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EXHIBIT 10.31

                         COLLECTIVE BARGAINING AGREEMENT

                                   BETWEEN THE

                          PUERTO RICO TELEPHONE COMPANY

                                     AND THE

                              INDEPENDENT UNION OF

                       TELEPHONE EMPLOYEES OF PUERTO RICO

                                 EFFECTIVENESS:

                              FROM JANUARY 18, 2003

                             UNTIL JANUARY 17, 2006

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                                    ARTICLE 1
                            RECOGNITION OF THE UNION

SECTION 1

      The Company recognizes the Union as the exclusive representative for all
the employees included in the bargaining unit, such as it is defined in Article
2 (Bargaining Unit) for purposes of the Collective Bargaining Agreement with
regard to the rates of compensation, salaries, work hours, employment tenure,
grievances and other employment conditions.

SECTION 2

      For purposes of this Collective Bargaining Agreement, the terms "worker"
and "employee" shall be interchangeable, reason why they will be utilized
alternatively in singular as well as in plural.

                                    ARTICLE 2
                       APPROPRIATE UNIT (BARGAINING UNIT)

SECTION 1

      The employees covered by this Collective Bargaining Agreement henceforth
referred to as the "Employees", shall be all the non-supervisor employees,
including all the regular employees, the temporary ones, Messengers or Mail
Office Clerks (certified by the National Board in case number 24-RC-4380 of
August 9, 1971) and all those positions which have been included in the
Appropriate Unit by the Labor Relations Board from that date onwards; and all
the employees included in the Certification of the Labor Relations Board (case
number P-96-1D-96-1257) dated July 10, 1996: Administrative Office Clerks,
Administrative Assistants, Executive Receptionists, Document Filing Clerk,
Document Assistant, Phone Card Office Clerk, Coordinator of Materials, Verifier
of Invoices, Librarian for the Data Center and Transportation Analysts.
Excluding all the Executives, Officers, Administrators, Supervisors, Department
Directors, Managers, Heads of Divisions, Sections, Zones, Districts and
Geographical Sub-Divisions, Security Guards, Employees from other Appropriate
Units, all personnel with capacity to hire, fire, promote, discipline or in
another manner vary the status of employees or make recommendations to that
effect, office employees intimately linked to the management, employees of
trust, including Secretaries for the Officers, Executives, Administrators,
Department Directors, Managers, all the employees from the Department from Labor
and Employee Affairs, Salesmen on a Commission basis, Payroll Office Clerk,
Employees from the Department of Client Affairs, Executive Receptionists from
the Office of the President, Administrative Office Clerks from the Office of the
Vice-President of Operations, Administrative Assistants from the Office of the
Vice-President for Network Planning and Engineering, from the Office of the
Vice-President for Business Services, from the Office of Treasury Operations,
from the Department for Corporate Security and any other positions which
functions imply responsibilities equal to those of positions which are excluded
in the Bargaining Unit and the Supervisors according to how they are defined by
the Law.

SECTION 2

      The titles mentioned above shall not limit the exclusion in the future of
positions which functions imply responsibilities equal to those excluded above,
including the ones that have the functions of a confidential nature (positions
of trust), in accordance to how these have been defined under the labor
jurisprudence.

SECTION 3

      The Company shall send the Union, on or before the following sixty (60)
days of each year that this Collective Bargaining Agreement is in effect, a
listing of all the positions by levels, included in this Bargaining Unit, with
the names of the ones holding the positions, entry dates, postal address and
their present salary.

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                                    ARTICLE 3
                            RIGHTS OF THE MANAGEMENT

SECTION 1

      The Union recognizes that the administration of the Company and direction
of the working force are the exclusive prerogative of the Company. Therefore,
except as expressly limited by the terms of this Collective Bargaining
Agreement, the Company retains and shall retain the exclusive control of all the
matters concerning the operation, handling and administration of its business,
including, but without having this being interpreted as a limitation, the
administration and handling of its departments and operations, the work
organization and methods, the processes, methods and procedures for the
rendering of service, the determination of the equipment, parts and services to
be purchased, the assignment of working hours, the direction of the personnel,
the right to employ, classify, re-classify, transfer and discipline employees,
and all the functions inherent to the administration and/or handling of the
business.

SECTION 2

      If it is the understanding of any employee that he has been treated in a
discriminatory, arbitrary or unfair fashion in accordance to the terms of this
contract or any provision of this contract has been violated by any action taken
by the Company by virtue of the preceding section, such allegation shall be
submitted by the Union or by the employee to the Grievance Procedure established
in this Agreement.

                                    ARTICLE 4
                                   UNION SHOP

SECTION 1

      All employees who are covered by this Agreement who as of the date of the
signing of the same are a member of the Union, shall be obligated as a condition
of employment to continue as members of the Union and, in the case of new
personnel, these shall be obligated as a condition of employment to join the
Union within the thirty (30) days following their working for the Company and in
both cases, to pay dues to the Union during the effective period of this
Agreement.

SECTION 2

      The Company, at the written requirement on the part of the Union, shall
dismiss or suspend from their job any employee who is not affiliated or who does
not continue being affiliated as a bona-fide member of the Union. Said written
requirement must be notified to the Company by certified mail and with a copy to
the affected employee by certified mail.

SECTION 3

      The Company shall post a copy of this clause in visible places in its
different departments in the Island of Puerto Rico, for knowledge of the
personnel.

SECTION 4

      In the event that a competent entity determines that the separation to
which Section 2 of this article refers was unjustified or illegal, the Union
shall be the only one responsible for all the damages caused by said dismissal,
and the Union will safeguard the Company and reimburse it for any expense or
outlay in which the Company may incur as a result of said dismissal.

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SECTION 5

      The Company and the Union agree that the Union shall have the opportunity
to meet during thirty (30) minutes with the recently hired employees, as part of
the general orientation process, for the purpose of supplying them with
information about the Union and the Collective Bargaining Agreement. The time
invested during the regular work shift of each employee given orientation shall
be paid as time worked. This orientation shall be carried out during the fifteen
(15) days following the entry of the union member employee, or from the time
that the Company notifies the entry, whichever is greater.

                                    ARTICLE 5
                                 DUES CHECK-OFF

SECTION 1

      During the effectiveness of this Collective Bargaining Agreement, the
Company commits itself to automatically deduct from the salary received by all
the employees covered by the definition of the Bargaining Unit, the sum of the
initiation dues, the regular dues and any uniform special dues which the Union
establishes for its members after receiving the written authorization on the
part of the employee. The authorization for the regular dues shall be for a
minimum term of one (1) year and shall be extended year after year, while the
employee occupies a position within the Bargaining Unit. This authorization
shall be irrevocable for a period of one (1) year from the date of the
authorization. The Union shall notify the Company in writing with regard to the
dues to be checked off from the employees covered by this Agreement. The Union
shall comply with all the applicable procedures and laws prior to the
establishment of said dues and the sum of said deductions shall be deposited
within a term which shall not exceed five (5) calendar days, after carrying out
the bi-weekly deduction by means of a direct deposit to the UIET's bank account,
it being provided that the Company will do everything possible to make the
deposit on the next working day.

SECTION 2

      a)    The Company will send the Treasurer of the Union or the Officer
            designated by him, after rendering the bond required by law, the
            document evidencing the deposit of the amount of the corresponding
            dues during the ten (10) calendar days after the payment of every
            two (2) weeks has been made except when there are extraordinary
            circumstances intervening in which case the term shall not exceed
            ten (10) additional days. The Company shall send the Union a summary
            every two (2) weeks with the names of the employees who have had
            said deductions made, in addition, containing the individual sum and
            the total of the same. The Company will check off the initiation
            dues in the amount and installments certified by the Union for all
            employees joining the Union, after receiving the written
            authorization from the employee.

      b)    The Company shall not forward dues until the Union has shown it that
            the Treasurer or the designated Officer have rendered the bond
            required by law.

      c)    In all cases of suspension or dismissal in which an Arbitrator,
            court or administrative entity has determined that the suspension of
            the employee or the dismissal of the employee was not justified and
            has ordered the reinstatement of the employee with all the total or
            partial salaries that it did not receive in cases of dismissal or
            has ordered the total or partial payment of the salaries not
            received during the suspension, the Company must deduct from said
            payment the total of the Union dues not paid by the employee during
            the time that the employee was dismissed or suspended, as the case
            may be, and forward its sum to the Union in conformity to this
            article.

      d)    In addition, the parties agree that in those cases of suspension or
            dismissals that were settled and as part of the agreement the total
            or partial payment of salaries not received by the employee have
            been agreed upon, the Company must also deduct from said pay the
            total of the Union dues not paid by the employee during the time
            that the employee was dismissed or suspended and to forward its sum
            to the Union in the terms stated above.

      e)    With regard to the deduction of dues to which reference is made in
            paragraphs c) and d) of this section, it shall be the obligation of
            the Union to notify the Company on a timely basis about the total
            sum of dues that the employee is to have checked off.

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SECTION 3

      In the event that any competent entity determines that any dues have been
illegally set or deducted, the Union shall release the Company from all
liability and shall indemnify and pay directly any reimbursement ordered by said
entity.

SECTION 4

      During the effective period of this Collective Bargaining Agreement, the
Company shall send the Union, on a monthly basis, a report regarding the
employees who are enjoying any of the leaves established in this Collective
Bargaining Agreement, which duration shall be of thirty (30) calendar days or
more, with said report having to state the name of the employee and his number,
the position occupied by him, the department, the work center, the leave which
he is enjoying and up to where it is possible, the duration of the leave stating
the possible return date.

SECTION 5

      During the effective period of this Agreement, the Company must check off
the Union dues in all those cases in which an employee from the bargaining unit
is enjoying the benefits of any of the leaves with pay acknowledged in the
Agreement, except under the Prolonged Illness Leave, (Act 139), and forward its
sum on the basis of the terms stated above, it being provided that in those
cases under Act 139 (SINOT), the Company, once the employee has returned to his
job, must withhold the Union dues that were not paid by the employee during said
leave and forward their sum to the Union in the terms stated in this article.
The total of said check offs must be made during the first three pay periods.

                                    ARTICLE 6
                      COOPERATION ON THE PART OF THE UNION

      The Union, as well as its members, agree to promote, at all times and as
fully as possible, good service and efficient operation. The Union and its
members also agree with the Company to produce maximum production during each
daily work shift.

                                    ARTICLE 7
                                  PRODUCTIVITY

      The Union and the Company acknowledge that productivity must be increased
to confront the competition in the telecommunications services.

      To that effect, the Union agrees that the employees who are Union members
shall commit themselves to render the maximum of their productivity, attendance,
timeliness, efficiency and effectiveness with order and discipline. All of it in
accordance to Article 6, Cooperation on the part of the Union.

      The Company will carry out all possible efforts to provide the means and
resources necessary so that the employees can attain the productivity objectives
established.

                                    ARTICLE 8
                             DELEGATES OF THE UNION

SECTION 1

      The delegates and their sub-delegates in their substitution, shall
represent the Union in the process of administrating the Collective Bargaining
Agreement before the Company.

      The delegates shall provide orientation to the employees covered by this
Collective Bargaining Agreement with regard to their responsibilities and
rights; in like manner they shall watch out and be empowered to help their
co-workers when these have a complaint or grievance or when their presence is
required by any boss or supervisor.

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SECTION 2

      The Union delegates shall be limited to handling the grievances and
matters related to the application of the Collective Bargaining Agreement in
their work area.

SECTION 3

      No delegate may intervene in another department or area that is not one
for which he has been designated, with the exception of those work areas or
departments where no delegate has been appointed, in which case the delegate
from another nearby department may act as the appointed delegate in that other
operational unit or department, as long as he has been previously authorized in
writing by the President of the Union or his authorized representative.

      The Union shall be entitled to appoint sub-delegates or substitute
delegates who shall act only in the absence of the appointed delegate.

SECTION 4

      The delegate shall utilize the time adequately for the quickest solution
of the grievances. When it is necessary for a Union delegate to deal with a
grievance or related matter, the delegate must:

      a.    Notify his immediate supervisor with reasonable time to stop taking
            care of his regular work and taking care of the grievance or related
            matter.

      b.    The delegates shall receive up to a maximum two (2) hours for each
            grievance. When a delegate is required by the Management to handle
            some specific matter related to the Collective Bargaining Agreement,
            the time devoted by him to the attention of said matter, shall not
            be deducted from his salary. It being provided, that the meeting
            time may be limited by the Management.

      The Union binds itself to comply and promote faithful compliance with this
article in such manner that the time requested by the delegate be utilized
exclusively for the aforementioned purposes.

      The Company, on its part, may take the actions and measures that it deems
necessary and relevant in such manner that faithful compliance be given to the
provisions of this article, including having the time requested by a delegate to
be utilized exclusively for the purpose stated above.

      c.    Return to his job upon finishing dealing with the manner if his work
            schedule has not ended.

      d.    The meetings between the delegate and the employee requiring his
            services in accordance with this Agreement, work shall be carried
            out in the areas near the employee's work area.

      e.    When it is necessary to have a delegate hold a private conversation
            with an employee during time with or without pay on the part of the
            Company to process a grievance or to deal with a matter relating to
            the application of the Collective Bargaining Agreement in accordance
            to the Grievance Procedure, the express authorization from the
            supervisor must be obtained.

      f.    The Company agrees to provide the Union with adequate facilities at
            each work site where the same exists and which are available for the
            purpose of having its functionaries, delegates or agent being able
            to hold meetings relating to grievances from the concerned area or
            department.

SECTION 5

      When the Company expands its services creating additional units and
increasing in a substantial manner the personnel in the additional services, the
parties, after previous agreement, shall reach an agreement regarding the
appointment of the corresponding delegates.

SECTION 6

      The delegate shall represent the employees covered by this Collective
Bargaining Agreement when the employee so requires it in the different stages of
the Procedure for Grievances, with the President of the Union or any member of
the Board of Directors being able to participate in said representation.

SECTION 7

      The Company shall not acknowledge any delegate until the President or
Vice-President of the Union has informed the Director of Labor and Employee
Affairs about it in writing and the delegate has received his appointment.

      The delegates will have to be regular employees of the Company.

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SECTION 8

      The parties shall reach an agreement with regard to the schedule, number
and place where the delegates shall act. It being provided that there shall not
be more than one delegate and one sub-delegate in functions per each operational
unit of the Company, with the exception of the Traffic Department in which
centers the delegates and sub-delegates necessary to insure that the employees
are duly represented may be appointed.

SECTION 9

      The President or the Vice-President of the Union may appoint General
delegates, in conformity with the preceding section 7 and these shall receive
the same treatment, respect and courtesy that should be rendered to the Officers
of the Union.

      The General Delegates shall be appointed to represent and substitute the
officers of the Union and when they visit the shop or specific area to which
they have been appointed, they shall have all the prerogatives that the Officers
of the Union have. The General delegate must comply with what is provided for in
Section 4 of this article.

                                    ARTICLE 9
                           VISITS FROM UNION OFFICERS

SECTION 1

      The President of the Union, the members of the Board of Directors and the
members of the Elections Committee shall have access to the Company's premises
during working hours, for the purpose of resolving grievances, investigating
work conditions and verifying the compliance with this Collective Bargaining
Agreement. The members of the Elections Committee, during periods of reunions
for internal elections of the shall have access to the Company's premises for
the sole purpose of administrating and coordinating said elections. In addition,
it is agreed that the members of the Union's Discipline Committee shall have
access to the Company's premises during working hours, for the sole purpose of
carrying out the functions relevant to said Committee, it being provided that
prior notice shall be given, with less in writing, of no lesser than 24 hours,
to the Director of Labor and Employee Affairs.

SECTION 2

      Upon arriving at the area to be visited, the President, members of the
Board of Directors, members of the Elections Committee or members of the
Discipline Committee, shall identify themselves and inform the purpose of their
visit and shall go in person before the officer of the Company that they are
going to be visiting or to the representative appointed by them.

SECTION 3

      The President of the Union may appoint agents or representatives to carry
out any of the functions of said Board. The Company shall not recognize as such
an appointed agent or representative until the President of the Union has
notified the Director of Labor and Employee Affairs in writing about his
designation as such, including a description of the matters which said agent or
representative shall be authorized to handle in the Union's name.

      The representatives appointed by the President of the Union shall be
acknowledged by the Company and these shall receive the same treatment, respect
and courtesy that should be rendered to the officers of the Union, it being
provided that these agents or representatives shall have access to the Company's
premises for the purpose of handling the matters authorized to be handled in the
Union's name. Upon the arrival of the agent(s) or representative(s), he shall
identify himself and inform the purpose of his visit and shall appear in person
before the Officer of the Company that he is going to be visiting or the
representative designated by him.

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                                   ARTICLE 10
                              PERSONNEL ACTIVITIES

SECTION 1

      The Company and the Union agree that the employees or representatives of
the Union shall not be allowed to carry out propaganda or Union activities of
any nature whatsoever during their working hours within or outside the Company
premises, except those expressly contained in this Collective Bargaining
Agreement.

SECTION 2

      No union propaganda or activity of any nature whatsoever shall be allowed
within the Company premises on the part of the employees, the Union delegates
and officers during their free time, if by doing so it causes about one or more
of the following conditions:

      a.    Interrupts or distracts the work of the personnel which is working.

      b.    Constitutes a disturbance or harm to the Company.

      c.    Causes a situation of disorder or violence.

SECTION 3

      The Company and Union the agree that the working hours are for each
employee to devote to his work for the Company and therefore, it is not
allowable to dedicate working time to matters which are foreign to work such as,
for example: discussions about sports, politics, religion, etc. Neither are such
activities allowable during the employee's free time but within the Company's
premises if that causes one or more of the conditions in clauses a, b and c of
the preceding section.

SECTION 4

      No employee shall have access to the Company buildings or premises without
prior express authorization from the Supervisor of the site or the Director of
Labor affairs, except to his regular work site and during his regular work
schedule. In the event of receiving such authorization, the employee must be
accompanied at all times by said Supervisor or by the person designated by him
unless the Supervisor or the person designated by him determines, at his
discretion, that it is not necessary to accompany him and so informs it verbally
to the visiting employee. Under no circumstance will the employee be authorized
to enter onto Company property if there is no Supervisor, or the person
designated by him available to accompany the him.

                                   ARTICLE 11
                     PUBLICATION, ADJUDICATION OF POSITIONS
                   AND APPOINTMENTS, PROMOTIONS AND TRANSFERS

SECTION 1

The Company shall publish visible and accessible in bulletin boards that allow
the ample divulgation at all work centers, the positions of new creation, the
vacant ones or the ones which could be left vacant in the near future,
corresponding to the bargaining unit that they are going to cover, specifying
the requirements for the same. The publication of the positions shall be made
for a term no lesser than five (5) working days. The Company shall send to the
Union a copy of said publication. A position so published shall not be canceled
without notifying the Union about the reasons for its cancellation.

SECTION 2

Any regular employee, who meets the requirements for a published position, may
apply for the same by submitting the corresponding application, in the form
supplied by the Company, within the term established in the publication, to the
Recruiting Department, with return receipt requested. It being provided that
those employees who work outside of the
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buildings of Plaza Telefonica (1500, 1513 and 1515 Roosevelt) shall count with a
term of two (2) additional working days after the closing of the publication.

SECTION 3

The Company shall only consider those employees who meet the requirements, who
have filed the petitions within the period established in the publication, and
who may fulfill the functions of the position immediately upon having it
adjudicated to them; or if they are enjoying their vacation leave, upon the
conclusion of the same; or if they are receiving benefits under the State
Insurance Fund or using sick leave, within thirty (30) days after it has been
adjudicated to them.

SECTION 4

Any vacant position or a position of new creation shall be adjudicated to the
employee who qualifies pursuant to what is provided in Section 6 of this article
within the following order of priority, except in the case of promotion or
transfer from one classification to another, where seniority shall not be the
determinant criterion for the adjudication of the position:

      a.    Employees who are going to be affected by personnel reductions.

      b.    Employees who have suffered an occupational illness or accident that
prevents them from carrying out the functions that they used to carry out in
their positions prior to said illness or accident. This priority shall not have
the scope of extending the term of time provided by law within which an employee
reserves his job tenure from the time of the occupational accident or illness.

      c.    Employees who have suffered a non-occupational illness or accident
that prevents them from carrying out the functions that they used to carry out
in their positions prior to said illness or accident. This priority shall not
have the scope of extending the term of time provided by law within which an
employee reserves his job tenure from the time of the known occupational
accident or illness onwards.

      d.    Employees who request a transfer within their same occupational
classification.

      e.    Employees requesting a promotion.

      f.    Employees requesting lateral transfer or lateral movement (change
from one classification to another with the same salary level).

      g.    Employees requesting a demotion

      h.    Ex-employees which the Company may have laid off within the twelve
(12) previous months due to scarcity or reduction of work.

SECTION 5

For the purpose of this Agreement, no regular employee or one of new appointment
may apply for a movement in transfer, lateral transfer and demotion, until
eighteen (18) months have passed from the date when the adjudication of the
position presently occupied have passed or until the maximum of the existing
progression for his present occupational classification has been reached,
whichever occurs first.

<PAGE>

SECTION 6

In those cases in which the adjudication of a vacant position or one of new
creation represents a promotion or lateral transfer for the applicant employee,
the position shall be adjudicated among the candidates who fulfill the
requirements in accordance to the following factors: seniority; evaluation
criteria, in conformity to the work evaluation form for the previous two (2)
years; disciplinary record for the previous two (2) years; attendance history
for the previous two years; related experience and trainings. Seniority shall
prevail over all the other factors if these were to turn out to be equal among
the employees to be considered for covering the new or vacant positions.

SECTION 7 - Transfer - Lateral Transfers

      a.    For the purpose of this Collective Bargaining Agreement, an
appointment in transfer shall be understood to mean any permanent change from
one department to another, from one work center to another, or from one
municipality to another, as long as the employee continues in his same
occupational classification.

      b.    For the purpose of this Collective Bargaining Agreement, an
appointment in transfer or lateral movement shall be understood to mean any
change from one classification to another with the same salary level. No
employee may request a lateral movement until after eighteen (18) months have
passed in one position and he must remain in said position a minimum of eighteen
(18) months after said movement. In a lateral movement, the employee, in his new
classification, shall fulfill the same requirements provided for the cases of
promotion in Section 6 of this Article.

        For the purpose of this Article exclusively, each one of the following
areas of the municipality of San Juan shall be considered as a municipality:

            -     San Juan - Santurce - Isla Verde

            -     Hato Rey - Rio Piedras

            -     Pueblo Viejo

Also, for purposes of this Article exclusively, the Levittown area shall be
included in the municipality of Catano.

      c.    There will be two (2) types of transfers:

            1.    Transfers by a formal petition on the part of the employee,
which is the one that is produced when one fills out a written request, through
the Recruitment Department.

            2.    Transfers when the Company determines it due to the need in
service. The employee may, after having carried out this type of transfer,
question it through the Grievance Procedure.

Except in cases where events occur beyond the control of the Company and the
service may be adversely affected, the employee shall be located in the position
of transfer within a period which shall not exceed thirty (30) days from the
date when the Recruitment Department adjudicated the same to him.

When the Company is interested in transferring an employee due to service needs,
it shall notify the employee and the Union with thirty (30) days of advance
notice, except when there are extraordinary circumstances in which case it shall
be notified with ten (10) days of advance notice. In the events of fights or
conflicts between employees which may affect the peace or the normal functioning
at the Work Center, if it were considered necessary, a transfer of the employee
can be made until an investigation of the matter can be carried out, without
complying with the terms established herein.

In the case where there arises the need to cover the position that was left
vacant by the transferred employee due to service need between the following one
hundred and eighty (180) days after the transfer was effected, he, the
transferred

<PAGE>

employee, shall have priority to return to said position. After one hundred and
eighty (180) days, the position shall be filled following the process
established in this Article.

The Company will acknowledge the right of exchange among the employees, as long
as the Company determines, in its sole discretion, that there exists equality of
circumstances, category, capacity, efficiency and ability. In the case of an
exchange, the expenses caused by the transfer shall be to the account of the
employees.

The Company shall not utilize its discretion in a capricious, arbitrary or
discriminatory fashion to authorize the exchange being requested.

The transfer shall not be utilized capriciously, arbitrarily or as a
disciplinary or discriminatory measure.

SECTION 8 - PROMOTIONS

      a.    For the purpose of this Collective Bargaining Agreement, a promotion
shall be understood to be the movement of an employee from one position to
another, which has a higher salary level and those changes from one position for
which the maximum series level is inferior to the maximum level of the new
position.

      b.    In the promotions, priority shall be given to the Company employees
who have requested promotion and who qualify for the same, in conformity to what
is provided in this Article, Section 6. Seniority shall prevail over the other
factors, if these were to turn out to be equal among the employees to be
considered for covering of the positions in promotion. When an employee changes
work center due to a promotion for which he has applied, he may not request a
change of position outside of his new work center until twenty-four (24) months
have elapsed from the promotion.

      c.    Any promoted employee shall be subject to a probationary period of
two (2) months during which he will have to show having ability, knowledge,
skills and the efficiency which, in the judgment of the Company, is required for
the new position. In the cases of promotions which requires special training,
said training period shall not form part of this probationary period.

      d.    In the case when an employee is promoted, the Company shall pay him
the salary corresponding to the new position as soon as he begins to occupy the
same.

      e.    If his probationary period were not satisfactorily approved, the
femployee shall return to his previous position with the salary that would have
corresponded to him if he had continued in the previous position. The Company
shall reinstate to their previous position and salary the employees who would
have been promoted as a result of the vacancies that would have brought about
the promotion of said employee. If, as a result of said promotion, a new
employee had been hired, the Company would be free to separate said new employee
and the Union shall not file any complaint whatsoever under the Complaint and
Grievance Procedure.

      f.    Except in cases where events occur beyond the control of the Company
and/or the service may be adversely affected, the employee shall be placed in
the position in promotion within a period that shall not exceed thirty (30) days
from the date when the Recruitment Department adjudicates the same to him. g.
The promotion to a superior level within the same classification shall not be
considered a promotion. These promotions shall be made in conformity to the
requirements established by the Company in the duty sheet.

      g.    The promotion to a superior level within the same classification
shall not be considered a promotion. These promotions shall be made in
conformity to the requirements established by the Company in the duty sheet.

<PAGE>

SECTION 9 - DEMOTION

For the purpose of this Collective Bargaining Agreement, a demotion shall be
understood to be understood to be any change of an employee from one position to
another position with a lower salary level, or those changes from one position
where the maximum series level is superior to the maximum series level of the
new position, or toward another position in which the employee has to begin at a
level lower than the present one, even when the maximum level of the new
position is equal to the one which he was occupying at the moment of the change.
No employee may request a demotion until after he has been eighteen (18) months
in one position and he must remain in said position a minimum of eighteen (18)
months after said demotion.

In those cases in which an employee has had a position of an inferior level
adjudicated to him as the result of a request, in other words, one which
represents a demotion, his salary shall be adjusted to that of the position of
the inferior level.

SECTION 10 - GENERAL PROVISIONS

Nothing of what has been previously provided in this article shall have the
scope of limiting the faculty of the Company to transfer employees due to needs
in service or the right of the Company to recruit external personnel for those
positions which have not been covered by means of internal recruitment in
accordance to this Collective Bargaining Agreement.

SECTION 11

Within ten (10) working days following the adjudication of a vacant position or
one of new creation, the Company must notify the Union, by certified mail with
return receipt requested, with a copy of the determination and indicating the
position which was adjudicated, the requisition number for the position and the
name and the employee number of the person with whom the same was covered and
the criteria why it was adjudicated to the person. It must also notify them a
list with the names of all the employees who were competing for the position
with the corresponding salary levels.

SECTION 12

The Company shall send to the employees who appear in the registry of eligible,
by ordinary mail, at their last known postal address, a copy of all publications
of vacant positions or those of new creation, for the purpose of having these
regular laid-off employees be able to apply for the same within the term
established in this article. A copy of said letter shall also be sent to the
Union.

SECTION 13

The Company shall send the Union a copy of all petitions for change, outside of
the Appropriate Unit, requested by any employee from this bargaining unit.

                                   ARTICLE 12
                               PROBATIONARY PERIOD

SECTION 1

      All persons hopeful of entering as employees, must have first approved
those examinations, written or evaluation ones, required by the Company.

SECTION 2

      The employees included in the Bargaining Unit are classified as regular
employees, probationary employees and part-timers. The part-timers may continue
working in the traffic functions or any other call center throughout the
geographical areas in which the Company is organized. The parties agree that
when an employee with a regular work

<PAGE>

day of eight (8) hours is transferred outside of the Traffic area, the vacancy
that he leaves shall be covered with a part-timer, if it were necessary.

      The putting into effect of the previous measure shall be in a prospective
manner and the operation of Traffic shall never have more than fifty (50%)
percent of the labor force at half shifts. This process shall be put into effect
gradually.

      For the purpose of this article, there shall be two (2) types of part-time
      employees (part-timers).

      I.    Those employees with a half work shift who work in the Traffic Call
            Centers (Long Distance and Information Services), whose work day is
            no lesser than twenty (20) hours per week and no more than
            thirty-nine (39) hours per week.

      II.   Those part-time employees who work in the Repair Call Centers, calls
            to Service Representatives and other Call Centers, with the
            exception of Traffic, who are those who will work after 5:00 PM and
            weekends with a work schedule of no lesser than twenty (20) hours
            per week and no greater than thirty (30) hours per week.

      It being provided that when a part-time employee works 2,030 hours within
a period of one (1) year, the Company may consider changing the part-time work
shift to a regular work shift.

SECTION 3

      A condition for regular appointment shall be that the employee has worked
to the satisfaction of the Company during a Probationary Period of ninety (90)
days. The training period for the probationary employees at the training centers
recognized by the Company shall not form part of the Probationary Period if it
does not exceed thirty (30) consecutive days. However, the probationary period
for each employee shall begin to be counted as soon as the Company assigns him
to perform regular work outside of the training centers. The Company may assign
the probationary employee to a work shop for a waiting time at the beginning of
the training, as long as said time does not exceed fifteen (15) days. However,
this initial waiting time, of up to a maximum of fifteen (15) days, shall form
part of the calculations of the ninety (90) days established for his
probationary period. Once the Company reassigns this worker to perform work in a
work shop, any other training time shall be counted for the completion of his
probationary period.

SECTION 4

      All employees, during their probationary period, must be periodically
evaluated with regard to, among other factors, their capacity to assimilate
training, their productivity, their efficiency, their timeliness, their
attendance at work, their habits, attitudes and general behavior. The Company
shall hand over to the employee a copy of each periodic evaluation, except when
the employee has abandoned the service and is not available.

SECTION 5

      Any employee who satisfactorily approves the Probationary Period shall be
appointed as a regular employee by means of an official notice to the employee.

SECTION 6

      All probationary employees will have to submit themselves to those medical
examinations required by the Company and the result of said medical examinations
will have to be satisfactory to the Company, as a condition of employment. The
cost, if any, of these examinations shall be paid for by the Company.

SECTION 7

      All employees who join the Company by virtue of a transfer, sale, merger,
expropriation or lease shall have the provisions of this article applicable to
them.

SECTION 8

      The Company has the right to order or decree the dismissal of any
probationary employee within the terms of Section 3, without having such
dismissal giving rise to any grievance whatsoever before the entities
established by this Collective Bargaining Agreement for the resolution of
controversies and grievances.

<PAGE>

                                   ARTICLE 13
                              MEDICAL EXAMINATIONS

SECTION 1

The Company may require any regular employees to submit himself to medical
examinations and examinations of any other kind which are of a medical nature.
The cost, if any, of the same, shall be paid for by the Company. This
prerogative may not be utilized in a discriminatory fashion against the members
of the Brotherhood.

SECTION 2

The Company shall compensate the employee for the time that the examination
takes as long as this is carried out within his regular work schedule.

SECTION 3

The Company shall take the measures and actions that its considers necessary and
pertinent, to ensure the correct use of the benefits disposed in articles 27 and
28 of this agreement. Thus the Company reserves the right to select a physician,
properly qualified, who determines if the employee in effect is a disable
person. The notification to the employee will be with copy to the Union. In
order to continue receiving economic benefits disposed in those articles, the
employee must attend at the required time for those medical tests and exams
which the physician orders.

If the physician determines that the employee is able to work, the benefits of
this article discontinue and the employee will receive the benefits provided by
SINOT or FSE, which ever is applicable. Nevertheless, the retention period for
this employee will be that provided in Articles 27 and 28, which ever is
applicable.

If the employee is not in agreement with the doctor's determination, the Union
shall, within 5 working days, following the employees receipt of the
determination, request the Company, in written , that wishes to select by mutual
agreement another physician properly qualified to evaluate if the employee is
able to work. The Union and the Company will ask to the "Colegio de Medicos de
Puerto Rico", to submit a list of 5 physicians properly qualified in the alleged
condition of which the parties will select one by eliminating 2 by each party.
If the "Colegio de Medicos de Puerto Rico" is not in position to provide the
list, the Company and the Union will submit 3 names each of physicians properly
qualified in the area of the alleged condition. Three (3) of the names will be
eliminated at random and at the 3 remaining ones each party will eliminate one,
then the remaining one will be the chosen one. This physician shall render his
determination not later than 10 days from having finalized the corresponding
examination and tests if any, which will be carried out as soon as possible and
the employee will fully cooperate. The determination of the physician shall be
final and unappealable. The cost of this medical evaluation should be paid in
equal part by the Company and the Union for the first 10 employees during the
year that request this evaluation. For additional cases the total cost shall be
assumed by the Company.

The Company may submit during the year, in order to determine if they are able,
a number of employees not more than 10% of the employees enjoying the leave of
absences under the articles 27 and 28 of the natural year immediately preceeded.
The Union shall be informed of the total number of employees making use of the
benefit during such year.

                                   ARTICLE 14
                                    SENIORITY

SECTION 1

      Seniority shall be understood to be the total time of service credited to
an employee by the Company. Credited time shall be all the time of regular work
schedule that an employee has worked in a continuous form for the Company

<PAGE>

as well as all the leaves with salary. The leaves without salary granted to the
members of the Board of Directors of the Union during the terms for which they
have been elected shall be credited to their seniority with the Company.

SECTION 2

      Seniority rights will expire as a result of any of the following reasons:

      a)    Resignation

      b)    Dismissal

      c)    Lay-off during twelve (12) consecutive months or upon the receipt of
            the compensation provided for in Article 17, Section 3 - Reduction
            of Personnel and re-employment.

      d)    Absence due to occupational illness or accident in excess of his
            leave for occupational illness or accident.

      e)    Absence due to non-occupational illness or accident in excess of the
            term established in this Collective Bargaining Agreement or until he
            exhausts his leave for prolonged illness, whichever is greater.

      f)    Not accepting an available position and one for which he qualifies,
            while he is on the preferential employment list.

      g)    Accepting a position outside of the bargaining unit, unless the
            employee decides to return and/or the Company decides to return him
            to his old position, within the six (6) months following his
            departure from the bargaining unit.

SECTION 3

      The probationary employees shall not accrue seniority until they have
approved their respective probationary periods, in which case the seniority will
be retroactive to the date when they began their respective probationary
periods.

                                   ARTICLE 15
                    REDUCTION OF PERSONNEL AND RE-EMPLOYMENT

SECTION 1

      When the Company determines the need to carry out lay-offs or personnel
transfers due to lack of sufficient work or due to reasons of economy in
determinate classifications of employment, it shall prepare a lay-off or
transfer plan, as the case may be, and in accordance to the provisions of this
Agreement, and it shall notify in writing by certified mail or in person, about
the lay-off or transfer, to the affected employees and to the Union including in
the notice copy of the plan, with no less than one (1) month of advance notice
prior to the date when the lay-off or transfer shall be made effective, and such
reduction shall be made observing the following order:

      a.    Probationary employee in the affected classification.

      b.    Regular employee in inverse order of seniority in the affected
            classification.

      In the case of lay-offs or transfers, the members of the Board of
Directors and the delegates shall have super seniority in their classification.

      The determination of the number of employees who are needed to perform a
task is an exclusively managerial function which may not be questioned through
the grievance procedure.

SECTION 2

      a.    In the event that a regular employee with less than one (1) year of
            seniority is subject to lay-off, he may choose to bump another
            employee in a lateral classification or an inferior one with lesser
            seniority in which the displacing employee is qualified to perform
            the work immediately or any other classification in which the
            displacing employee has worked previously and continues being
            capable of performing the work immediately.

      b.    Any regular employee, with at least one (1) year of seniority, who
            is bumped as a result of the procedure established in the preceding
            paragraph a) shall have, in like manner, the right to bump by means
            of seniority following exactly the procedure established in the
            preceding paragraph.

<PAGE>

SECTION 3

      Any regular employee who is laid-off and who at the moment of the lay-off
has one (1) year or more, shall not lose the right to a compensation equivalent
to three (3) weeks plus one (1) week for each year of seniority up to a maximum
of twenty (20) weeks.

SECTION 4

      Any laid-off employee and who at the moment of the lay-off has at least
one (1) year or more of seniority shall be included in a list of preferential
employment for a maximum of twelve (12) months.

SECTION 5

      The compensation provided in the preceding Section 3 shall be paid at the
end of the twelve (12) month period established in the preceding Section 4. In
the alternative, a laid-off employee may choose to receive the compensation for
lay-off previously indicated at any moment after the lay-off has been notified,
plus said employee shall be excluded from the preferential employment list as
soon as he receives said compensation.

SECTION 6

      The regular employees who are laid-off shall be included in a registry of
eligibles, utilizing the criterion of seniority and they shall have the
preference provided in Section 4 of the article regarding "Publication,
Adjudication of Positions and Appointments" to occupy regular or new vacant
positions within the bargaining unit, as long as the employee is qualified and
capable of fulfilling such position.

SECTION 7

      The Company will supply the Union a copy of this list of eligibles with
the name of the employee, position that he used to occupy and the years of
service; in like manner, it will inform the changes in the list, if any.

SECTION 8

      When there arises the possibility of re-employment, the Company shall get
in touch with the laid-off ex-employee by certified mail at his last address,
with copy to the Union, granting him ten (10) working days in which to accept
the position. If he does not to accept or answer within the term, he shall lose
the right granted in this article and shall be eliminated from the corresponding
list. If he answers within said term indicating that he cannot accept the job
due to extraordinary reasons which in effect make it impossible for him to
accept the position being offered to him and it is so proven to the Company
within said term, the laid-off employee shall not lose the right to
re-employment with regard to other vacancies that arise later on in his
classification within the term of twelve (12) months after his lay-off, as is
provided further on.

SECTION 9

      The right to re-employment, as provided in this article, shall be
extinguished within twelve (12) months after having being laid-off as an
employee for the Company, except when he does not accept or does not answer a
communication offering him a vacancy, as provided in the previous section. If
positions are frozen during this period, the right will be extended for a period
of time equal to that of the freezing.

                                   ARTICLE 16
                                RECLASSIFICATION

SECTION 1

      When the Union considers that a position has had assigned to it functions
and duties belonging to a superior position or that the duties and functions of
it have evolved in a substantial and permanent matter toward a position of a
superior level or that functions and duties of greater complexity have been
assigned, the President of the Union or in his absence, the vice-president,
shall submit in writing a petition for reclassification to the Director of Labor
and Employee Affairs indicating the criteria and reasons justifying the
petition.

<PAGE>

      The Director of Labor and Employee Affairs, once the petition for
reclassification has been received, will refer it to the Director of
Compensation and Records, who shall coordinate a meeting with the President of
the Union or his representative so that he will present in the name of the Union
the reason justifying the petition or reclassification that is being requested.

SECTION 2

      No petitions for reclassification for positions which are not at the
maximum salary level of his class shall be accepted, if this class is made by
progression levels.

SECTION 3

      The assignment of additional duties or functions of equal, similar or
lesser complexity, and/or the increase in the volume of work, shall not imply a
reclassification.

SECTION 4

      The Director of Labor and Employee Affairs shall notify the President of
the Union about the Company's position with regard to the petition for
reclassification within a period of ninety (90) calendar days from the date of
the meeting provided for in Section 1 of this Article. If it were determined
that a position must be reclassified, its reclassification shall be effective to
the date of receipt of the petition on the part of the office of the Director of
Labor and Employee Affairs.

SECTION 5

      If the Union is not in agreement with the determination of the Director of
Labor and Employee Affairs regarding its petition for the reclassification of a
position, it may question the same in conformity to the Grievance Procedure
established in this Agreement.

SECTION 6

      No reclassification petitions for petitions of the Bargaining Unit will be
accepted, if within the last eighteen (18) months, a petition regarding the same
position has been filed.

SECTION 7

      All employees who at the moment of the signature of this Collective
Bargaining Agreement have an occupational level 11 may request a classification
as long as functions and duties of a greater complexity have been assigned to
them. In the event that it were determined that a reclassification is in order
in accordance to this article, the employees shall maintain their occupational
level 11, but they will receive a salary increase of fifty-five ($.55) cents per
hour.

                                   ARTICLE 17
                                 PERSONNEL FILES

SECTION 1

      The official file for each employee is the file in the power of the
Company under the custody of the Division of Records. The warnings, reprimands,
or disciplinary actions imposed which do not appear in the official file, may
not be utilized for any purpose.

SECTION 2

      Any employee may, after requesting and coordinating with his immediate
supervisor, review his personnel file once a year.

SECTION 3

      In addition, the Company agrees to present the official personnel file
when the employee has a grievance pending a hearing in the third stage of the
Grievance Procedure and the employee has requested its presentation

<PAGE>

previously in writing, and when the employee understands that in the official
file there appear charges which are not in agreement with the facts. The
President or the member of the Board of Directors may examine the file of the
employee at the third stage of the Grievance Procedure if the employee so allows
it and if he is present. If there do not exist new documents in the personnel
file since the last presentation, the Company will not be obligated to show the
file once again.

SECTION 4

      In like manner, the Company agrees, to present the personnel file to all
union members whose petition for promotion, transfer or change to a position
with an lower salary grade has been denied and the employee requests in writing
to examine his file and has a complaint pending in the third stage regarding his
promotion, transfer or change to a position with a lower salary grade.

SECTION 5

      When, in the employee's file, after its presentation, there appear charges
or documents which do not adjust themselves to the real facts, the Company,
after investigating the facts, agrees to withdraw the documents presented and/or
correct them if it were necessary. The disciplinary actions of the employee file
shall not be considered for any purpose whatsoever after a period of five (5)
years has elapsed since they were issued.

      At any moment in which the personnel file of the employee has to be taken
out of the office where the custody of the same is found, to be utilized in any
official procedure, the documents regarding disciplinary actions which were
issued more than five (5) years ago shall be eliminated from said file.

SECTION 6

      The Company will send the Union and deliver to the corresponding delegate
a copy of all disciplinary actions that are notified in writing to an employee
included in the Bargaining Unit. The Company shall send the Union a copy of all
personnel movement duly approved related to employees from the bargaining unit.

SECTION 7

      The Company shall not supply any person or entity foreign from it,
information which arises from the personnel file of the employee, without his
written authorization, unless there is the intervention a judicial mandate, in
which case it shall be notified previously. When there is an intervening
judicial or legal mandate, the employee shall be notified at the same time as
the documents are handed over, unless the judicial order or the law expressly
forbids it.

SECTION 8

      The employee shall be entitled to be supplied a copy of any document that
is placed in his personnel file containing information relating his person.

                                   ARTICLE 18
                           WORK OF THE BARGAINING UNIT

SECTION 1

      The Company agrees that the personnel employed in the capacity of
supervisor or non-supervisor which are not included within the Bargaining Unit,
shall not carry out work assigned to employees within the Bargaining Unit,
except in cases of emergency and/or circumstances where employees from the
Bargaining Unit, as it is defined in this Agreement, are not available. Nothing
of what has been previously stated shall limit the normal function of the
management to instruct, train and direct the work of employees within the
Bargaining Unit.

SECTION 2

      For purposes of this article "emergency cases" shall signify cases of Acts
      of God such as:

      a.    National Emergency

      b.    Hurricanes

<PAGE>

      c.    Fires

      d.    Flooding

      e.    Earthquakes

      f.    Cases of major breakdowns where the number of employees available is
            not sufficient and/or when they have not been able to correct it.

SECTION 3

      For the purpose of this article the concept "when employees from the
Bargaining Unit are not available", shall mean circumstances such as the ones in
which:

      a.    They are required to work overtime and the personnel from the
            Bargaining Unit, of the required classification, is not available to
            work overtime.

      b.    When work accrues in an abnormal fashion and the personnel belonging
            to the Union which is available is not sufficient to cover the needs
            of the service. This circumstance cannot justify carrying out work
            of the appropriate unit with personnel that is not from the unit at
            a specific site or in a specific classification for more than ninety
            (90) days.

      c.    When due to the absence of personnel belonging to the union, the
            service is affected, requiring that other personnel perform the
            work.

      When the situations being considered in paragraphs b. and c. arise, the
Company shall exhaust the resource of bringing personnel belonging to the Union
which are available and in the same classification from other work centers of
the Company belonging to the same department and located in the same
geographical area where the need exists, as long as the operation of these other
work centers is not affected.

      During the course of time of the process of exhausting the recourse of
bringing personnel belonging to the union, the Company may take the necessary
measures so that service is not interrupted as long as the implementation of
those measures do not annul the purpose stated in the previous paragraph.

      It being understood, however, that the previous provision shall apply
solely and exclusively when the situations considered in paragraphs b. and c.
are due to or are the direct consequence of the normal outcome of the services
rendered by the Company. It shall apply it under no circumstances when the
situations considered in paragraphs b. and c. are the direct or indirect result
of actions from personnel from the Bargaining Unit geared toward producing an
abnormal accrual of work: such as slowdowns, abnormal or agreed upon absences
from the Company's personnel belonging to the Union, or any action of the ones
stated in the article regarding "No-Strike and No-Lockout" of the Collective
Bargaining Agreement and/or disciplinary actions taken as a result of the
conduct indicated above.

      The personnel belonging to the Union will carry out the work corresponding
to them when the exceptions indicated in this article arise.

      The intention of the parties in this agreement is to prevent the
managerial personnel from displacing personnel belonging to the union in their
regular work and when working overtime, and at no time prohibiting that they
carry out its operations as a public service enterprise in a normal fashion.

      This agreement does not have the intention of allowing the supervisors to
perform work of the Bargaining Unit at all times.

SECTION 4

      The Company agrees that it shall not assign supervision, executive,
managerial or confidential work to employees who belong to and are included in
the Bargaining Unit.

                                   ARTICLE 19
                                HEALTH AND SAFETY

SECTION 1

      The Union and the Company agree that the health and safety conditions at
work are a responsibility share between the employees and the Company.

      The Company agrees to provide safe working conditions and methods and to
eliminate unsafe situations of work, in regard to which the Union agrees to
cooperate with the Company.

<PAGE>

SECTION 2

      The employees must comply with and follow the safety norms established by
the Company, by the laws and/or by the regulations.

      The Company's requirement that requires employees to carry on their person
in a visible place the identification card, crediting them as employees, shall
be complied with by all the personnel. The cost of the identification card shall
be paid for by the Company.

SECTION 3

      Any employee who suffers a work accident or who becomes ill during working
hours and their injury or illness results in an emergency case where immediate
medical or hospitalization services are required, shall be entitled, after the
authorization of a supervisor, to have utilized for their transportation, any
Company vehicle which is available and such vehicle may be driven by any person
authorized to drive motor vehicles if the driver in charge of the vehicle is not
available or accessible at the moment of the accident. In all investigations
carried out by the Company regarding any possible violation to the present
section, all the circumstances related to the emergency situation may be taken
into consideration to determine any justificating or mitigating factor with
regard to the possible violation.

SECTION 4

      The Company shall provide and maintain adequate sanitary facilities, as
well as drinking water, and the Union shall promote the adequate use of said
facilities.

SECTION 5

      The Company shall provide the Union with a copy of all the periodic
reports that it submits to any government agency relating to occupational
accidents.

SECTION 6

      The Company shall comply with all the applicable provisions of the laws
and regulations and Puerto Rico and the federal ones administrated by the
Department of Health or the Department of Labor and Human Resources with regard
to work facilities and safety conditions.

SECTION 7

      In those cases in which the Company determines establishing new work
centers, the Union shall be notified with thirty (30) days of prior notice, for
the purpose its having the opportunity to examine the same before beginning
operations in said centers and may express its observations and recommendations.
In special cases, the Company and the Union will reach an agreement to establish
the inspection within a lesser period of time.

SECTION 8

      The Company, through its Occupational Health and Safety Division, agrees
to provide the Union with the work accident reports and studies performed by any
laboratory on or prior to thirty (30) calendar days following the accident. In
like manner, if the Company were to perform any inspection or study related to
the health and safety of the members from the Bargaining Unit, a copy of the
same shall be provided to them, if it were required, as long as said request
specifies the study.

                                   ARTICLE 20
                              DRUG TESTING PROGRAM

SECTION 1

      The Union and the Company recognize that the use and abuse of controlled
substances is an alarming problem in the country and affects the working force
negatively. The Union, worried about the health and safety of its members,
recognizes the risk to which its employees may be exposed due to the use and
abuse of controlled substances.

<PAGE>

SECTION 2

      The Company, aware of its responsibility to protect the health and safety
of its employees and clients, as well as of its responsibility to watch out for
the productivity and efficient rendering of the services that its employees
rendered to the people, wishes to state its concern for the problem that the use
and abuse of drugs by the employees represents.

SECTION 3

      For these purposes and to maintain a work environment free from the
problems associated with the use and abuse of controlled substances; and to
protect the health and safety of the employees covered in this Appropriate Unit,
the parties, after a detailed and conscious analysis of all the elements
involved in this problem, voluntarily and in free exercise of their contractual
faculties in conformity to the law, agree that the Company may adopt a
Controlled Substance Use Detection Program for the employees, in accordance to
Act Number 59 of August 8, 1997.

      The guiding criteria of the Program shall be:

      -     The protection of the confidentiality, civil and constitutional
            rights of the employees.

      -     Non-discrimination against the employee.

      -     The identification of drug users for the purpose of providing the
            employees the opportunity for treatment and rehabilitation in
            conformity to the law, the Controlled Substance Use Detection
            Program for the Company Employees and the Company's programs for
            internal or external aid to the employee.

                                   ARTICLE 21
                            RESPECT AND CONSIDERATION

SECTION 1

      The Company and its functionaries obligate themselves to give to the
employees and the Union the best treatment, respect and consideration possible
for the purpose of maintaining the best relations between the employees, the
Union and the Company.

SECTION 2

      The Union and the employees from the Bargaining Unit obligate themselves
to observe toward the Company and its functionaries the best treatment, respect
and consideration possible for the purpose of maintaining the best relations
between the employees, the Union and the Company.

SECTION 3

      In any case in which the Union or an employee covered by this Agreement
accused any personnel from the Company excluded from the Appropriate Unit of a
violation to this Article and the award were to turn out to be favorable for the
grievant, the same shall form part of the official personnel file of the
managerial employee who violated this Article.

                                   ARTICLE 22
                                 BULLETIN BOARD

SECTION 1

      The Company shall allow the Union the use of bulletin boards in places to
be determined by a mutual agreement between the parties.

      In these bulletin boards, there will be posed notices regarding:

      a.    Summonses to meetings which will be limited to specifying the place,
            time and date of said activities.

      b.    Appointments of officers, committees and delegates.

      c.    Results of negotiations, elections, grievances or matters which
            constitute common projects between the Company and the Union.

      d.    Social, union, recreational, educational or cultural activities.

<PAGE>

SECTION 2

      The installation and cost of these bulletin boards shall be paid for by
the Company.

SECTION 3

      It is agreed that the notices which are posted shall not contain material
of proselytism, political or religious, or material which tends to slander, put
down or affect the image of the Company or its functionaries.

      The Company shall not allow the posting of notices which are contrary to
and in violation of this clause.

                                   ARTICLE 23
                              WORK DAY AND OVERTIME

SECTION 1

For the purpose of this Agreement, for the purpose of calculating overtime, the
work week shall consist of forty (40) hours and the daily work day shall consist
of eight (8) hours. The work week shall consist of five (5) days.

SECTION 2

No employee shall work overtime without first having received authorization from
his immediate supervisor or from the immediate supervisors of his immediate
supervisor. When the company determines that the service needs require working
overtime, it may request from any employee that he work overtime and the
employee shall work it, unless he can show that he has just cause for not
working said overtime.

SECTION 3

The Company shall assign the overtime work without privileges in a fair and
equitable manner and as long as it is operationally possible, the employees who
request it voluntarily and the demands of the service shall be taken into
consideration. The Company, to the degree that it is possible, for it to
anticipate work beyond its regular work day, shall establish work shift
calendars to inform its employees about the work shifts that they will be
working.

SECTION 4

The overtime that the Company requires to be worked in excess of the forty (40)
hours per week shall be paid at the rate of double time the rate paid for
regular hours of work. The hours required by the Company to be worked in excess
of eight (8) hours per day, shall be paid for at the rate of double the rate per
hour paid for regular hours.

SECTION 5

When an employee is required to work outside of the place where he lives, the
time during which the employee is not really working, such as, but without
having this understood to be a limitation, the time for meal consumption,
sleeping, etc., shall not be considered as time worked.

The Company will comply with the requirements of the Fair Labor Standard Act
(FSLA) in relation to travel time on temporary assignment.

<PAGE>

SECTION 6

The employees who belong to the Union may enjoy a fifteen 15) minute rest during
the course of each four (4) hour period of work as long as the service is not
affected and the emergencies are dealt with. The Company shall schedule the
manner in which the employees shall enjoy this rest period.

SECTION 7

The employee is entitled to enjoy one (1) hour for the consumption of meals,
which must begin to be enjoyed no earlier than the end of the third hour nor
later than the end of the fifth hour of his regular daily work shift. The time
worked during the period destined for the consumption of meals shall be
compensated at the rate at twice (2) the rate of the regular work hour.

SECTION 8

In the case of the meal consumption periods taking place outside of the
employee's regular work schedule, said period shall be obviated (shall not be
enjoyed), subject to his not working more than two (2) hours after the regular
work day.

SECTION 9

The aforementioned does not have the effect of eliminating the right of an
employee to enjoy his meal hour when at any given moment he works more than two
(2) hours beyond his regular work day. If these situations were to arise and the
employee does not enjoy his meal consumption period, the Company shall be
obligated to pay the penalty provided by the law for that particular hour.

SECTION 10

The provisions contained in this article shall apply solely to those employees
of the Company covered by this Agreement who are not exempt or could be not
exempt in the future due to any law, regulation, decree or any other provision
whatsoever regarding the payment of additional compensation for overtime work
hours.

<PAGE>

                                   ARTICLE 24
                                 VACATION LEAVE

SECTION 1

      The personnel from the bargaining unit shall enjoy vacation leave in the
following manner:

      a.    Those employees who count with less than three (3) years of
employment shall enjoy vacation leave during the effective period of this
Collective Bargaining Agreement at the rate of one point seventy-five (1.75)
working days for each month of work, equivalent to twenty-one (21) days per
year.

      b.    Those employees who count with three (3) years or more of employment
but less than seven (7), shall enjoy vacation leave during the effective period
of this Collective Bargaining Agreement at the rate of one point ninety-two
(1.92) working days for each month of work, equivalent to twenty-three (23) days
per year.

      c.    Those employees who count with seven (7) years or more of employment
but less than ten (10), shall enjoy vacation leave during the effective period
of this Collective Bargaining Agreement at the rate of two point seventeen
(2.17) working days for each month of work, equivalent to twenty-six (26) days
per year.

      d.    Employees who count with ten (10) years of more of employment shall
enjoy vacation leave during the effective period of this Collective Bargaining
Agreement, at the rate of two point five (2.5) working days for each month of
work, equivalent to thirty (30) days per year.

To be entitled to enjoy the days of vacation leave pursuant to how it is
previously provided for, during the month of work, the employee must have worked
at least one hundred (100) hours of work during said month. The employee who
works less than one hundred (100) hours in any month will enjoy vacation leave
in proportion to the number of hours which he in fact worked during that month
with regard to one hundred (100) hours; for example: if an employee who is
entitled to enjoy vacation leave under clause b. of this section works
seventy-five (75) hours in a particular month, he shall be entitled to enjoy in
that month seventy-five percent (75%) of two (2) days on the basis of one
working day of eight (8) hours, twelve (12) hours of vacation leave in that
month. The employee will receive at the beginning of the enjoyment of his
vacation leave the equivalent to the hours accrued on the basis of the
aforementioned applicable formula multiplying by the regular basic rate of pay
per hour for the employee.

SECTION 2

The vacation leave shall be taken during the twelve (12) month period following
the date of the anniversary of the employee's entry. It being provided that if
at the end of said twelve (12) month period it has not been possible to grant
the employee the vacation leave that he should have enjoyed during the same,
these shall be paid at double the regular rate per hour, and that vacation leave
which was accrued during said twelve (12) month period shall begin to be enjoyed
at the time when the aforementioned vacation leave is paid.

The Company shall determine the dates when the annual vacation leave period that
is to be granted to each employee shall begin and end, paying attention in the
first instance to the Company's operational needs. However, they will take into
consideration, if this is possible, any observation made by the employee with
regard to the date of his preference for taking his vacation leave. It being
provided that if there are two or more interests of employees in conflict with
regard to the date for taking vacation leave, the employee with the greater
seniority shall have preference.

The Company may shut down, chargeable to vacation leave parts of its operations
for the period of 24 to 31 of December. If the employee does not have sufficient
accrued vacations the time will be advanced. Similarly the time will be advanced
if the Christmas shut down causes the employee not to have sufficient accrued
vacations to cover the ones that were on schedule.

<PAGE>

SECTION 3

All employees shall be entitled to receive the equivalent of the vacation leave
that they have accrued as of the date of their resignation or separation from
the job in cash.

SECTION 4

The employee who is enjoying vacation leave shall not be called to work until he
has finished said vacation leave, except in the case of emergency in which it
has to be interrupted due to service needs. Upon finishing the work for which he
was called, the employee shall enjoy the days of vacation leave that he has
remaining, including the days in which he was called in to work.

SECTION 5

The period of time in which the employee covered by this Collective Bargaining
Agreement is enjoying sick leave or vacation leave shall count for effect of
this article solely as hours worked, once the employee has returned back to
work.

SECTION 6

When an employee is enjoying annual vacation leave and becomes ill for a period
of three (3) or more consecutive working days, it must be charged to sick leave,
if the employee requests it and as long as the employee presents medical
evidence, in conformity with Article 29, Section 5, (Sick Leave), that he is
ill, in which case the employee upon ending his illness will continue the
vacation leave for a period equivalent to the remaining of his authorized and
unauthorized vacation leave.

SECTION 7

At the petition of the employee, the Company may schedule the annual vacation
leave in two (2) or more separate periods within the same year in which the
employee is entitled to enjoy the same.

SECTION 8

The employee may request the cash payment of his accrued vacation leave in
excess of the maximum number of days of vacation leave established in Mandatory
Decree Number 73, applicable to the communications industry. The granting of
this request shall require an agreement between the Company, the employee and
the union representative.

In order to create a bridge between a holiday ( as defined in the contract) and
a weekend, the Company may shut down part of its operations and grant said days
chargeable to regular accrued vacations. In the case that the employee does not
have enough accrued vacations the time will be advanced. Similarly the time will
be advanced if the shut down causes the employee not to have sufficient accrued
vacations to cover the ones that were on schedule.

                                   ARTICLE 25
                              SPECIAL SPORTS LEAVE

SECTION 1

      It is agreed to grant a Special Sports Leave, in conformity to Act 49 of
July 23, 1992, as amended, to the employees who qualify.

<PAGE>

SECTION 2

      All employees who request this leave must count with the written
certification from the Olympic Committee of Puerto Rico to represent Puerto Rico
in Olympic Games, Panamerican Games, Central American Games or in regional or
world championships.

SECTION 3

      All employees who are duly certified by the Puerto Rico Olympic Committee
to represent Puerto Rico in the competitions listed in Section 2 of this
article, shall present to the Company, with at least ten (10) days in advance to
their going off to compete, a certified copy of the document crediting them to
represent Puerto Rico in said competition, which shall contain information about
the time that said athlete will be participating in the aforementioned
competition.

SECTION 4

      The employee must submit to his immediate supervisor, within the first ten
(10) days of each month, a certification in which the time utilized in the
Federation or in the Olympic Committee during the preceding month is stated.

SECTION 5

      The Company shall grant a bonus of $500.00 to each participating athlete
who makes use of this leave for a period of at least five (5) days.

                                   ARTICLE 26
                                   SICK LEAVE

SECTION 1

The employees covered by this Collective Bargaining Agreement shall accrue sick
leave at the rate of one and a half (1 1/2) working days for each month in which
they have worked at least one hundred (100) hours of work. Those employees who
work less than one hundred (100) hours in the month shall accrue sick leave in
the proportion that the number of hours that they worked in the month has to one
hundred (100) hours; in other words, if they work seventy-five (75) hours during
the month, they shall accrue seventy-five percent (75%) of one and a half (1
1/2) of the working day on the basis of an eight (8) hour working day, in other
words, nine hours of work.

The period of time in which the employee covered by this Collective Bargaining
Agreement is enjoying sick leave or vacation leave shall count for the purpose
of this article solely as hours worked once the employee has returned to work.

SECTION 2

The sick leave unused by the employee during the course of the year shall remain
accrued for the following years up to a maximum of seventy-five (75) days for
the purposes of liquidation provided in Section 3 and ninety (90) days for the
purpose of this Section. As of the date of retirement to enjoy the benefit of
the Company's pension plan or disability plan determined by Social Security, the
employee shall be paid the accrued days of sick leave up to a maximum of ninety
(90) days. This benefit shall be calculated by multiplying by eight (8) the
regular basic rate of pay per hour that the employee was receiving at the time
of his retirement or disability.

SECTION 3

The Company shall pay on an annual basis the accrued sick leave in excess of
seventy-five (75) days to which the employee is entitled, within an eight (8)
week period from the anniversary of vacation leave, calculating by eight (8) the
regular basic rate of pay per hour that the employee is receiving, at the rate
of fifty percent (50%) during the first two (2) years of the effective period of
this Collective Bargaining Agreement and at the rate of seventy-five percent
(75%) the third year of effectiveness of the same.

<PAGE>

SECTION 4

In the event of having to be absent from work due to any reason, the employee
must let his immediate Supervisor know during the employee work shift.

SECTION 5

The employee who is absent due to illness in excess of two (2) days must present
a medical certificate to his supervisor upon returning to work which specifies
the date of the consultation with the physician and the estimate made by the
physician as to the days that the employee must spend recovering. In the event
that the employee continues ill for a period greater than three (3) days or
more, the employee must get said certificate to his supervisor within the first
three (3) days of absence from his job, except in the cases of Acts of God when
he must make said certificate get there in the briefest time possible. The
employee shall receive pay for the benefits provided in this article only when
he complies with what is provided for in this section.

SECTION 6

The Company shall inform the employees on an annual basis about the balance of
days of sick leave accrued.

                                   ARTICLE 27
                               EXTENDED SICK LEAVE

SECTION 1

      In the event that a regular employee is absent for a consecutive period
greater than five (5) working days due to reasons of illness proven by means of
a medical certificate that complies with the requirements provided in the
article regarding Sick Leave, he shall receive benefits at the rate of one (1)
week at full salary and three (3) weeks at half (1/2) salary for each year of
service up to a maximum of thirteen (13) weeks at full salary and thirty-nine
(39) weeks at half (1/2) salary. In the event that the benefit under the
Non-Occupational Disability Insurance Act (Act 139), were to turn out to be
greater than the ones established herein, only the ones that are greater shall
be granted.

SECTION 2

      The Company reserves for itself the right to have examined by physicians
chosen by it, those cases that it deems necessary. The expenses for these
examinations shall be paid for by the Company.

SECTION 3

      Any accident and/or illness of an occupational nature shall be excluded
from the benefits provided in Section 1 of this article.

SECTION 4

      The first five (5) consecutive working days of absence prior to the
enjoyment of prolonged sick leave shall be charged to the regular sick leave
that the employee may have accrued.

SECTION 5

      To be entitled to the full accrual of the benefit considered in Section 1
of this article, during successive periods of illness, the employee must perform
his functions, without any interruption whatsoever, during a thirteen (13) week
period between one illness and another.

      For the purpose of this section, the following shall not be considered to
be interrupting events: periods for Maternity Leave; Funeral Leave; Sports
Leave; Jury Duty and Military Leave.

<PAGE>

                                   ARTICLE 28
                             OCCUPATIONAL SICK LEAVE

SECTION 1

      Any regular employee who has to be absent due to an occupational accident
or illness so certified by the State Insurance Fund, shall be entitled to
receive his regular salary during the first twenty-six (26) weeks from the
moment of the accident.

SECTION 2

      In the event that the employee is absent from his work in excess of the
first twenty-six (26) weeks, the employee will be entitled to receive, in
addition, half of his regular salary during the following thirty-five (35)
weeks.

      If the employee were not discharged by the State Insurance Fund, after the
sixty-one (61) weeks have elapsed since the date of the accident, at the written
petition of the employee he shall have approved up to a maximum of seventeen
(17) additional weeks without salary, for purposes of holding on to the job, as
long as he complies with the terms and conditions established by the law with
regard to having had to been discharged and being physically and mentally
capable to be able to exercise his job, among other requirements of law.

SECTION 3

      In exceptional cases, the Company, in its sole discretion and after a
request on the part of the employee, with no less than thirty (30) days prior to
the termination of the seventeen (17) week period without salary from the
previous section, may carry out a medical evaluation of the employee to
determine his health condition. If it were to consider it necessary, the Company
could on the basis of deserving reasons and in its sole discretion, extend the
period without pay for an additional term which shall not, in any case
whatsoever, exceed four (4) weeks.

SECTION 4

      The Company shall deduct from this leave the per diems that the employee
receives from the State Insurance Fund during this period.

SECTION 5

      In the event that any employee is absent from his job due to an alleged
occupational accident or illness, and until the State Insurance Fund (SIF)
issues a certification of causal relationship, the Company shall pay to him the
benefits to which he is entitled under Act 139 (SINOT), in conformity to the
following table:

                        W E E K S  O F  B E N E F I T S

<TABLE>
<CAPTION>
 YEARS OF              FULL SALARY               HALF SALARY              SINOT
 SERVICE          ADJUSTMENT/SINOT COORD.   ADJUSTMENT/SINOT COORD.    COORDINATION
<S>               <C>                       <C>                        <C>
Less than 1                  -                          -                   26

    1                        1                          3                   22

    2                        2                          6                   18

    3                        3                          9                   14

    4                        4                         12                   10

    5                        5                         15                    6

    6                        6                         18                    2

7 or more                    7                         19                    -
</TABLE>

<PAGE>

      Once the SIF issues a certification of causal relationship, the Company
will charge to the Occupational Sick Leave provided in this article and credit
the benefits paid during said period to the Extended Illness Leave, accrued by
the employee.

      In the case of employees who do not have the non-occupational disability
benefits in their entirety, the benefits remaining under Act 139 in conformity
to this table shall be paid. It being explained that the SINOT and the SIF
benefits are mutually excluding between one and the other; in other words, that
the employee cannot receive both benefits at the same time.

                                   ARTICLE 29
                                 MATERNITY LEAVE

SECTION 1

      All employees who are pregnant shall be entitled to a rest period of four
(4) weeks before and four (4) weeks after the birth, with full pay at the rate
of their regular salary.

SECTION 2

      The employee may choose to take up to one week of prenatal rest and extend
it up to seven (7) weeks the post natal rest to which she is entitled as long as
she presents to her supervisor with a medical certification crediting that she
is in condition of working up to one week before the birth.

SECTION 3

      If the employee were to suffer a complication after the birth which
prevented her from working for a term that exceeds four (4) weeks, to be counted
from the day of the birth, the Company will grant an additional rest period for
a term which shall not exceed fifteen (15) additional weeks without pay, as long
as prior to the expiration of the rest period the employee presents a medical
certification crediting such complication. It being provided that the employee
may charge the fifteen (15) weeks either in their entirety or partly to her sick
leave or accrued vacation leave, until completing said fifteen (15) weeks.

SECTION 4

      The employee who adopts an infant (less than 7 years old) in accordance to
the effective legislation and procedures, shall be entitled from the
presentation of the documents crediting this fact onwards, to the same benefits
for Maternity Leave which an employee who delivers a baby enjoys.

SECTION 5

      With one (1) month prior to the beginning of the leave, the employee shall
present to the Company a medical certification crediting her pregnancy and
indicating the probable date of delivery. Upon complying with this requirement,
the employee shall receive the pay corresponding to her as provided in Section
1, in advance, at the moment that she begins to enjoy this leave.

SECTION 6

      The employee who suffers a miscarriage shall be entitled to and can claim
the same benefits enjoyed by the employee who has a normal delivery. However, to
be credited such benefits, the miscarriage must be one of such nature that it
produces the same physiological effects that regularly arise as a result of the
delivery, in accordance to the decree and certification of the physician
attending her during the miscarriage. Said benefit shall be from the miscarriage
onwards.

<PAGE>

SECTION 7

      All female regular employees, when they return to their job, after
enjoying this leave, shall be entitled to a period of thirty (30) free minutes
with pay at the beginning of their regular work shift during a period of five
(5) working days.

                                   ARTICLE 30
                                LEAVE WITHOUT PAY
                                FOR UNION AFFAIRS

SECTION 1

      The Company and the Union will reach an agreement about the time without
pay to be granted to personnel designated by the Union to attend a workers
convention or another worker activity.

SECTION 2

      The Union shall notify in writing, the immediate supervisor, with copy to
the Department of Labor and Employee Affairs, with at least five (5) working
days of prior notice, the personnel appointed and the probable duration of the
absence.

SECTION 3

      The Union agrees that, when making its petition for free time for Union
activities, it shall give the proper consideration to the number of employees
affected so that there will not be no interruption of the Company's operations
due to the lack of available personnel.

SECTION 4

      The time that any employee is on Union Affairs Leave shall be considered
as service time for purposes of seniority.

      The employee, upon his reinstatement to the Company, shall be entitled to
the occupational level and salary corresponding to him as if he had been
working.

SECTION 5

      The Company and the Union agree that the time that an employee belonging
to the union is on union leave due to his occupying a position in the Board of
Directors of the Union shall be acknowledged as service for purposes of
retirement, and it shall not exceed seven (7) at the same time.

SECTION 6

      This benefit shall be made extensive to all those employees belonging to
the union who have served as members of the Board of Directors of the
Independent Union of Telephone Employees from its foundation in 1971 onwards and
which as of the date of the signature of this Agreement continue as regular
employees and members of the Union.

                                   ARTICLE 31
                    LEAVE FOR ADMINISTRATIVE FUNCTIONS OF THE
                         COLLECTIVE BARGAINING AGREEMENT

SECTION 1

      The Company shall grant five (5) Union Leaves with pay to the Union to
handle worker-employer matters between the Company, the Union and the union
members. It being understood that with regard to this leave, PRTC shall only pay
the sum of the salaries, minus the corresponding deductions of law with the
Union having to pay the fringe benefits and any other deduction or contribution.

<PAGE>

SECTION 2

      Union Leave with pay shall be understood to mean that P.R.T.C. will pay
his net monthly salary to the employee enjoying said Leave, Christmas bonus and
the Company's contribution to the health plan. It being understood that with
regard to the Union Leave with Pay as well as the Union Leave without Pay the
benefits for Sick Leave, Vacation Leave and any other benefits, deductions or
contributions shall be agreed upon internally between said employee and the
Union, and in no case whatsoever shall they be paid as an additional and
separate compensation from the salary by the Company.

SECTION 3

      These leaves do not imply an obligation of payment for the concept of per
diems, lodging, mileage, transfers, overtime, differentials, assistance for
studies, scholarships and other benefits provided by the Collective Bargaining
Agreement, but the time of service on Union Leave shall be acknowledged for
purposes of retirement and seniority, as if it were time worked.

SECTION 4

      In the event that any Section of this article were to be declared invalid
or illegal by a Court with jurisdiction, the parties bind themselves to enter
into immediate negotiations for the purpose of agreeing a substitute provision,
mutually satisfactory for such article or section.

                                   ARTICLE 32
                                 MILITARY LEAVE

SECTION 1

      Any regular employee who joins the military service shall enjoy all the
rights provided by Public Act Number 756 of the United States Congress, as it
has been or may be subsequently amended.

SECTION 2

      When a regular employee renders temporary services in the Puerto Rico
National Guard in conformity to the relevant provisions of Act Number 62,
Military Code of June 23, 1969 (Puerto Rico Military Code) or in the Reserves of
the Armed Forces of the United States, pursuant to the United States Military
Code, he shall be entitled to a leave with salary of up to a maximum of thirty
(30) days in a natural year to attend the annual exercises.

                                   ARTICLE 33
                                LEAVE WITHOUT PAY

SECTION 1

      All employees who wish leave without pay to be absent from their job shall
request a written permission from the Company by sending a copy of his petition
to the President of the Union. It will be at the discretion of the Company to
grant said leave without pay.

SECTION 2

      All employees who are authorized leave without pay, once they have
returned to work, shall be obligated to pay to the Union the dues not paid
during the period of said leave, in monthly installments equivalent to the
period of the leave without pay granted, until the debt is liquidated. This
deduction shall be in addition to their regular dues, and the Union will request
it from the Company in writing.

SECTION 3

      The leave without pay may be extended up to a maximum of six (6) months on
the basis of the merits of the case and after a study is carried out by the
Company.

<PAGE>

SECTION 4

      The purpose of this Leave shall not be that of allowing an employee to try
another job to change employment or to make a profit.

SECTION 5

      One employee for each department in each work center may receive the
benefits of leave without pay. One same employee cannot request leave without
pay in two (2) consecutive years. If there are extraordinary circumstances
involved and the applicant can show the merits of his petition, the Company may
leave without effect the limitations indicated in this section as long as the
service is not affected.

SECTION 6

      During the time that the leave lasts, the Company shall guarantee the
      employees the following benefits:

      a)    Health Plan

      b)    Being retained in his same position or an equivalent position, with
            the same salary, employment benefits and conditions that he used to
            have. The use of this leave shall not result in the loss of
            seniority or accrued benefits as of the date of effectiveness of the
            same.

                                   ARTICLE 34
                           FAMILY-MEDICAL LEAVE (FMLA)

SECTION 1

      The employees covered by this Collective Bargaining Agreement may be
eligible for a family-medical leave without salary, as long as they fulfil the
requirements provided in the Family and Medical Leave Act of 1993 (FMLA) and the
regulations promulgated under the same. Said legislation shall rule the benefits
to be granted under the same.

SECTION 2

      The Company will consider requests for leave without pay under the terms
and conditions of the Family Medical Leave Act, for the birth or care of a
child, for the adoption or the custody of a child, or for the care of a spouse,
children or parents, due to a serious health ailment which requires prolonged
treatment through medical diagnosis or for the serious illness of the employee
himself, which prevents him from fulfilling his functions or for other
additional reasons, as long as the Company considers that the same justify the
granting of a leave without pay.

SECTION 3

      This leave shall not be greater than twelve (12) working weeks within a
period of twelve (12) months. Only those employees who have worked for the
Company no lesser than twelve (12) months and who have rendered no lesser than
1,250 hours of service during the twelve (12) months prior to the request for
said leave may apply for this leave. They must submit their request with thirty
(30) days of advance notice before the foreseeable date of the effectiveness of
the leave, except in cases of emergency. The Company may require medical
certification in the cases in which the leave is due to reasons of a serious
health ailment. In addition, it may require second and third medical opinions
(paid for by the Company) and qualification evaluations for the performance of
their functions before the employee returns to work.

      In cases where both spouses work in the Company and both are eligible for
the family-medical leave, they will be allowed to take a combined leave for a
total of 12 weeks of family-medical leave during the 12 week period, applicable
for each qualifying event. In the cases where the husband or wife make use of a
portion of the total of 12 weeks of the family-medical leave for a qualifying
event, the husband and the wife shall be entitled to the difference between the
number that he or she took individually and 12 weeks of family-medical leave for
another purpose.

      The total period of this leave shall be twelve (12) weeks of work within a
period of twelve (12) months, calculated in a twelve (12) month rolling form.
Any other leave granted under this Collective Bargaining Agreement with or
without pay, which is eligible under the Family and Medical Leave Act, will run
concurrently with this Family-Medical Leave.

<PAGE>

SECTION 4

      During the time that the employee is enjoying this Family-Medical Leave,
the Company will guarantee the medical plan and the insurance to which the
employee is subscribed. In turn, it will guarantee the retention of his same
position or an equivalent position, with the same salary, employment benefits
and conditions that he used to have. The use of this leave will not result in
the loss of seniority or accrued benefits as of the date of effectiveness of the
same.

SECTION 5

      The employees, while they are on leave, shall be considered as having been
dismissed from the job, if they accept work with another employer who is
dedicated to business for the purpose of profit and/or who request unemployment
compensation.

SECTION 6

      When granting this twelve (12) week leave, at the request of the employee,
the Company may, in its sole discretion, grant the leave provided by Article 36,
Leave Without Salary.

SECTION 7

      The provisions of this article are not subject to the grievance or
arbitration procedure of the Collective Bargaining Agreement except for cases of
reinstatement to the job by employees making use of the leave.

                                   ARTICLE 35
                                  FUNERAL LEAVE

SECTION 1

      All regular employees shall be entitled to enjoy a permit with salary for
funerals lasting three (3) working days from the date of the death of any of
their natural parents or foster parents (one excludes the other), of his spouse,
of children or of siblings and one day in the event of the death of grandparents
and in-laws.

SECTION 2

      In the event of the death of the natural or foster parents (one excludes
the other), of his spouse, of children and siblings and the funeral took place
outside of Puerto Rico, the employee may enjoy a leave with salary of up to five
(5) working days from the date of the death to travel to the place of the
burial.

SECTION 3

      In the event that an employee needs additional time, the Company shall
grant the same with charge to the vacation leave that the employee has accrued.

SECTION 4

      The Company may require evidence of the death, as well as of the burial
and the trip outside the country.

                                   ARTICLE 36
                           LEAVE FOR JUDICIAL PURPOSES

SECTION 1

All regular employees shall be entitled to enjoy a permit with salary for the
time that is required by a court of justice to serve as jury.

Jury duty shall be with salary a case per year.

<PAGE>

SECTION 2

The Company shall pay the regular salary of an employee who is officially
subpoenaed by the district attorney's office or by a court of justice or an
administrative agency for a quasi-judicial proceeding to appear as a witness in
a criminal case for all the regular working hours which said subpoena prevents
the employee from showing up at his work. The employee must inform his immediate
supervisor about said subpoena with at least two (2) days of prior notice unless
he is subpoenaed within a lesser period. The employee must return to his work
immediately as soon as he ends his interview with the district attorney, or be
excused by the court. The employee must present written evidence of the
subpoena, as well as of his appearance before the district attorney and/or the
court.

SECTION 3

When an employee who has been officially subpoenaed to appear before any court
of justice, district attorney, administrative entity or government agency which
is not covered by the two (2) previous sections, he shall be entitled to enjoy
leave without pay for the time during which said official subpoenas prevent him
from showing up at his regular work day. The employee may, at his option, charge
this time to vacation leave.

SECTION 4

When an employee is subpoenaed, arraigned or accused due to the alleged
commission of a criminal act allegedly committed during his working hours, the
days utilized to appear in court or at the citations, at the request of the
employee, shall be charged to his accrued and unenjoyed regular vacation leave
or in its defect he shall be granted leave without pay, as long as he presents
evidence of the appearances. It being provided that if he were exonerated or the
crime of which he is accused is filed, such days shall be paid to him and the
time shall be taken into consideration for all purposes of the law and the
Collective Bargaining Agreement as time which has been worked.

<PAGE>

                                   ARTICLE 37
                                    PER DIEMS

SECTION 1

Per diems are understood to be the expenses for meals and lodging in which the
employees incur when they are required to work outside of the municipality where
their work center is normally located or vice-versa and of hours outside their
regular work day where their work center is normally located.

SECTION 2

When an employee is required to work in a place outside of the municipality
where his work center is normally located for a period not greater than one day,
the Company shall pay expenses for meal and lodgings up to the amount and under
the conditions specified further on:

      a.    If he leaves on or before 6:00 a.m. and returns on or after 8:00
a.m. of the same day, for breakfast the first year of the Collective Bargaining
Agreement five dollars ($5.00) shall be paid, and five dollars and fifty cents
($5.50) the second and third years.

      b.    If he leaves on or after 8:00 a.m. and returns on or after 1:00 p.m.
of the same day, eight dollars and fifty cents ($8.50) shall be paid for lunch,
during first year of the Collective Bargaining Agreement, and nine dollars
($9.00) during the second and third years.

      c.    If he leaves on or after 1:00 p.m. and returns on or after 7:00 p.m.
of the same day, eight dollars and fifty cents ($8.50) shall be paid for dinner
during first year of the Collective Bargaining Agreement, and nine dollars
($9.00) during the second and third years.

      d.    If the employee were required to spend the night, he shall be
entitled to lodging and seventy dollars ($70.00) shall be paid during the three
(3) years of the Collective Bargaining Agreement.

SECTION 3

The employees who travel to the Islands of Vieques and/or Culebra shall receive
for the concept of per diems, the following amounts, during the three years of
the Collective Bargaining Agreement:

<TABLE>
<CAPTION>
Breakfast              Lunch               Dinner
---------              -----               ------
<S>                    <C>                 <C>
 $ 5.50                $9.00               $ 9.00
</TABLE>

SECTION 4

In the event that an employee has to work in a place outside of the municipality
where the employee's work center is normally located for a period greater than
one day, during which term of time the employee has to have his meals and sleep
in said place, the Company shall pay the amount of ninety-two dollars ($92.00)
daily during the first year of the Collective Bargaining Agreement, ninety-three
dollars and fifty cents ($93.50) daily during the second and third years, an
amount which will cover all the expenses in which the employee incurs and for
which amount the employee will not have to present a receipt or vouchers. In
addition, if he were required to work up to beyond seven (7) hours from the end
of his working day, he shall be paid a per diem for the amount of $8.50 during
the first year of the Collective Bargaining Agreement, $9.00 during the second
and third years.

<PAGE>

SECTION 5

For purposes of this article, the municipalities comprised in the Metropolitan
Telephone Area are considered as one single work center, which are the
following: San Juan, Santurce, Hato Rey, Rio Piedras, Pueblo Viejo, Puerto
Nuevo, Caparra, Guaynabo, Levittown, Catano, Bayamon, Carolina, Trujillo Alto,
Isla Verde and any other area within those boundaries.

SECTION 6

Expenses for the concept of per diems will be reimbursed to employees who are
working in the municipality where their work center is normally located, under
the following circumstances:

      a.    To the employees who work exclusively in the dawn work shifts which
are the work shifts that regularly end after 12:00 midnight, they shall be paid
five dollars ($5.00) for a snack during the first year of the Collective
Bargaining Agreement and five dollars and fifty cents ($5.50) during the second
and third years.

      b.    In the case of employees who work any (daily) schedule of eight (8)
hours and are required to continue working for more than an hour and a half (1
1/2), they shall be paid a per diem for the amount of eight dollars and fifty
cents ($8.50) during the first year of the Collective Bargaining Agreement and
nine dollars ($9.00) during the second and third years.

      c.    In those cases in which the employees are required to work in some
place outside the municipality where their Work Center is normally located and
once they return to their work center, or vice-versa, and they are required to
continue working consecutively for more than one hour and a half (1 1/2) they
shall be paid the per diem of eight dollars and fifty cents ($8.50) during the
first year of the Collective Bargaining Agreement and nine dollars ($9.00)
during the second and third years provided herein. In the event that the
employee is required to work outside the municipality where his work center is
normally located and after the employee working there his regular day he is
required to continue working consecutively in said place for more than one hour
and a half (1 1/2), he shall be paid a per diem of eight dollars and fifty cents
($8.50) during the first year of the Collective Bargaining Agreement and nine
dollars ($9.00) during the second and third years.

If the employee continues working up to beyond the seven hours (7) from the end
of his daily eight (8) hour work shift, he shall be paid a second per diem.

The time in which the employee incurs in the consumption of meals shall not be
considered as time worked and the employee shall not receive pay for said time.

SECTION 7

In those cases where an employee is required to work outside of the municipality
where his work center is normally located and during this period of time there
are holidays between two (2) working days, the Company shall pay per diems and
lodging for said holidays.

In those situations in which an employee is required to report at work on a
Monday at 8:00 a.m. outside of the municipality where his work center is
normally located, the Company will pay the lodging for the previous day
according to the terms of this article, as long as the employee is authorized to
spend the night in lodging during the previous Sunday.

In those cases where an employee is required to work outside of the municipality
where his work center is normally located and he becomes ill during this time,
the Company will be obligated to pay the per diems provided in this article,

<PAGE>

as long as the employee spends the night in the lodging in the municipality
where he is required to work and complies with the provisions of the article
regarding Sick Leave and never for a period in excess of two (2) days.

SECTION 8

The following employees shall be entitled to the per diem which is provided
further ahead:

      a.    All employees regularly assigned to Bayamon, Levittown or Catano who
are required to work temporarily in Carolina, Isla Verde or Trujillo Alto, and
in like manner, all employees assigned regularly to Carolina, Isla Verde or
Trujillo Alto who are required to work temporarily in Bayamon, Levittown or
Catano.

      b.    All employees regularly assigned to Bayamon, Levittown or Catano
when they are required to attend training at the Technical Training Center
(TTC), while the same is located at Las Virtudes; it being provided that if said
Training Center were to be relocated, the parties will renegotiate this Clause.

In these cases, a per diem of eight dollars and fifty cents ($8.50) shall be
paid during the first year of the Collective Bargaining Agreement and nine
dollars $9.00 during the second and third years for each day that they work
temporarily up to a maximum period of thirty (30) calendar days. Upon finishing
the temporary assignment, the aforementioned per diem for each day worked shall
be suspended and the employees shall be reassigned to their work center of
origin or shall be regularly reassigned to the work center where they are
rendering their services temporarily. The Company may extend the temporary
period for an additional period in which case the employees shall continue
receiving the per diem of eight dollars and fifty cents ($8.50) during the first
year of the Collective Bargaining Agreement and nine dollars ($9.00) during the
second and third years until the Company determines that the work that had been
assigned to them had concluded.

SECTION 9

All employees whom the Company requires to attend to testify in its favor at
hearings at the Department of Consumer Affairs (DACO), Public Service Commission
and/or any other government agency, whether state or federal and/or state or
federal court, shall receive the per diems in conformity to Section 2 of this
article.

SECTION 10

Nothing in this article shall be construed in a manner that may imply the
payment of per diem for more than one concept (pyramidal payment).

SECTION 11

In the event that an employee is required to travel outside of Puerto Rico, the
Company will pay the expenses for meals, as provided in Section 2 of this
article and the lodging shall be for the cost of the same, pursuant to a receipt
with previous authorization on the part of the Company.

SECTION 12

The Company shall be retaining in the origin all deductions that correspond in
law or regulation.

<PAGE>

                                   ARTICLE 38
                                 TRANSPORTATION

SECTION 1

When an employee is required to work at a place outside of where his work center
is normally located, the Company, as the case may be, shall supply the
transportation, pay the transportation expenses in which he incurs in advance or
reimburse them, in accordance to what is being provided further on.

SECTION 2

The transportation expenses must be approved and paid by the Company prior to
incurring in them, it being provided that transportation expenses which an
employee normally incurs in going and/or coming (from his residence) to his work
center shall not be considered to be reimbursable expenses; in addition,
expenses for transportation shall not be paid when the transportation is
supplied by the Company.

SECTION 3

The employees authorized to utilize their private vehicles shall be paid at the
rate of thirty-nine ($0.39) cents per mile for vehicles without public liability
insurance and forty-three ($0.43) cents per mile for vehicles with public
liability insurance. To determine the miles for the purposes of claiming the
payment, the distance tables between the towns prepared by the Highway Authority
and that of the Metropolitan Area prepared by the Company shall be used. When
the distance tables cannot be applied, the reimbursement system will be utilized
and the employee must inform the distance traveled.

SECTION 4

When the Company orders an employee to carry out an official trip due to service
needs or when it assigns him to some temporary duties outside of his regular
work center, it shall provide said employee with the means of transportation
from his work center, or instead, it shall pay him the transportation expenses
in advance for the miles he has to travel on said official trip or for the ones
that he may have to travel due to the temporary assignment from his regular work
center.

This section applies only when the employee shows up at his regular work center
and is sent to work to another place on the same day.

SECTION 5

When the Company requires an employee to travel directly from his house to
another work center to which he has been temporarily assigned, the Company will
pay said employee for the miles of distance that exist between his regular work
center and the center to which he has been temporarily assigned. The assignments
requested by the employee are excluded from the benefits of this section.

SECTION 6

When an employee is required to utilize public transportation, he shall be
reimbursed in accordance to the effective rate in the transportation means
utilized. He will not be reimbursed on the basis of the rate for one means when
the means utilized is another one. The use of taxis shall be conditioned to the
employee's presenting together, with the petition for reimbursement, the
following information: taxi license, name of the taxi line and the number of the
taxi.

<PAGE>

SECTION 7

To be entitled to the payment or to the reimbursement of any expense provided in
this article, the employee must complete the forms established by the Company
for this purpose.

SECTION 8

When the Company determines, on the basis of he need, to permanently transfer an
employee from one municipality to another and as a result of said transfer, the
employee changes his residence to the municipality to which he has been
transferred, the Company shall compensate for the following expenses:

      a.    Moving expenses really incurred in which must be approved previously
and justified by a receipt signed by the moving company.

      b.    Transportation expenses, and per diems and lodging expenses in
conformity to the terms of this Agreement during the time that the employee has
to travel to the new work area until he transfers his residence permanently, for
a period of up to thirty (30) working days from the effective date of the
transfer. If the employee has not moved within the sixty (60) days following the
transfer, he will only be entitled to the benefits provided in Section 9 of this
article and therefore must return what he has been paid in excess.

Permanent transfers carried out within the limits of the boundaries of San Juan,
Santurce, Hato Rey, Rio Piedras, Pueblo Viejo, Puerto Nuevo and Caparra and any
other area within those boundaries, are excluded from the benefits of this
section, as well as the transfers carried out at the employee's request.

SECTION 9

When due to service need, the Company determines to permanently transfer an
employee from one municipality to another and the employee does not move his
residence, he shall be entitled to receive transportation expenses and per diems
for a period of thirty (30) working days for the excess miles of distance, if
any, that he has to travel between his old regular work center and his residence
and his new regular work center and his residence. This shall be measured by
highway through the closest route.

SECTION 10

For exclusive purposes of this article, transfer shall be understood to mean:

      a.    Any permanent change from one municipality to another as long as the
            employee continues in his same occupational classification.

      b.    Each one of the following areas shall be considered as a
            municipality:

                  1)    San Juan-Santurce-Isla Verde

                  2)    Hato Rey-Rio Piedras

                  3)    Pueblo Viejo (includes Caparra and Puerto Nuevo)

      c.    In addition, the Levittown area shall be included in the
            municipality of Catano.

SECTION 11

For the exclusive purposes of transfers motivated by relocation of work center,
the telephone metropolitan area shall be considered as one single municipality
including all of the following: San Juan, Santurce, Hato Rey, Rio Piedras,
Guaynabo, Pueblo Viejo, Levittown, Catano, Bayamon, Carolina, Trujillo Alto,
Isla Verde and any other area within

<PAGE>

those boundaries. However, any employee regularly assigned to Bayamon, Levittown
or Catano who is permanently transferred to Carolina, Isla Verde or Trujillo
Alto or vice versa, shall be entitled to mileage during the term provided in
this article.

SECTION 12

The transfers that occur at the petition of the employee are excluded from the
benefits of this article.

SECTION 13

In the event that the Company adopts a mileage payment policy that is superior
to the one established in this Agreement to be applicable to non-covered
employees, said policy shall be applicable to the Bargaining Unit.

SECTION 14

      a.    The employees who are assigned to work in a municipality or place on
the Island in which it is proven that there exists no adequate lodging and who
are authorized by the Company to lodge in another nearby municipality where
there is adequate lodging, shall be entitled to receive the benefits mentioned
in this article relating to the transportation from the authorized lodging to
the assigned work center.

      b.    When the employees are assigned to work temporarily outside of their
regular work area in a municipality or place on the Island where they are
required to spend the night in said place, the Company must provide adequate
transportation.

SECTION 15

The employees from the Traffic Department who work night work shifts and who end
their work shifts between 10:00 P.M. and 12:00 midnight, shall receive pay for
transportation for the amount of $4.25.

SECTION 16

The provisions of this article, except Section 5, shall apply to the
Installers/Testers of equipment for the Central Office who report to their work
center and who during the course of that day are required to work at another
work center.

SECTION 17

The Company shall be retaining in the origin all deductions that correspond in
law or regulation.

<PAGE>

                                   ARTICLE 39
                               USE OF AUTOMOBILES

SECTION 1

In all the cases where an employee is required to use his automobile in official
endeavors of his job, due to the fact that there is no fleet vehicle available
or that his duty so demands it, the Company shall answer for the damages to
property belonging to third parties and bodily damages to third persons which
may have arisen as a result of an accident due to the utilization of said
automobile.

SECTION 2

The employee shall have to notify the police immediately and his immediate
Supervisor as soon as possible (within 24 hours) and shall remain at the site of
the events, until the police arrive and render the corresponding report, except
when it is not feasible. The employee shall proceed in accordance with the
Company Practice FI-455 of October 1, 2001 Vehicle Accident Reporting Procedure
with Property Damage and/or Bodily Injuries (including Form F-603 revise), shall
submit an automobile accident report (Form F-603, revised) with the signature of
his immediate supervisor, indicating the case number and any other report
required by the Company.

                                   ARTICLE 40
                   HOLIDAYS AND HOLIDAYS GRANTED OFF WITH PAY

SECTION 1

      The regular employees covered by this Collective Bargaining Agreement
shall receive pay for all the regular work hours and shall enjoy free time with
pay with the exceptions provided in this article on the following holidays:

<TABLE>
<S>                                   <C>
1.  January 1st.                      New Year's Day
2.  January 6th                       Three Kings Day
3.  Second Monday in January*         Eugenio Maria de Hostos Day
4.  Third Monday in January           Martin Luther King Day
5.  Third Monday in February          George Washington Day
6.  March 22*                         Abolition of Slavery Day
7.  Movable                           Good Friday
8.  Third Monday in April*            Jose de Diego Day
9.  Last Monday in May                Memorial Day
10. July 4                            U.S. Independence Day
11. Third Monday in July*             Luis Munoz Rivera Day
12. July 25                           Commonwealth of Puerto Rico
                                      Constitution Day
13. July 27*                          Jose Celso Barbosa Day
14. First Monday in                   Labor Day
    September
15. October 12                        Discovery of America Day
16. First Tuesday in November         General Election Day (every 4 years)
17. November 11                       Veterans Day
18. November 19*                      Discovery of P.R. Day
19. 4th Thursday in                   Thanksgiving Day
    November
20. December 25                       Christmas Day
21. Individual                        The Employee's birthday
</TABLE>

<PAGE>

      If any of the aforementioned days were to be changed by means of
legislation, this article shall be understood to have been amended to that
effect.

      If during the effective period of this Collective Bargaining Agreement,
the Legislature of Puerto Rico or the United States decrees a holiday by law,
which is applicable to PRT, the Company and the UIET shall meet to discuss the
importance of the event and convenience of considering the new holiday.

      Whenever the aforementioned days fall on a Sunday, the next day shall be
considered a holiday.

      When one of the holidays acknowledged in this article coincides with
another holiday, the following working day shall be considered as a holiday for
all purposes.

SECTION 2

      The regular personnel required by the Company to work on holidays, shall
receive, in addition to their basic pay, pay at time and a half for each hour
worked, with the exception of what is provided for in Section 5 of this article.

      It being provided that when the birthday coincides with another day
outside of his regular work schedule or with another holiday, his next working
day shall be considered, for all the purposes of this Agreement as his birthday.

SECTION 3

      To be able to be entitled to pay for the holiday, the employees will have
to have worked the last work day previously assigned, as well as the assigned
work day after a holiday. The employee who is absent during the previous
assigned work day and/or after a holiday and does not receive any pay whatsoever
from the Company during said absence shall not receive any pay for the holiday.
A duly justified absence on such days, which entitles him to receive pay during
said absence, shall also receive pay for the holiday.

SECTION 4

      The holidays with rights to pay as specified in the preceding paragraph
are those which coincide with the regular assigned work day. When a holiday of
the ones listed in this article is celebrated during the days from Monday
through Friday of any week and said holiday coincides with the employee's day
off during irregular work shifts, the employee shall be compensated for said
holiday in harmony with this article.

SECTION 5

      Those employees who voluntarily are willing to work the holidays marked
with asterisks (*), may request waiving the receipt of the payment at one and a
half times the hourly rate provided in Section 1 and substitute it for the
enjoyment of free time equal to that worked up to a maximum of eight (8) hours,
under the following criterion:

      1.    The employee shall request in writing, before the year begins, the
            dates when he will enjoy the holidays off with pay marked with an
            asterisk in Section 1.

      2.    Upon granting the employee holidays with pay, the Company will take
            into consideration, principally, the service needs.

      3.    The holidays with pay shall be enjoyed and compensated in accordance
            to the regular work schedule of each employee (8 hours).

      4.    The Company will schedule, in the same manner and criteria which it
            establishes the regular vacation leave program, the enjoyment
            calendar of the holidays granted off with pay which the employee
            voluntarily requests.

      5.    The employee who works the holiday granted off with pay, previously
            scheduled, shall have the option that the same be paid in accordance
            to what is provided in Section 1 or shall have the option of the
            enjoyment of said day off with pay to be rescheduled within a period
            no larger than ninety (90) days from the day when he worked it.

      6.    The holidays granted off with pay shall be enjoyed in accordance to
            the annual program. These days may not be postponed for enjoyment
            during the following year. A holiday granted off with pay may be
            fractioned for its enjoyment into two (2) periods of four (4)
            consecutive hours, at the request of the employee.

      7.    At the request of the employee during the course of the year, these
            days may be rescheduled on days which have not been previously
            selected by other employees, as long as the service

<PAGE>

            needs so allow it. The employee must present a request for change
            with at least forty-eight (48) hours of advance notice, prior to the
            day originally scheduled.

                                   ARTICLE 41
                                   HEALTH PLAN

SECTION 1

During the effective period of this Collective Bargaining Agreement, the Company
commits itself to provide a health plan with the same benefits provided by the
health plan that was in effect at the time of the signing of this Collective
Bargaining Agreement, including benefits such as kerectomy, chiropractors,
psychologists and vaccines (Hepatitis A and B and boosters for children),
hearing test, podiatric and tele-consultation program with the coverage's,
deductibles and limitations provided in the plan. Shall be reimburse at the cost
of the treatment in Puerto Rico. In case of an emergency during a trip abroad ,
the reimbursement not be limited at the treatment in Puerto Rico. The Company
will not pay for the medical plan for any optional dependant. The employee shall
select one of the following alternatives offered by the medical service provider
and will contribute on a bi-weekly basis the amounts indicated below in
accordance to his selection:

<TABLE>
<CAPTION>
                                            Contribution during the effective period of this
                                                    Collective Bargaining Agreement
                                                    -------------------------------
<S>                                         <C>
a. Basic (H-MQ-A) + Major
   Medical (M-3) + Pharmacy                                    $2.70

b. Basic (H-MQ-A) + Major
   Medical (M-3) + Dental (D-49)                               $2.72

c. Basic (H-MQ-A) + Major
   Medical (M-3) + Dental (D-49)                               $6.54
   + Pharmacy
</TABLE>

Brand medicines will have a deductible of $8.00 each during the first two years
of this agreement and $9.00 each during the third year of this agreement.

The over the counter medications or medications without federal brochure shall
have a deductible at the rate of $3.00 for each one of them prescribed.

SECTION 2

The employee, when signing the application form provided by the company
providing medical services, shall accept the terms and conditions imposed by
this Company. The Union and the employee accept that the terms and conditions of
the Medical Plan selected are not negotiable. The employee must remain in the
alternative selected until there is a Plan anniversary, on which date the
employee may change from one of the three alternatives to another one.

SECTION 3

Every month the Company shall send the provider of medical services the
corresponding total contributions while the employee remains on active
employment with the Company, in other words, that the Company will cease its
contribution when the employee due to any reason is fired, laid off or while he
is suspended for more than thirty (30) days.

<PAGE>

SECTION 4

The Union authorizes the individual deduction of each employee member of the
Union of the corresponding contribution according to the alternative selected by
the employee, according to how it is provided for in Section 1 of this article.

SECTION 5

To obtain the hospitalization services for mental health conditions which are
related to the rehabilitation for the abuse of substances (drugs) and alcohol
through the medical plan, the employees must request the services of the
Employee Assistance Program (EAP) from the Company and obtain a
pre-authorization from them. If the services are not requested and if the EAP
pre-authorization is not obtained, the benefits will not be covered and the
payment shall be the responsibility of the employee. This requirement applies to
the employee covered by the medical plan.

If the employee were hospitalized and it is determined that it is for use or
abuse of substances or alcohol, the subsequent hospitalizations and ambulatory
treatments must also be pre-authorized by the EAP.

SECTION 6

The Union and the employees belonging to the union also agree and commit
themselves to the adequate use of the medical plan.

SECTION 7

The Company may modify the effective Medical Health Plan at the termination of
the Collective Bargaining Agreement, in which case, if it were to consider it
necessary, it shall notify the Union about said intentions so that the Union
presents any suggestion that it deems relevant.

SECTION 8

The Health Plan shall be administrated only in accordance to its provisions and
no matter relating to the Health Plan, nor any difference which arises related
to it, shall be subject to the Grievance Procedure or to the arbitration process
of this Collective Bargaining Agreement. The selection of the Administrator of
the Health Plan, the administration of the Medical Plan and all the terms and
conditions relating to the aforementioned and the solution of any discrepancy
related to the terms, conditions, construction, administration or adequate
benefits shall be determined by and be subject solely to the discretion of the
Company.

                                   ARTICLE 42
                            SALARIES OF NEW EMPLOYEES

SECTION 1

      All new personnel who joins the Company after the effective date of this
Collective Bargaining Agreement shall start with the type of salary per hour
that applies to the occupational group of the position to which they belong
according to the following scale:

<PAGE>

<TABLE>
<CAPTION>
                              RATE PER HOUR AS OF THE
OCCUPATIONAL                     SIGNATURE  OF  THE
   GROUP                             AGREEMENT
------------                  -----------------------
<S>                           <C>
    1-3                               $ 5.25
      4                               $ 5.25
      5                               $ 5.50
      6                               $ 5.75
      7                               $ 6.00
      8                               $ 6.50
      9                               $ 6.75
     10                               $ 7.00
     11                               $ 7.50
</TABLE>

      In addition, it is stipulated that the salaries for new employees
established herein, shall be maintained at a level of ten cents ($0.10) per hour
over the minimum salary applicable to each level.

      The employees who join after the signature of this Collective Bargaining
Agreement shall be entitled to the raises granted during the first, second and
third anniversary, as long as they are regular employees on the date when these
raises are granted.

                                   ARTICLE 43
                                     SALARY

SECTION 1

All employees covered by this Collective Bargaining Agreement who are regular
employees in the dates mentioned ahead shall receive the hourly salary increase
as follows:

<TABLE>
<CAPTION>
JANUARY 18, 2003          JANUARY 18, 2004          JANUARY 18, 2005
<S>                       <C>                       <C>
 $.60 PER HOUR             $.60 PER HOUR              $.60 PER HOUR
</TABLE>

SECTION 2

The personnel which is promoted during the effective period of this Collective
Bargaining Agreement shall receive a raise of twenty cents ($0.20) per hour for
each grade to which they are raised, if their previous classification is from
grades 1 through 6 and a raise of twenty-five cents ($0.25) per hour for each
grade that they are raised if their previous classification is from grades 7 to
8 and a raise of thirty cents ($0.30) per hour for each grade that they are
raised if their previous classification is from the grades 9 and 10.

SECTION 3

The Union understands and accepts that the salary raise provided in this
Collective Bargaining Agreement has been agreed upon on the basis of the
commitment on the part of each one of the employees of the bargaining unit to
significantly increase their production in a manner that will place the Company
in the condition of attaining the objectives of improvement and expansion of the
telephone service.

SECTION 4

Notwithstanding what has been established as minimum salary per hour in the
article regarding Salary for New Employees and in this article, the Company may
establish one or more incentive program(s) for each work classification(s)
covered in this Collective Bargaining Agreement as well as modifying, changing,
eliminating or reestablishing said program(s), as long as the same do not affect
and/or reduce the minimum salaries per hour established in the article regarding
the Salaries of New Employees and in the article regarding the Salary of New
Employees and in this article.

<PAGE>

                                   ARTICLE 44
                            INCENTIVES FOR ATTENDANCE

A three day bonus for perfect attendance, counting all absences, except for
vacations, excused by Company for lack of work and leave without pay for union
matters.

                                   ARTICLE 45
                                  DIFFERENTIALS

SECTION 1 - DIFFERENTIALS FOR NIGHTTIME WORK SHIFTS

      The Company shall pay a differential of $.80 per hour worked as part of
the regular work schedule in night work shifts, which are all of those work
shifts that regularly end between 9:00 P.M. and 12:00 (midnight).

      The night work shift may coincidentally be a split work shift with a right
to pay for differential in accordance to what is stipulated in the section
regarding the differential for split work shifts. In these cases, the employee
shall only receive the pay for one differential (the highest of the two).

SECTION 2 - DIFFERENTIAL FOR SPLIT WORK SHIFTS

      The Company shall pay a differential of $.90 per hour worked as part of
the regular work day in work shifts with two (2) or more hours of separation
between the two parts of the same. To be entitled to this pay for differential
two (2) or more hours of separation between the two parts of the work shift must
have elapsed. The separation between the two parts of the work shift shall not
exceed four (4) hours.

      The split work shift may be coincidentally a night work shift with
entitlement to payment for differential in accordance to how it is stipulated in
the section regarding Night Work Shift Differential. In these cases, the
employee shall only receive the payment of a differential (the highest of the
two).

SECTION 3 - DIFFERENTIAL DAWN WORK SHIFTS

      The Company shall pay a differential of $1.00 per hour worked as part of
the regular work day in dawn work shifts, which are all those work shifts which
regularly end between 12:00 midnight and 7:00 A.M.

SECTION 4

      The Company shall grant all the employees from the bargaining unit a
salary differential of $.80 per hour that they work in regular work shifts that
comprise Saturdays and/or Sundays (the differential shall only be paid for the
hours worked on Saturday and Sunday). This differential does not apply in cases
where work is performed on Saturdays and/or Sundays in overtime.

SECTION 5

      These differentials shall be part and not in addition to any differential
that is provided by the law or regulations which apply to the Company for work
during schedules comprised in the work shifts included in Sections 1, 2 and 3 of
this article.

                                   ARTICLE 46
                                 CHRISTMAS BONUS

      All regular employees covered by this Collective Bargaining Agreement who
meet the requirements provided by the Bonus Act (Act #148 of June 30, 1969, as
amended) shall be entitled to receive a Christmas Bonus of 8% for each year of
the Collective Bargaining Agreement with regard to the total of the salaries
received during the bonus year. The term salary shall not include payments made
to the employee for the concept of Occupational Sick Leave, Prolonged Sick Leave
and the Christmas Bonus of the previous year. The same shall be payable between
December 1st. and 15 of each year of the Collective Bargaining Agreement.

                                   ARTICLE 47
                                    PENSIONS

SECTION 1

The Company agrees to maintain in effect the Pension Plan known as the "Puerto
Rico Telephone Company Pension Plan for Hourly Employees" put into effect on
January 1st, 1972, and agrees to amend the formula that

<PAGE>

is utilized to determine the monthly pension to employee who retired during this
agreement in accordance with the following formula:

      -     The years of service up to 20 years worked shall be paid at the rate
            of $52.00 per year of service.

      -     The years of service over 20 shall be paid at the rate of $60.00 for
            each year of service over 20.

SECTION 2

To be entitled to a full and normal pension, the regular employee must have
turned 62 years of age and have at least twenty (20) years of credited service.
An employee shall be entitled to a pension without any reduction when he has 30
years of service.

SECTION 3

To be entitled to early retirement, the regular employee must have turned 52
years of age with at least twenty (20) years of credited service.

SECTION 4

To determine the early retirement pension, the same formula for the
determination of the normal pension shall be utilized and from the result three
percent (3%) shall be deducted for each year anticipating his pension at the age
of 62.

SECTION 5

The Vesting Right section is amended only after having five (5) years of
credited service with the Company. In these cases, the pension will be
calculated on the basis of the formula which is in effect as of the date when
the employee has resigned or has been separated from the Company. The Vesting
Rights are calculated on the basis of the actuarial value at the moment when the
employee is receiving or requests his regular pension upon turning 62 years of
age.

SECTION 6

An additional benefit is established for the spouses of the employees in the
event of death. This benefit provides in the case of the death of an employee,
before retiring, and that he is eligible as of the date of his death, to an
early retirement pension, a benefit payable to his spouse. The amount of this
benefit to be paid shall be the accrued benefit up to the date of his death
reduced by the corresponding early retirement factor (5% for each year in
advance of his turning 62 years of age if he still does not have 20 years of
credited service, or 3% for each year prior to his turning 62 years of age if he
has 20 or more years of credited service as of the date of his death). In the
cases of the employees who die after having turned 52 years of age and that
these have elected one of the reduced options provided by the plan in the event
of death after retirement, the amount of the benefit shall be reduced on an
actuarial basis basing itself strictly on the option that the employee has
selected.

The Company and the Union agree that the aforementioned amendments and/or
changes shall be applicable to any employee from the bargaining unit who retires
after the signature of the present Collective Bargaining Agreement.

SECTION 7

The benefits of the Pension Plan shall be payable in their entirety by the
Company.

<PAGE>

SECTION 8

The employees who choose this benefit, during the effective period of the
Collective Bargaining Agreement, shall receive the following lump sum:

<TABLE>
<S>                                <C>
5 to 20 years of service           6 months of salary
21 to 29 years of service          9 months of salary
30 or more years of service        12 months of salary
</TABLE>

SECTION 9

All the employees from the bargaining unit who choose to receive the retirement
benefits after the signature of this Collective Bargaining Agreement, shall be
eligible to participate in a family medical plan which shall be similar to that
one provided to the employees covered by this Collective Bargaining Agreement,
without the benefit of dental coverage.

The retired employee will have to make the contributions provided in Article 41
(Medical Plan) during the effective period of this Collective Bargaining
Agreement.

The bargaining unit employees who retire after June 30, 2003, will pay starting
the last year of this agreement, half of the increases of every year, if any, of
the medical plan cost to the Company. The employees who retire during the
duration of this agreement prior to July 1, 2003 the clause to pay half of the
cost of the medical plan starting the third year of the agreement will not be
applicable. To be covered by the Medical Plan for retirees it is necessary that
the employee who retires be covered by the entire coverage offered by Medicare,
including Part B and medicine coverage, if it is offered by Medicare in the
future. This proposal does not apply to persons retired before the signing of
the agreement that is being negotiating.

The increase in the contribution to the medical plan by the retirees for 2005
will be calculated in the following way: The 50% of the increase, if any, of the
Company per capita increase per month for the year 2004, compared to the year
2003. In 2006 and subsequent years the same comparison shall be made for the 2
previous years, in order to determine the additional contribution that will be
made by the employee who retires during these contract, on top of what already
is being contributed by him.

Instead of being covered by the Company's Medical Plan and making the affored
mentioned contribution, said retiree may opt that the Company pay not more than
X to another medical plan of his selection, including the one mentioned in the
following paragraph.

The Company and the Union will do their best efforts to find of a health
insurance company an insurance company an alternate medical plan for said
retired persons to be effective 2005, which monthly premiums shall not exceed X
amount. If the efforts are not succesful, it will not anule what is provided in
this section.

X for year 2005 means PRT monthly cost per capita of the Medical Plan for the
year 2004, plus 50% of increase, if any, over the monthly PRT per capita
increase for Medical Plan for the year 2003 and there after for successive years
with respect to the previous year.

Furthermore , the Company shall furnish to the Union that information necessary
to verify the cost of the annual Medical Plan of the Company

SECTION 10

Any employee from the bargaining unit, who requests this benefit during the
effective period of the Collective Bargaining Agreement, may request receiving
the Social Security Level Option benefit, under the terms and conditions
established by the Company.

<PAGE>

                                   ARTICLE 48
                           PUBLICATION OF WORK SHIFTS

SECTION 1

      The Company shall prepare and publish the work shifts of any group of
employees or of each employee with fifteen (15) days of advance notice. The
rotating work shifts that comprise the hourly work schedule from 8:00 A.M. to
12:00 N. and 1:00 P.M. to 5:00 P.M., from Monday through Friday, shall not be
published, except in the Work Centers which have work shifts working after 5:00
P.M., such as the Operator Call Centers, Repairs, Service Representatives and
other Call Centers.

      Only in cases of emergency and/or due to service needs, may the work
shifts be changed and informed to the employee with 48 hours of advance notice.
Emergencies and service needs shall be understood to mean cases such as: greater
breakages and/or which affect a substantial number of clients which interrupt
the services of the communications, severe atmospheric conditions, congestion of
calls in the services due to the fact that other call centers are affected,
unexpected absenteeism and special training needs in an unforeseen manner.

SECTION 2

      The Company shall assign the work shifts in each work center, following
the following principle, the work shifts shall be assigned for the benefit of
the employee in accordance to seniority in the Company. The employee with the
greater seniority may cede his work shift to another employee with less
seniority. To be able to cede a work shift, the employee must notify his
Immediate Supervisor with at least fifteen (15) days of advance notice.

SECTION 3 - WORK SHIFTS OF PREGNANT EMPLOYEES

      A pregnant employee who works a nighttime work shift or a dawn work shift
shall be entitled to replace the employee of lesser seniority who works in her
same work center and in her same classification during the daytime work shift,
as long as she is qualified to perform the work, during her seventh and eighth
month of pregnancy. Upon her return, after her maternity leave, the employee
shall be reinstated to the work shift system corresponding to her.

SECTION 4

      The rotating work shifts have the purpose of increasing the productivity
and improving service to the clients, in all of the Company's work areas.

SECTION 5

      In the event that the employees in skilled and semi-skilled positions
where there is work done during nighttime work shifts, holidays, and weekends,
the personnel with greater seniority may be assigned to work shifts if the
personnel with lesser seniority does not have the skills, the trainings
completed or the knowledge required to perform the job. The assignment shall be
made for a term no greater than 30 days within a period of six (6) months within
one (1) calendar year.

      If the employee with greater seniority gives his consent and the service
needs so require it, the Company may extend the assignment for up to a maximum
of 30 additional days.

                                   ARTICLE 49
                                  PROGRESSIONS

      When an employee is prevented in progressing in his classification due to
the fact that the Company has not offered the course or courses required for his
progression or when even though the same has been offered, the Company has not
allowed him to attend the training although he requested it on time and was
available to take it or them, the Company shall approve his progression with the
condition that the employee approves the training later on.

      In all cases where the employee has been performing the work or the
functions of a position in a satisfactory manner, for a period greater than
eighteen (18) months, it will be considered that he has approved the training.
He may be able to modify this period by means of a written agreement between the
parties, as long as the employee has performed the functions in a satisfactory
manner during a period greater than twelve (12) months. Notwithstanding, the
employee will be obligated to take the corresponding training.

<PAGE>

                                   ARTICLE 50
                     FINANCIAL AID FOR EDUCATIONAL EXPENSES

SECTION 1

      All regular employees with one year or more of service with the Company,
who have completed their last two job evaluations with qualifications of at
least satisfactory and who satisfactorily completes studies relating to the area
of telecommunications at learning institutions credited by the Council of Higher
Education or the Department of Education, may request that the Company reimburse
them for the first one hundred and sixty dollars ($160.00) of the total cost of
the tuition, plus eighty percent (80%) of the remaining one per semester. The
cost of the books, up to a maximum of a hundred and sixty dollars ($160.00) per
semester may be included in the balance. The maximum amount to be reimbursed per
semester, including books, shall not exceed one thousand ($1,000.00) dollars.

SECTION 2

      The right to request reimbursement for completed courses shall expire
three (3) months after having finalized the same and the employee may not claim
those expenses that have been paid by means of any other study aid program. To
that purpose, the employee shall provide the necessary authorizations to verify
the existence or not of the other sources of aid.

SECTION 3

      The applicant must accompany his petition for reimbursement with documents
that evidence that the employee paid the tuition, as well as the grade obtained.
The employee must submit the originals or certified photocopies of these
documents. Before beginning the course, the employee must present his duly
filled out petition to the Company.

SECTION 4

      When the Company decides to put into effect a study scholarship program,
it shall give consideration to the employees who belong to the Union. The
applicant must fulfill the requirements which the Company establishes for the
granting of said scholarships.

SECTION 5

      The Company will not reimburse tuition expenses for courses taken in
learning institutions which are similar to the ones offered by the Company as
part of the Regular Training Program, except in those cases where the courses
are indispensable as requirements leading toward an academic degree.

SECTION 6

      The studies must be carried out during the employee's non-working hours.

                                   ARTICLE 51
                                 LIFE INSURANCE

SECTION 1

      The Company agrees to provide life insurance for all the regular employees
from the bargaining unit, for the sum of fifty-five thousand dollars
($55,000.00) and another fifty-five thousand dollars ($55,000.00) for the
concept of accidental death and dismemberment.

SECTION 2

      The cost of this life insurance shall be paid in its entirety by the
Company.

SECTION 3

      The employee shall have the option to purchase optional life insurance
(option I and II), which shall be paid in its entirety by the employee.

<PAGE>

                                   ARTICLE 52
                            UNIFORMS AND SAFETY SHOES

SECTION 1

      In the event that the Company requires the use of uniform as a condition
of employment, the Company shall provide five (5) uniforms upon the employee's
entry and five additional uniforms as of the date of his anniversaries for
service or one year after the previous ones have been handed in without any cost
whatsoever to the employee; it being provided that in those cases in which the
Company understands the use of overalls to be necessary, in addition to
uniforms, it shall provide the employees two (2) overalls upon entry and two (2)
on the anniversary or one year after the previous ones have been handed over.
The employee shall utilize these uniforms only when they are performing
essential functions of their job, with the employee having to make good use of
the same.

SECTION 2

      In those situations in which because of provisions of law applicable to
the Company or when the Company itself requires the use of safety shoes, the
same shall be provided to the employee without cost. These shoes shall be
utilized only when the employee is performing his functions, with the employee
having to make good use of them.

SECTION 3

      If the Company does not hand over the uniforms on the scheduled dates,
this does not have the effect that it is not obligated to hand over the same;
then, at the next handing over, it must supply the totality of the uniforms owed
up to that moment.

                                   ARTICLE 53

                              NO-STRIKE AND LOCKOUT

SECTION 1

      The Union agrees that neither if, nor the employees of the Company who are
part of the Bargaining Unit covered by this Agreement, may, collectively, in a
concerted fashion or individually devote themselves to participate directly or
indirectly in strikes of any nature, reduction in the production or slow-down,
interruption and/or paralysis of work, picketing, boycotts or any other type of
interference and/or interruption of the Company's operations and activities.

SECTION 2

      During the effective period of this Agreement, the Union commits itself to
going to the Grievance Procedure provided by this same Agreement instead of
going to strike. To honor the terms of this Article and guaranteeing a permanent
and constructive industrial peace, the Union shall utilize all the available
resources and the ones that are in agreement with this Article.

SECTION 3

      In like manner, the Company commits itself, during the effective period of
this Agreement, to not make use of the lockout in any way whatsoever.

      To honor the terms of this Article and guarantee a permanent and
constructive industrial peace, the Company shall utilize all the available
resources and the ones which are themselves in consonance with this Article.

<PAGE>

SECTION 4

      The Company reserves to itself the right to separate any employee from the
Bargaining Unit who carries out any of the actions stipulated above.

                                   ARTICLE 54
                               GRIEVANCE PROCEDURE

SECTION 1

The term "grievance" comprises any controversy that involves the interest of one
or more employee and/or complaint, grievance or claim relating to the
construction, application, administration or alleged violation of this
Agreement.

SECTION 2

The complaints of grievances may be presented by the Union or by the Company.

SECTION 3

All complaints or grievances shall be exclusively dealt with in conformity to
the mechanisms created in this article. The parties agree in this Agreement that
if controversies were to arise during the effective period of the same, these
shall not be resolved exclusively through the procedure which is provided as
follows.

SECTION 4 - First Stage

      a.    Any grievance which arises shall be presented in writing in the
first instance within the term of fifteen (15) working days from the time that
the grievance arises or the employee has knowledge of it and the same shall be
presented by the Union delegate and/or the employee to the employee's immediate
supervisor.

      b.    The supervisor, the delegate and the employee shall meet to discuss
and analyze the grievance and try to resolve the same. The supervisor will have
up to ten (10) working days, from the time that the grievance has been received,
to answer the same.

SECTION 5 - Second Stage

If the Union or the employee are not in conformity with the decision in this
case, or once the term in which to answer has elapsed, the same shall be
appealed in writing within the seven (7) working days following the receipt of
the decision or the termination of the period for the first step, to the
immediate boss of the corresponding supervisor who shall have up to five (5)
working days in which to answer the grievance. The Union or the employee must
present in writing to the immediate boss of the supervisor a summary of what
happened during the first stage.

SECTION 6 - Third Stage

      a.    If the Union is not in conformity with the decision issued in the
second stage of the case or once the term in which to answer has elapsed, any
Union officer may appeal filing the same within the ten (10)

<PAGE>

working days following the receipt of the decision or the termination of the
period to answer in the previous stage if it has not been answered.

The appeal shall be presented in writing before the office of the Director of
the Labor and Employee Affairs in writing accompanied by a summary of the facts,
as well as the results of the previous stage.

      b.    The Director of Labor and Employee Affairs or his representative
shall summon the President of the Union or his representative once the grievance
has been received within ten (10) working days following the receipt of the
grievance indicating the time, place and date, which shall be no later than ten
(10) days following the date of the summons.

      c.    The Director of the Department of Labor and Employee Affairs or his
Representative, the President of the Union or his representative, the person who
took the action which gave basis for the grievance when the allegations of the
grievance so require it, as well as the grievant shall meet to the effect of
trying to resolve or conciliate the grievance. It being provided that in this
stage in those cases of suspension or dismissal the Company shall supply the
employee or the Union, with a copy of the documentary evidence on which the
disciplinary action is based.

      d.    Once the grievance has been discussed, the Director of Labor and
Employee Affairs, or his representative, shall answer the same in writing, by
means of certified mail, within the next ten (10) working days. The decision
issued in the case may:

                  1.    Confirm the determination.

                  2.    Modify the determination including the reduction of the
                        disciplinary measures.

                  3.    File and leave the determination without effect.

                  4.    Expand the investigation of the case if the need for it
                        is determined.

                  5.    Grant any other remedy which is consider appropriate.

      e.    If the Union is not in agreement with the answer from the Director
of Labor and Employee Affairs, he may resort to arbitration as indicated further
on.

      f.    The complaints regarding salary claims shall be filed in writing in
the first instance in the third stage within the term of fifteen (15) working
days from the time that the grievance arises or that the employee obtains
knowledge about it. The Director of Labor and Employee Affairs or his
representative shall summon the President of the Union or his representative
once the grievance has been received within the ten (10) following working days
upon the receipt of the grievance, indicating the time, place and date, which
shall be no later than the ten (10) days following the date of the summons. The
Director of Labor and Employee Affairs, or his Representative, shall have a term
of fifteen (15) working days in which to answer the grievance after the meeting
for the consideration of the same has been held.

SECTION 7 - Arbitration

      a.    When the grievance has not been resolved in the previous stage, the
            same may be submitted to arbitration within the following twenty
            (20) working days following the receipt of the decision of the
            Director of Labor and Employee Affairs once the term to answer has
            elapsed, whichever happens first. The Union will submit to the
            Company a copy of the request and the date in which it was submitted
            to Arbitration. The arbitrators to be utilized shall be those from
            the Bureau of Conciliation and Arbitration of the Department of
            Labor and Human Resources, except when another thing has been agreed
            upon between the parties, and the same shall be selected in
            conformity to the procedure for the selection of three candidates
            presented for selection and to the norms of said Bureau. The
            decision of the Arbitrator shall be final and unappealable, which
            shall be followed and complied with by the parties, as long as it is
            in conformity to the Law. The parties shall submit to the Arbitrator
            the written submission of the grievance to be resolved. For all
            purpose of this article, shall prevails the

<PAGE>

            norms that were in effect as of December 26, 2002, and no amendment
            or new regulation will be applicable under this agreement.

      b.    The salary claims are excluded from this Arbitration procedure.
            Notwithstanding, the salary claims up to $1,500.00 shall be dealt
            with in accordance to the arbitration procedure established herein.
            The Union reserves for itself the right to carry the cases of claims
            for salaries in excess of $1,500.00 to the courts as long as it
            complies with the procedural terms provided herein. It is made clear
            that all the other types of cases, such as but without limitation,
            petitions for reclassification, per diems, promotions and/or claims
            that they are performing work belonging to another classification,
            shall continue to be dealt with through arbitration.

SECTION 8 - Cases of Suspension and Dismissal

      a.    The Union acknowledges that it is a managerial prerogative inherent
to the administration of the business of the Company to establish norms of
conduct for its employees during the operation of the business and to apply
disciplinary norms due to just cause when said norms are violated.

      b.    The Company, in its turn, acknowledges that in the administration
process and in the application of the norms of conduct and discipline applicable
to the employees, said processes must be fair and reasonable, for the purpose of
maintaining healthy employee-employer relations. The processes shall comply with
the following:

            1.    The application of the disciplinary norm shall be carried out
within a reasonable term, after the violation or fault of which the employee is
being accused is known.

            2.    The Company will carry out an investigation of the facts on
which a disciplinary action is based.

            3.    The employee shall be notified in writing, with copy to the
Union about the violations of which he is accused and the disciplinary measure
to be imposed and the approximate date of the meeting which is described in the
number 4 of this Section, 8b.

            4.    The Company, whenever it is possible, shall hold a meeting
with the employee when imposing a disciplinary measure on him.

            5.    In the cases of suspension or dismissal of employees, the
following procedure shall be followed when the Union or the employee considers
the suspension or the dismissal action to be unfair:

                  a)    If the employee considers his suspension or dismissal to
                        be unfair, he must present his grievance before the
                        Union.

                  b)    In the event that the Union also considers the
                        suspension or dismissal of the employee unfair, the
                        Union shall present a grievance in writing within the
                        fifteen (15) working days following the suspension or
                        notice of separation of the employee before the Director
                        of Labor and Employee Affairs or the person from the
                        Company upon whom he delegates. If the grievance is not
                        resolved, the Union may request a meeting with the
                        Director of Labor and Employee Affairs, personally. The
                        procedure before this Department shall be an expedited
                        one, it being understood that the cases of suspension
                        and dismissal shall be dealt with and investigated with
                        priority over any other case submitted prior to it and
                        in like manner, in these cases, the expedited
                        arbitration, if it were necessary, shall be requested.

                  c)    The Director of Labor and Employee Affairs, upon
evaluating the action taken, shall have the same faculties provided for in
Section 6(d) of this Article.

<PAGE>

                  d)    From here on, it shall be proceeded with, as provided in
Section 6, clause e, which is the aforementioned one.

SECTION 9 - Cases of Publication and Adjudication of Positions, Transfers and
Promotions

      a.    The grievances which arise in which an employee claims to be
entitled to a vacant position or that the article regarding "Publication
Adjudication of Positions and Appointments" has been violated shall be filed in
writing before the Director of Labor and Employee Affairs, indicating the
position that is being claimed, the requisition number for the position, and the
person with whom it was covered. The grievance must be presented within the
seven (7) working days following the adjudication of the position or from the
time that the employee has knowledge of the adjudication of the position.

      b.    And it shall be proceeded with from here on as provided from Section
6, clause b of this article onwards.

      c.    In all proceedings regarding the present section, the person to whom
the position has been adjudicated shall be notified and shall have the right to
participate and intervene in said proceeding.

SECTION 10 - Cases of Reclassification of Positions

The grievances which arise as a result of a petition for reclassification for a
position shall be presented before the Company's Director of Labor and Employee
Affairs.

In the event that the Union is not in agreement with the determination of the
Department in charge of the certification of positions with regard to the
petition for reclassification of a position and that it determines to file a
grievance, the same shall be filed before the Director of Labor and Employee
Affairs within seven (7) working days following the receipt of the notice of the
determination or seven (7) working days after the time to inform the Union about
the determination regarding the petition has elapsed. And from here on it shall
be proceeded with as provided in Section 6, clause b. of this article onwards.

During the discussion of the grievance in this stage, the Union must establish
that the position has had some functions or duties assigned to it which belonged
to a superior position or that the duties and functions of the same have evolved
in a substantial and permanent manner toward a position of a superior level or
that functions or duties of greater complexity have been assigned.

SECTION 11 - Grievances between the Parties

The grievances of the Company shall be initiated by means of the sending of a
letter on the part of the Director of Labor and Employee Affairs to the
President of the Union. The grievances which the Union has regarding alleged
violations of the Union's rights or violations to the rights of groups or
classes consigned in this Agreement, shall be initiated by means of the sending
of a letter on the part of the President of the Union to the Director of Labor
and Employee Affairs.

In both cases, these grievances shall be initiated in the third stage. When the
grievance is a Company grievance, the President of the Union or his
representative shall meet with the Director of Labor and Employee Affairs within
ten (10) working days after the receipt of the grievance on the part of the
Union. When the grievance is a Union grievance, the Director of Labor and
Employee Affairs shall meet with the President of the Union within ten (10)
working days after the receipt of the grievance on the part of the Company. If
the meeting is not held in the terms indicated herein, the injured party may
recur directly to arbitration in the terms indicated in Section 7 (Arbitration)
once the term has expired.

The grievances of the Union and the Company shall have to be presented within a
period of ten (10) working days after the facts which motivated the grievances
have occurred or from the time that the grievant party obtains knowledge of the
events which motivated the grievance.

<PAGE>

If an agreement is not able to be reached between the parties, they shall be
preceded in conformity to what is established in Section 7 (Arbitration) of this
article.

Complains that arise as a result of the application of Article 20 - Drugs
Testing Program shall be filed in third stage, as provided in Section 6.

SECTION 12 - General Provisions

      a.    It is agreed that at no time whatsoever will the grievant employee
or the delegates or representatives of the Union be accompanied by more than one
employee although the grievance covers more than one, except in the cases of
separation when the grievants are not working. The parties, may by mutual
agreement in cases which so require it, excuse more than one employee as long as
the services are not affected.

      b.    The Department of Labor and Employee Affairs shall hold meetings and
shall have at its discretion authority to investigate the cases referred to this
Department, obtain evidence and call witnesses one at a time.

      c.    The terms to begin the different stages of this procedure are of a
jurisdictional nature.

      d.    In those cases in which the Director of Labor and Employee Affairs
summons a worker for the purpose of this article, he must do so within his
working hours with pay.

SECTION 13 - Substantive Matters

      a.    A stenographic transcript of the arbitration hearings shall be
            prepared by the stenographer supplied by the Bureau of Conciliation
            and Arbitration if there is one available. In the event that the
            Bureau were not able to supply said Stenographer, the Arbitrator
            will notify the parties prior to the Arbitration Hearing so that any
            of them, if they wish to obtain a stenographic transcript, shall
            supply the Stenographer and pay the cost for the same.

            If both parties wish a copy of the stenographic transcript, they
            shall pay for it in equal parts. In the event that any of the
            parties decides to submit a brief, the Arbitrator shall grant a term
            no greater then thirty (30) working days in which to submit the
            same.

      b.    The Arbitrator shall not have power or faculty to in any way
            whatsoever alter, amend, change, modify, add or subtract in any way
            whatsoever from any of the provisions of this Agreement, even from
            any of the provisions of the article regarding "Management Rights".
            An award in violation of what has been indicated above shall be null
            and without effect.

      c.    The Arbitrator shall not have authority to grant damages.

      d.    In discipline cases, the arbitrator shall be authorized to modify,
            confirm or reduce the suspension or dismissal. Also, shall be
            authorized to provide remedy of reinstatement with or without back
            pay and benefits not received. To any back pay award the
            corresponding deductions shall be made to account for interim
            earnings during the suspension period and the obligation to mitigate
            damages.

                                   ARTICLE 55
                           STABILITY OF THE AGREEMENT

SECTION 1

      In the event that the merger of the Company or of any of its dependencies
with a private or public entity or that the Company divides into separate or
subsidiary structures, sells, transfers or leases property where employees
covered by this Agreement work, the Union must be notified with no less than
twenty (20)

<PAGE>

days of advance notice before the merger, division into separate or subsidiary
structures, sale, closing, transfer, lease, or expropriation. In addition, the
Company is obligated to inform the aforementioned new entity about the existence
of this Agreement.

SECTION 2

      In the event that as a result to said merger, division into separate or
subsidiary structures, sale, transfer, lease, closing or expropriation,
employees from the Bargaining Unit are displaced, the regular employees who are
affected shall be considered for relocation to other activities of the
Enterprise in conformity to the provisions of this Agreement.

SECTION 3

      If during the effective period of this Agreement the Company were to
acquire any facility or service which at the present time were being
administrated by another Company and it were integrated into the Company's
program, the new positions that are created, as well as any vacant position in
said new facility or service, which corresponds to the Bargaining Unit shall be
covered in accordance to the provisions of this Agreement. The time of seniority
for the purpose of this Agreement for all the personnel passing through the
Company by means of this procedure shall begin to count from the effective date
of their appointment as employees of the Company.

SECTION 4

      In the event that any transfer, sale, merger, division into separate or
subsidiary structures, lease of facilities or expropriation were to take place,
the Company, notwithstanding what is provided in the article regarding the
Effectiveness with regard to the duration of this Agreement, shall be released
from there on from all obligation under the same, except with regard to
obligations which had already been incurred in under the article regarding
Procedure for Grievances.

      This Collective Bargaining Agreement shall bind during its effective
period all successor employers of the Company even when the transfer, sale,
merger, lease or expropriation were a partial one.

                                   ARTICLE 56
                                  SEPARABILITY

SECTION 1

      In the event that part of any of the provisions of this Agreement were to
turn out to be illegal by virtue of the effective laws or the ones approved in
the future or by means of a judicial decree or a final judgment, issued by a
court of competent jurisdiction, or by any other government entity, such law,
decree, decision, order or judgment shall affect only the part or provision that
is declared illegal, but the same shall not invalidate the rest of the
Agreement, it being the express intention of the contracting parties that all
the portions not declared illegal shall remain in their full force and effect
during the effective period of this agreement. And in addition, it is stated
that nothing of what is agreed upon herein in shall in any way whatsoever
prevent any of the contracting parties to exercise their right to appeal the
judgment or judicial decision, order or judgment of the concerned government
entity.

SECTION 2

      In the event that any article or section were to be declared null or the
compliance or observation of such article or section were declared in suspense,
the parties affected by such action will enter into immediate collective
negotiations, for the purpose of agreeing a mutually satisfactory substitute
provision for such article or section.

SECTION 3

      In the event that in any matter or controversy more than one provision of
this Agreement may be applied or where more than one interpretation of the same
is possible, that provision or interpretation which turns out to be more
consistent with the Collective Bargaining Agreement interpreted in its entirety
shall be the one that will be applied.

<PAGE>

                                   ARTICLE 57
                                SPECIAL TRAINING

SECTION 1

a.    When the introduction of new specialized equipment, which requires special
      training to operate the same, affects the work of the personnel from the
      bargaining unit, the Company shall select the employees to be trained from
      among the affected employees who meet the training requirements for the
      position and approve the written examinations and/or practical tests which
      the Company designs for said training.

b.    The requirements, examinations and tests shall be established by the
      Company prior to the selection of candidates for the training. The Company
      shall determine in its criterion, the number of persons to receive the
      special training, but when choosing among the candidates who qualify the
      Company shall apply the following criteria: seniority; evaluations already
      written and prepared in the normal course of employment during the past
      two (2) years; attendance and timeliness records for the past two (2)
      years; disciplinary records for the past two (2) years; related experience
      and training. Seniority shall prevail over all the other factors if these
      were to turn out to be equal among the employees to be trained.

c.    If there do not arise sufficient candidates who qualify from among the
      affected employees, the Company shall publish the position or positions in
      conformity with Section 1 of Article 11 regarding "Publication,
      Adjudication of Positions and Appointments". If sufficient internal
      candidates who qualify do not arise, the Company will retain the right to
      include qualified personnel from outside hiring in the training.

SECTION 2

      The Company shall extend to the selected candidates appointments
conditioned to the approval of the training. During the training period the
daily hourly schedule and the weekly work program may vary in accordance to the
needs and conditions of the training to be offered and the service rendered.

SECTION 3

      The employees who approve the trainings in which they participate shall be
maintained in said positions. However, those employees who do not approve their
training satisfactorily or who were not selected for the same shall be
reassigned to another position, as long as there exists another vacant position
and that they qualify for the same. If there does not exist a vacant position or
if the employee does not qualify for the vacant positions that may exist, it
shall be proceeded with in accordance to the article regarding "Reduction of
Personnel and Re-employment".

                                   ARTICLE 58
                                 TEMPORARY WORK

SECTION 1

      When the Company requires an employee to perform on a temporary basis the
tasks of another position, superior to his, on a temporary basis for a period
greater than one (1) working day, of any bi-weekly pay period, the Company shall
pay a differential, equivalent to the increase in salary that were to
correspond, if the employee were promoted to the superior position. This
differential shall be paid from the beginning of the temporary assignment, and
for the total of hours worked in this superior position. This differential shall
be established utilizing Section 2 of Article 43.

SECTION 2

TECHNICAL OR OPERATIONAL TRAINING

A.    For the purpose of being able to utilize and acknowledge the knowledge,
      skills and experience of the members of the Bargaining Unit, the Company
      and the Union agree, with the consent of the employee that, when it is
      necessary and required by the Department of Training and Development of
      the Employee or the Department of Centralized Traffic Services, these
      personnel shall be temporarily transferred for the purpose of offering and
      developing courses during the regular work shift related to


<PAGE>

      his specialty, in conformity to the requests received from the different
      areas with need in the Company.

B.    A supplementary compensation, in other words, a differential, is
      established as an economic incentive for all employees who devote time to
      teach courses and/or specialized training in the area of
      telecommunications. A differential of $1.30 from the basic salary per hour
      shall be granted, for the amount of hours devoted, required by the
      Department of Training and Development of the Employee or the operational
      area. The trainings mentioned herein are formal trainings with an
      established curriculum for groups of employees, which shall not include on
      the job training geared toward improving the skills of the individual
      employees.

C.    The $1.30 differential from the basic salary per hour shall apply to the
      necessary hours before, during and after the time during which the
      training is offered for the purpose of making it more effective:
      preparation of documents, utilization of audiovisual equipment and other
      necessary resources for the effectiveness of the training.

D.    In those cases where it applies, the employee shall receive the
      corresponding per diem and mileage.

E.    The participation of the members of the UIET in these training functions
      shall not be utilized by PRT to request that they be excluded from the
      Bargaining Unit. Neither will they perform tasks from personnel included
      in other Bargaining Units and they shall not supervise any personnel
      whatsoever.

                                   ARTICLE 59
                                  WELFARE FUND

SECTION 1

The Company agrees to contribute the amount of nine cents ($0.09) for each hour
worked for each employee covered by this Collective Bargaining Agreement during
the first two years of effectiveness of the same, for the Welfare Fund
established in accordance to the trust created by the parties. During the third
year of effectiveness of the Collective Bargaining Agreement, the Company agrees
to contribute the amount of ten cents ($0.10) for each hour worked for each
employee covered by this Collective Bargaining Agreement.

SECTION 2

When any audit reveals a pattern of violations to the regulation or that the
administration of the fund has strayed away from the principles and purposes for
which this fund was created, the Company may discontinue the contributions to
the Fund until the violations have been corrected.

SECTION 3

If this article, or the Trust created under the same were to be declared illegal
by a Court with competent jurisdiction, the Company shall discontinue the
contributions to said Fund and all existing funds as of that moment shall be
returned to the Company.

                                   ARTICLE 60
                            SUPPLYING OF INFORMATION

      The Company shall supply the Union, simultaneously, a copy of all
communications, documents, notices, memorandums, bulletins or brochures sent or
circulated to the employees comprising the bargaining unit.

      In addition, the Company shall supply a copy of all administrative
practices, procedures or policies, which are of application to the employees
covered by this Collective Bargaining Agreement, or which affect in any way
whatsoever, the terms and conditions of employment of these employees.

<PAGE>

                                   ARTICLE 61
                                LEGAL ASSISTANCE

      The Company shall provide free of cost, services of attorneys selected by
the Company, to those employees who in the fulfillment of their duties were to
suffer an accident while driving motor vehicles on official matters and were
summoned and/or arraigned due to such events, or when being on official
endeavors, they are accused of a public crime, for events allegedly occurred
while they were rendering service to a client, except sexual crimes, murder or
controlled substances in any of its modes.

                                   ARTICLE 62
                                 CHILD DAY CARE

SECTION 1

During the effective period of this Collective Bargaining Agreement, the Company
shall pay on a monthly basis to institutions devoted to daily child care which
have the corresponding permits required by the laws applicable to it, under the
conditions provided further on. Said payment shall be for the concept of the day
care for the children of unionized, which maximum age is up to five (5) years.

SECTION 2

The number of children who may benefit from the provisions of this Article, as
well as from the maximum monthly contribution that the Company shall forward,
shall be in conformity to the following table:

A maximum number of ninety (90) children with a maximum monthly benefit of one
hundred dollars ($100.00) per child during the effective period of this
Collective Bargaining Agreement.

SECTION 3

These amounts shall be payable directly to the Day Care Center by means of the
prior presentation of an invoice by the corresponding center or through the
employee and in such situation the Company shall issue, on a monthly basis, a
check to the order of said Center, within the fifteen (15) calendar days
following the receipt of the invoice.

It shall be the responsibility of the employee to pay the Day Care Center for
any difference between the rate and the maximum benefit paid for by the Company,
pursuant to what is provided in this article.

The payment corresponding to the first year shall have effectiveness from the
beginning of the corresponding school year to the year 2000.

SECTION 4

The children of unionized employees, whose parents shall benefit from this help,
shall be chosen by means of a raffle to be held no later than the month of June
of each year, during the effective period of this Collective Bargaining
Agreement. Each employee must request this benefit for a son or daughter, in a
manner that the greater number of employees may enjoy the benefits. There shall
participate in the raffle the employees who certify to the Company, prior to the
raffle that they have young children, of up to five (5) years of age. Said
raffle shall be coordinated between the Company and the Union.

<PAGE>

SECTION 5

The employee selected shall certify that he has his son or daughter registered
in the duly authorized Child Day Care Center, which is operating with all the
necessary permits. The Company reserves for itself the faculty to require any
other relevant information and evidence of the required permits.

SECTION 6

The Company shall be retaining in the origin all deductions that correspond in
law or regulation.

                                   ARTICLE 63
                                   CONTRACTING

SECTION 1

      The sub-contracting of work, tasks, services and functions shall not be
utilized to lay off or bump off employees covered by the bargaining unit.

SECTION 2

      If it were determined that it has a negative effect on the work performed
by the members of the bargaining unit the parties shall meet to discuss what
measures, if any, may be adopted geared toward preventing or minimizing said
negative effect.

SECTION 3

      In the event of an alleged controversy which arises from the construction
or application of this article, the Union shall be entitled to proceed in
accordance to what is provided in Article 55 of this Collective Bargaining
Agreement.

                                   ARTICLE 64
                              CHAUFFEUR'S INSURANCE

      The Company will pay the corresponding contributions under the Chauffeur
Social Security Act in its entirety (Act 428 of May 15, 1950, as amended).

                                   ARTICLE 65
                       TIME SUBJECT TO BE CALLED "ON CALL"

SECTION 1

In those cases in which the Company determines the need to have qualified
personnel subject to be called outside of the regular work schedule in certain
specialized classifications and areas of work where an on call personnel
schedule is required to be established, this article shall apply.

The employees in work shifts subject to be called must provide the telephone
number where they may be reached. If it were necessary, they shall be provided
with a beeper to make their location easier.

The work shifts shall be assigned in an equitable manner whenever possible.

SECTION 2

The employee who is assigned to be on call shall be paid a bonus of $18.00 per
day, for assignment to this work shift, during the time that he is assigned to
be subject to be called. The minimum hours to be worked when

<PAGE>

called and reporting to work shall be for a period no lesser than two (2) hours,
including the traveling time up to a maximum of thirty (30) minutes to reach the
designated place for work and thirty (30) minutes for the return to his
residence.

If the employee were called to work, he shall be compensated in the
corresponding manner and as it is indicated in the Work Day and Overtime
Article, pursuant to how it is provided in this Collective Bargaining Agreement.
The bonus mentioned in this section shall also apply.

SECTION 3

If the employee is called to work and does not answer the request to report
himself to the work site, he shall not be entitled to collect what is provided
in section 2 for that day's assigned schedule. If the employee to whom a work
shift corresponds for that day has not been able to be located on a timely basis
after several attempts to locate him, the supervisor shall state it in writing
with copy to the delegate of the Union.

If the employee expresses not being available for the work requested, the same
shall be offered to another employee who follows him in turn.

                                   ARTICLE 66
                     DUTIES CONSOLIDATION - UNIVERSAL WORKER

SECTION 1

The Company shall create regular new positions through duties consolidation
corresponding of two (2) or more positions included in the appropriate unit. The
positions created in this manner shall be called Universal Worker, and also
shall be known by their descriptive name followed by the service area
identification corresponding to the position.

SECTION 2

The duties consolidated always have to belong to positions under a same
administrative vice presidency. In cases where the Company move positions
between vice-presidencies, the duties shall be combined in its new vice
presidency with positions that also share a correlation of duties.

SECTION 3

When functions of positions are consolidated with different occupational
degrees, the position of new creation shall never be placed in a wage level
lower than the maximum level of the positions which functions are consolidated.

SECTION 4

The Company shall determine on the basis of service needs, the quantity of the
positions to be created by vice-presidency, the requirements, as well as the
geographical areas in which such newly created positions shall be assigned and
perform their task.

SECTION 5

The created positions of Universal Worker shall be adjudicated between
candidates in accordance to the following factors:

                        1.    Evaluation Criteria for the previous two (2) years

                        2.    Disciplinary Record for the previous two (2) years

                        3.    Related Experience and Trainings

                        4.    Approve written test and/or practical test that
                              the Company design for this purposes

                        5.    Attendance History for the previous two (2) years

<PAGE>

The seniority shall prevail when other factors are equal between candidates.

The publication shall be at all work centers according with Section 6 as
follows. The positions shall first be covered with those that qualify belonging
to the workshop where the Universal Worker position exist. If any vacancies
occur, it shall be covered with employees of other workshop.

No employees shall be transferred to other workshop as a result of having
brought employees from other workshop to occupy a Universal Worker position.

SECTION 6

The Company shall publish at all the work centers, the positions of new creation
that are going to be covered, specifying the requirements for the same. The
publication of the positions shall be made for a term no lesser than five (5)
working days. It being provided that those employees who work outside of the
buildings of Plaza Telefonica (1500, 1513 and 1515 Roosevelt) shall have a term
of two (2) additional working days after the closing of the publication. The
Company shall send to the Union a copy of said publication. A position so
published shall not be canceled without notifying the Union about the reasons
for its cancellation.

SECTION 7

Any regular employee, who meets the requirements for a published position, may
apply for the same by submitting the corresponding application, in the form
supplied by the Company, within the term established in the publication, to the
Recruitment Department, with return receipt requested.

SECTION 8

The Company shall only consider those employees who meet the requirements, who
have filed the petitions within the period established in the publication, and
who may fulfill the functions of the position immediately upon having it
adjudicated to them; or if they are enjoying their vacation leave, upon the
conclusion of the same; or if they are receiving benefits under the State
Insurance Fund or using sick leave, within thirty (30) days after it has been
adjudicated to them.

SECTION 9

In those cases in which that published positions of Universal Worker exceed
qualified employees amounts and that lack of employees obeys to the failure in
written test or practical test reference in Section 5 of this article, the
Company shall choose among those employees that failed, those whose scores and
tests were the highest, that have a score of not less than 50% to be trained and
examined again.

SECTION 10

The employees who failed the test and/or practical test shall remain in their
positions.

SECTION 11

The employee who moves to occupy the Universal Worker position shall receive an
increase of $0.45 per hour. The Section 2 of Article 43 (Salary) shall apply to
those employees who move on to occupy a position of Universal Worker in a
promotion.

<PAGE>

SECTION 12

Any employee selected to occupy one of these positions shall be subject to a
probationary period of two (2) months during which he will have to demonstrate
having ability, knowledge, skills and the efficiency which, in the judgment of
the Company, is required for the new position.

SECTION 13

If the probationary period is not satisfactorily approved, the employee shall
return to his previous position with the salary that would have corresponded to
him if he had continued in the previous position.

SECTION 14

Except in cases where events occur beyond the control of the Company and/or the
service may be adversely affected, the employee selected to occupy a position of
Universal Worker shall be placed in said position during the following thirty
(30) days from the date when the Recruitment Department adjudicates the same.

SECTION 15

Within ten (10) working days following the adjudication of a vacant position or
one of new creation, the Company must notify the Union, by certified mail with
return receipt requested, with a copy of the determination and indicating the
position which was adjudicated, the requisition number for the position and the
name and the employee number of the person with whom the same was covered and
the criteria where by it was adjudicated to the person. It must also notify it a
list with the names of all the employees who were competing for the position
with the corresponding salary levels.

SECTION 16

The intention of the parties with the creation of these new positions is to make
the Company as well as the employees more efficient, so that they have greater
capacity to respond to the increase necessity of the service that the
competitive telecommunications industry in Puerto Rico requires. It is not the
intention of this article to eliminate or reduce jobs, salaries or working
conditions, nor to limit the right that under this agreement the Company has
with relation to Articles 3, 15 and 63.

SECTION 17

Except for that provided in Section 4 of this article if any employee or the
Union understands that the Company has violated any disposition of this article,
such allegation shall be brought by the Union or the employee according to the
Grievance Procedure provided in this collective bargaining agreement.

                                   ARTICLE 67
                                  EFFECTIVENESS

This Collective Bargaining Agreement shall be in effect during thirty-six (36)
months and shall begin to rule from January 18, 2003 until midnight of January
17, 2006.