Communications, is
R$0.18 (eighteen centavos), which corresponds to one minute during the normal
period (NP) for the greatest distance indicated in the Rate Table below.
2.6 - Per-minute rates shall be limited to the amounts set forth in the table
below, on the basis of the distance between the centers of billing areas and the
time of the call:
Normal Super-
------ ------
Premium Period Discount Discount
------- ------ -------- --------
Level Distance Multiplier Period R$ (NP) R$ Period R$ Period R$
----- -------- --------- --------- ------- --------- ---------
-----------------------------------------------------------------------------------------------------------------
(2xNP) (1xNP) (0.50xNP) (0.25xNP)
-----------------------------------------------------------------------------------------------------------------
DC Local 0.128 0.04608 0.02304 0.01152 0.00576
-----------------------------------------------------------------------------------------------------------------
D1 Up to 50 Km 0.300 0.10800 0.05400 0.02700 0.01350
-----------------------------------------------------------------------------------------------------------------
49
-----------------------------------------------------------------------------------------------------------------
D2 Between 50 and 0.500 0.18000 0.09000 0.04500 0.02250
100 Km
-----------------------------------------------------------------------------------------------------------------
D3 Between 100 and 0.750 0.27000 0.13500 0.06750 0.03375
300 Km
-----------------------------------------------------------------------------------------------------------------
D4 Over 300 Km 1.000 0.36000 0.18000 0.09000 0.04500
-----------------------------------------------------------------------------------------------------------------
2.7 - Billing periods have been established by Standard No. 003/81, and restated
by Administrative Decree No. 297 of November 29, 1995, as per the following
table:
-------------------------------------------------------------------------
Period Monday - Friday Saturday Sunday and Holidays
=========================================================================
Midnight to 6 am super-discount super-discount super-discount
-------------------------------------------------------------------------
6 am to 7 am discount discount discount
-------------------------------------------------------------------------
7 am to 9 am normal normal discount
-------------------------------------------------------------------------
9 am to Noon premium normal discount
-------------------------------------------------------------------------
Noon to 2 pm normal normal discount
-------------------------------------------------------------------------
2 pm to 6 pm premium discount discount
-------------------------------------------------------------------------
6 pm to 9 pm normal discount discount
-------------------------------------------------------------------------
9 pm to Midnight discount discount discount
-------------------------------------------------------------------------
2.8 - No additional charges may be levied upon the above-defined amounts,
regardless of call length.
2.9 - Manual calls shall be billed in keeping with the criteria established in
Standard No. 003/81, restated in Administrative Decree No. 297 of November 29,
1995.
3 CALLS TO MOBILE CELLULAR SERVICE
3.1 - The billing criteria and procedures for mobile cellular calls are
regulated by Standard No. 23/96, approved by Administrative Decree No. 1536 of
November 4, 1996, issued by the Ministry of Communications.
3.2 - The billing unit is one tenth of a minute (i.e., six seconds).
3.3 - The minimum billing increment is 30 (thirty) seconds.
3.4 - Administrative Decree No. 2503 of December 20, 1996, issued by the
Ministry of Communications, has determined the maximum per-minute rates, as
shown in the table below:
--------------------------------------------------------
Normal Rate Discount Rate
--------------------------------------------------------
VC-2 VC-3 VC-2 VC-3
--------------------------------------------------------
0.58000 0.66000 0.40600 0.46200
--------------------------------------------------------
3.5 - The discount period for calls to Mobile Cellular Service shall be from
Monday through Saturday from midnight to 7 a.m. and from 9 p.m. to midnight, and
all day Sundays and
50
holidays, as set forth in Standard No. 23/96, approved by Administrative Decree
No. 1,536 of November 4, 1996, issued by the Ministry of Communications.
51
ANNEX 3
OPTICAL ROUTES
-------------------------------------------------------------------------------
INSTALLED
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Sao Paulo (SPO)
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Belo Horizonte (BHE)
-------------------------------------------------------------------------------
Sao Paulo (SPO) - Belo Horizonte (BHE)
-------------------------------------------------------------------------------
Belo Horizonte (BHE) - Brasilia (BSA)
-------------------------------------------------------------------------------
Brasilia (BSA) - Anapolis (ANS) - Goiania (GNA)
-------------------------------------------------------------------------------
Sao Paulo (SPO) - Curitiba (CTA)
-------------------------------------------------------------------------------
Curitiba (CTA) - Paranagua (PNG)
-------------------------------------------------------------------------------
Curitiba (CTA) - Florianopolis (FNS)
-------------------------------------------------------------------------------
Florianopolis (FNS) - Porto Alegre (PAE)
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Vitoria (VTA) - Sao Mateus (SMT) (Underwater)
-------------------------------------------------------------------------------
Sao Mateus (SMT) - Porto Seguro (PGU) (Land)
-------------------------------------------------------------------------------
Porto Seguro (PGU) - Salvador (SDR) - Recife (RCE) (Underwater)
-------------------------------------------------------------------------------
Recife (RCE) - Natal (NTL) (Underwater)
-------------------------------------------------------------------------------
Natal (NTL) - Fortaleza (FLA) (Land)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TO BE INSTALLED BY 12/31/1998
-------------------------------------------------------------------------------
Porto Alegre (PAE) - Santa Xxxxx (SMA) - Xxxxxxx do Sul (RSS) - Alegrete (ALG)
- Uruguaiana (UGN)
-------------------------------------------------------------------------------
Uruguaiana (UGN) - Passos de Los Libres
-------------------------------------------------------------------------------
Xxxxxxx do Xxxxxxxxxx (SIV)- Xxxxxxx do Sul (RRS)- Alegrete (ALG)
-------------------------------------------------------------------------------
Xxxxxxx do Xxxxxxxxxx (SIV) - XXXXXX
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Tangua (TANG)
-------------------------------------------------------------------------------
Xxxxxx (STS) - Sao Paulo (SPO)
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Xxxxxx (STS) (Underwater)
-------------------------------------------------------------------------------
Tres Coracoes (TCS) - Juiz de Fora (JFA)
-------------------------------------------------------------------------------
Fortaleza (FLA) - Salvador (SDR)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TO BE INSTALLED BY 12/31/1999
-------------------------------------------------------------------------------
Florianopolis (FNS) - Curitiba (CTA) (Supplemental)
-------------------------------------------------------------------------------
Sao Paulo (SPO) - Curitiba (CTA) (Supplemental)
-------------------------------------------------------------------------------
Maringa (MGA) - Apucarana (APU) - Londrina (LDA)
-------------------------------------------------------------------------------
Goiania (GNA) - Belo Horizonte (BHE) (Supplemental)
-------------------------------------------------------------------------------
52
-------------------------------------------------------------------------------
Sao Paulo (SPO) - Goiania (GNA)
-------------------------------------------------------------------------------
Salvador (SDR) - Belo Horizonte (BHE) (Supplemental)
-------------------------------------------------------------------------------
Fortaleza (FLA) - Teresina (TSA)- Sao Xxxx (SLS)
-------------------------------------------------------------------------------
Sao Xxxx (SLS) - Santa Xxxx (SIS) - Belem (BLM)
-------------------------------------------------------------------------------
Porto Alegre (PAE) - Florianopolis (FNS) (Supplemental)
-------------------------------------------------------------------------------
Porto Seguro (PGU) - Itabuna (ITB) - Vitoria da Conquista (VCA)
-------------------------------------------------------------------------------
Rio de Janeiro (RJO) - Fortaleza (FLA) (Atlantis2)
-------------------------------------------------------------------------------
Santa Xxxx (SIS)- Imperatriz (ITZ) - Estreito (ETO)
-------------------------------------------------------------------------------
Goiania (GNA) - Palmas (PMJ) - Estreito (ETO)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TO BE INSTALLED BY 12/31/2000
-------------------------------------------------------------------------------
Bauru (BRU) Campo Grande (CPE)
-------------------------------------------------------------------------------
Foz do Iguacu (FOZ) - Cascavel (CSC) Maringa (MGA)
-------------------------------------------------------------------------------
Cascavel (CSC) - Ponta Grossa (PGO)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TO BE INSTALLED BY 12/31/2001
-------------------------------------------------------------------------------
Recife (RCE) - Caruaru (CRU) - Bom Nome (BONM)
-------------------------------------------------------------------------------
Itabuna (ITB) - Ilheus (ILH)
-------------------------------------------------------------------------------
Goiania (GNA) - Araguari (ARI)
-------------------------------------------------------------------------------
Porto Alegre (PAE) - Criciuma (CUA) - Florianopolis (FNS) - Joinville (JVE)
-------------------------------------------------------------------------------
53
