---

MERGER AGREEMENT

entered into by and
among, inter alia,  on the one
side,

TIM INTERNATIONAL N.V.

and, on the other side,

BRASIL TELECOM S.A.

dated as of

APRIL 28th, 2005

---



MERGER AGREEMENT

This MERGER AGREEMENT(this Agreement) is entered into on this 28th day of April, 2005, in the City of São
Paulo, State of São Paulo, Brazil, by and among, on the one side,

|1. | TIM
  INTERNATIONAL N.V., a company organized and existing under the laws of the
  Netherlands, with head office at 1629 Strawinskylaan WTC, Tower B, 16th floor, 1077 ZX Amsterdam, The Netherlands (TIMINT);
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | TIM
  BRASIL SERVIÇOS E PARTICIPAÇÕES S.A., a company organized and existing under the
  laws of Brazil, with head office at Avenida das Américas, 3434, Bloco 1, 6.o andar,
  Centro Empresarial Mário Henrique Simonsen, Barra de Tijuca, Rio de Janeiro,
  RJ, Brazil, CNPJ/MF no. 02.600.854/0001-34 (TIMB);
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (TII  and
  TI are sometimes also individually referred to as a TI Party and, collectively,  as the
TI Parties),  and, on the          other side;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | BRASIL
  TELECOM S.A., a company organized and existing in accordance with the laws of Brazil,
  with head office at SIA SUL, ASP, Lote D, Bloco B, Brasília, DF, Brazil,
  CNPJ/MF no. 76.535.764/0001-43 (BT);
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | 14
  BRASIL TELECOM CELULAR S.A., a wholly-owned subsidiary of BT organized and existing in
  accordance with the laws of Brazil, with head office at SIA SUL ASP, Lote D,
  Bloco B, Térreo  parte, Brasília, DF, Brazil, CNPJ/MF no. 05.423.963/0001-11
  (BTC);
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (BT and
  BTC are sometimes also individually referred to as a BT Party and, collectively, as the BT Parties);
| | ------------------------------------------------------------------------------------------------------------------

WHEREAS:

|A. | BT
  holds (i) concessions to exploit domestic long distance  (LDN)  switched fixed
  telephony  service (STFC) and local STFC          in Region II under the General
   Licensing Plan (PGO);  (ii)  authorizations  to exploit Local STFC and LDN STFC in
  Regions I          and III and Sectors 20, 22 and 25 of Region II of the PGO; and
   authorizations to exploit  International Long Distance (LDI)          STFC in Regions
  I, II and III of the PGO;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|B. | BTC,
  a wholly-owned  subsidiary  (subsidiária  integral) of BT, holds authorizations to render
  personal mobile service (SMP)          in Region II,  Areas 5, 6, 7 covering  all such
  Region II of the  PGA-SMP,  (the BTC  Authorizations)  and the  relevant E radiofrequency
  sub-bands associated with the BTC Authorizations (the BTC Frequencies);
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|C. | TIMINT
  is the controlling  shareholder of TIMB, which, in turn, is the direct or indirect
   controlling  shareholder of certain          companies that hold SMP  Authorizations  in
  Regions I, II and III of the PGA-SMP and LDN STFC and LDI STFC  authorizations  in
         Regions I, II and III of the PGO;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|D. | TIMINT
  and BT have  decided to merge BTC into TIMB,  convinced  that,  once  implemented  and
   followed  by the other  actions          described  below,  such merger will result in
  value  creation  for BT, the only  shareholder  of BTC,  and for TIMB,  and that
           implementation  of such merger will enable the group of Telecom Italia
   International  N.V. and BT, including BTC and TIMB, to          resolve the overlapping
  of mobile and fixed licenses  referred to in ANATELs Act no.  41.780/2004 and to comply
  with ANATELs          orders contained in such Act;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|E. | In
  this regard, the Parties wish to regulate herein those and other obligations, covenants
  and agreements among them;
|-- | -------------------------------------------------------------------------------------------------------------------------

NOW,  THEREFORE,  in
 consideration of the mutual  promises,  covenants and agreements set forth herein,  the
parties agree to enter into this Agreement in accordance with the following terms and
conditions:

|1. | DEFINITIONS;
INTERPRETATION
|-- | ---------------------------

| | 1.1 | Defined
Terms
| | --- | -------------

In addition to the
terms defined in the preamble above, as used in this Agreement the following  capitalized
 terms shall have          the following meaning:

Affiliate  shall
mean,  with respect to any person,  any other person  directly or indirectly  Controlling
 or Controlled by          such person or  otherwise  under  direct or indirect  common
 Control with such  person.  For the  avoidance of doubt,  (i) an          investment
 fund that is managed by a person shall be deemed as an Affiliate  of such person,  and
(ii) a limited  partnership          in which a person serves as the general partner
shall be deemed as an Affiliate of such person.

Anatel shall mean Agência
Nacional de Telcomunicações, the national telecommunication agency of Brazil.

Authorization shall
mean an authorization,  consent,  approval,  order,  resolution,  license,  concession,
 permit, notice,          exemption, filing, registration or notarization of any Court or
Governmental Authority.

Business Day shall
mean any day on which banks are open in the cities of São Paulo and Rio de Janeiro.

CADE shall mean the
Conselho Administrativo de Defesa Econômica, the Brazilian antitrust agency.

Chamber shall have
the meaning set forth in Section 11.10

Claim shall mean any
claim, demand, lawsuit, action,  litigation,  arbitration or administrative proceeding
filed or brought          by or against a person.

Control  shall mean
the power jointly or severally to direct or to cause the direction of the  management
 and policies of a          person and to appoint the majority of the managers
 (administradores) of such person,  whether through the ownership of voting
         securities,  by contract or  otherwise.  The terms  Controlling,  Controlled  and
other similar  expressions  shall have a          meaning corollary to that of Control.

Governmental
 Authority  shall mean any  nation or  government,  any  state,  municipality  or other
 political  subdivision          thereof,  any court,  tribunal or arbitration  tribunal
or authority,  autarchies,  agencies and any body or person exercising
         executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government, including CADE, CVM          and Anatel.

Indemnified Party shall
have the meaning set forth in Section 9.4.

Indemnifying Party shall
have the meaning set forth in Section 9.4.

Indemnity Claim shall
have the meaning set forth in Section 9.4.

Law  shall mean any
law,  decree,  provisional  measure  (medida  provisória),  regulation,  regulatory
 requirement,  rule,          ordinance, ruling, decision, treaty, directive,  guideline,
 policy, writ, judgment,  preliminary relief, injunction, order or          request of
any Governmental Authority,  including fiscal or monetary authority,  and their
interpretation,  administration and          application, whether or not having the force
of formal law.

Lien shall mean any
liens (gravames),  encumbrances  (ônus),  including any security interests  (direitos
reais de garantia)          such as pledges  (penhor) or  mortgages  (hipoteca),
 guarantees,  chattel  mortgages  (alienações  fiduciárias),  antichresis
         (anticreses),   seizures  (penhora),  arrests  (arrestos),  injunctions
 (liminares  or  antecipações  de  tutela),  judgments          (sentenças),  usufructs
(usufrutos), options, shareholders agreements and any other rights, claims or charges of
third parties          (including rights of first refusal, promises, covenants,
conditions or restrictions of any kind).

Loss shall have the
meaning set forth in Section 9.2.

Merger Protocol shall
have the meaning set forth in Section 2.1.

Rules shall have the
meaning set forth in Section 11.11.

Subsidiary shall
mean any Affiliate of TIMB that holds SMP Authorizations;

| | 1.2 | Rules
of Interpretation
| | --- | -----------------------

|Inthis
  Agreement, unless the contrary intention appears:
|----------------------------------------------------------

|(a) | a
  reference in this Agreement to the singular includes a reference to the plural and vice
  versa;
|--- | ----------------------------------------------------------------------------------------------------

|(b) | a person includes any individual,  company,  corporation,  investment fund,  trust,
   unincorporated  association or body of                   persons  (including  a
   partnership,  joint  venture  or  consortium),   Governmental  Authority,
    international  or                   multilateral organization or other entity, as well
  as its successors, transferees and assigns;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | an amendment includes any modification,  supplement,  novation, restatement or
  re-enactment and amended is to be construed                   accordingly;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | a
  provision of Law is a reference to that provision as amended or re-enacted;
|--- | -------------------------------------------------------------------------------

|(e) | an
   Article,  Section,  Schedule  or Exhibit is a  reference  to an article  of,  section
   of,  schedule to or exhibit to this                   Agreement;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | the
  terms including, include or includes shall be deemed to be followed by the phrase but
  not limited to; and
|--- | -------------------------------------------------------------------------------------------------------------------------

|(g) | the
  index to and the headings in this Agreement are for convenience only and are to be
  ignored in the  interpretation  of this                   Agreement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | STEPS
OF THE MERGER
|-- | -------------------

| | 2.1 | Execution
of the Merger Protocol
| | --- | --------------------------------

BT, BTC,  TIMINT and
TIMB shall,  on the same date hereof,  execute and deliver the merger  protocol (the Merger
 Protocol),          whose model is attached hereto as Annex 1.

| | 2.2 | Hiring
the Appraiser
| | --- | --------------------

As soon as possible
after the execution of the Merger  Protocol,  BT shall hire the appraiser named in the
Merger Protocol and          instruct it to carry out the appraisal of the  intrinsic
 equity value of BTC and TIMB.  The appraiser  shall also be required          to provide
a fairness  opinion to BT on the fairness of the  consideration  to be received by BT in
connection with the merger          of BTC into TIMB. The cost of such appraisals and of
the fairness opinion shall be borne exclusively by BT.

| | 2.3 | Appraisals
| | --- | ----------

BT will  contractually
 bind the appraiser to prepare its appraisal within thirty days of the date hereof.  The
appraisals are          to  determine  the  intrinsic  equity  value  of each of TIMB and
BTC as of March  31,  2005,  in each  case  considering  any          intercompany  debt
in either BTC or TIMB as equity to the extent such debt will be  capitalized by the time
the merger occurs.          The  valuation  of BTC shall take into  account the effects
of the  indebtedness  (for these  purposes,  any vendor  financing          accounts
 payable,  any accounts  payable  past due by more than 90 days and any  accounts
 payable with a maturity of greater          than 90 days from the date hereof will also
be considered as debt) but not those of any commercial  arrangements  between TIMB
         and BTC entered into after the date hereof.  BTC will furnish to such  appraiser
its audited (or subjected to limited  review)          March 31, 2005,  financial
 statements,  as well as such additional  historical  financial  information and
forecasts normally          required for similar  assignments,  to the extent  available,
 for such appraiser to establish BTCs  intrinsic  equity value.          TIMB will
furnish to such  appraiser its audited (or subjected to limited  review) March 31, 2005,
 financial  statements,  as          well as such additional  historical  financial
 information and forecasts  normally required for similar  assignments,  to the
         extent  available,  for such appraiser to establish TIMBs intrinsic equity
value. All such information and forecasts shall be          supplied by TIMB and BTC to
the  appraiser  and  thereafter  used by the  appraiser  solely for the  purposes of
 establishing          TIMBs and BTCs respective intrinsic equity value, and will be
subject to a confidentiality agreement,  including a provision          that the
 appraiser  shall commit that the  information  and forecasts of any TI Party are not
furnished to or shared with any          BT Party,  or vice versa,  without the Party in
questions  prior consent (except to the extent  unavoidably  reflected in the
         appraisal  report).  The values determined  through such appraisal must be
specific point estimates and not a range or ranges.          The  appraiser  shall
 deliver to each of TIMB and BT, on the same date,  a copy of both  appraisal  reports
and the  fairness          opinion.

| | 2.4 | Determination
of the Consideration of the Merger
| | --- | ------------------------------------------------

On the 2nd Business
Day  following  the day on which the approvals  referred to in Section  2.10(c) shall
have been  received,          TIMB shall deliver to BT a notice where TIMB shall specify
to BT the  consideration  that will be paid to BT in respect of the          merger,
according to the criteria of the Merger Protocol.

| | 2.5 | Shareholders Meetings
of TIMB
| | --- | ------------------------------

Subject to the
 fulfillment of the conditions  precedent set forth in Section 2.10, on the 2nd Business
Day date following the          day on which TIMB and BT receive the notice  referred to
in Section 2.4,  above (the Date of the  Merger),  a meeting of the
         shareholders  of TIMB shall be held,  at which  TIMINT,  as the  majority
 shareholder  of TIMB,  shall (i) approve the Merger          Protocol,  (ii)  authorize
a capital  increase in the same amount as that  contained  in the  notification  referred
to in the          Section 2.4, (ii) ratify the  appointment  of the appraiser by BT,
(iii) approve the appraisal  reports,  and (iv) approve the          merger, using the
consideration contained in the notification referred to in Section 2.4.

| | 2.6 | Shareholders
Meeting of BTC
| | --- | ----------------------------

On the Date of the
Merger,  a meeting of the sole  shareholder  of BTC shall be held, at which BT, as the
sole  shareholder of          BTC,  shall  approve the Merger  Protocol,  the appraisal
 reports and the merger,  using the  consideration  contained in the
         notification  referred to in Section  2.4,  and shall  authorize  BTCs
 officers to carry out all actions  necessary  for the          merger, including the
subscription of the capital increase of TIMB.

| | 2.7 | Consummation
of the Merger
| | --- | --------------------------

Immediately  following
the  shareholders  meetings  referred to in Sections 2.5 and 2.6 BT and BTC shall cause
BTCs officers          to carry out all actions  necessary for the merger,  including
the  subscription of the capital increase of TIMB. TIMB will be          responsible for
the filing of the merger documents with the Commercial  Registry and for their
 publication.  BT shall use its          best  efforts to cause its  officers,  directors
 and  employees  to fully  cooperate  with TIMB in  transferring  to TIMB the
         operations, clients, assets and obligations of BTC.

| | 2.8 | Transactions
after the Merger
| | --- | -----------------------------

After BTC is merged
into TIMB, it shall  thereafter be incumbent  solely upon TIMB to resolve the overlap of
mobile  licenses,          which solution shall constitute part of the filings  referred
to in Section 2.9, below,  provided that TIMB or its Subidiaries          shall maintain
their  existing and original SMP licenses with national  coverage,  but will return its
LDN and LDI licenses to          Anatel.

| | 2.9 | Anatel
and CADE Filings
| | --- | -----------------------

Within ten Business
Days of the date hereof,  TIMB and BT shall submit a filing  relating to the merger for
the prior approval          of Anatel.  Within fifteen Business Days of the date hereof,
 TIMB and BT shall jointly submit a filing relating to the merger          for the
approval of CADE,  also as required by applicable  Law,  provided that such filing will
be made within twenty Business          Days of the date  hereof  if any  administrative
 order or  injunction  now in force is  lifted  prior to the said  fifteeenth
         Business  Day.  TIMB shall  coordinate  such  filings and BT shall  fully
 cooperate  with TIMB and its counsel in  connection          therewith.  The Parties
shall cooperate with each other and provide in reasonable  time all  information  that
may be required          in connection with such filings.  Unless  otherwise  agreed to
by the Parties,  all legal and filing costs related to the CADE          and Anatel
filings shall be shared in equal parts among TIMB and BT.

| | 2.10 | Conditions
Precedent to the Merger
| | ---- | ----------------------------------

The  obligations  of
the TI Parties to hold the  shareholders  meetings  relating to the merger and to
approve and consummate          the merger shall be subject to the  fulfillment  and
 satisfaction,  at or prior to the Date of the Merger,  of the  following
         conditions precedent, unless otherwise waived in writing by the TI Parties:

|(a) | all
   representations  and warranties of each BT Party  contained in this  Agreement  shall be
  true and correct in all material                   respects as of the date hereof,  and
  such  representations  and warranties  shall be true and correct in all material
                  respects as of the Date of the Merger as if made at and as of such time;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | the
  BT Parties  shall have  performed  and  complied  with all  agreements  and  conditions
   required by this  Agreement to be                   performed or complied with by them
  prior to or on the Date of the Merger;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | the
  parties shall have  submitted to Anatel and, if the Date of Merger is later than the
   stipulated  filing date, to CADE the                   filings referred to in Section
  2.9; and both Anatels consent for the merger and any other transactions  contemplated
                    in the filings and any consent therefor of CADE required  pursuant to
  any  administrative  order or injunction now in                   force, shall have been
  obtained and shall be in full force and effect;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | no
  Law or other legal restraint shall prevent or otherwise affect the consummation of the
  transactions contemplated.
|--- | ------------------------------------------------------------------------------------------------------------------------

|3. | CERTAIN
OBLIGATIONS.
|-- | --------------------

| | 3.1 | Right
to Terminate Agreements
| | --- | -----------------------------

The BT Parties agree,
 for themselves and their  respective  Affiliates,  that TIMB and its Affiliates shall
have the right to          terminate at their sole  discretion,  at any time after the
Date of the Merger,  without cause,  any  agreements  entered into          prior to the
Date of the Merger between BTC on one side, and BT or any of their  respective
 Affiliates or related  parties on          the other side on other than an arms length
basis,  and such  termination  shall not give rise to any liability or obligation
         for TIMB or any of its Affiliates to pay damages,  penalties,  costs,  expenses
or any other amounts,  whether contemplated in          such  agreements or not. A list
of all  contracts  and  agreement  between or among BTC and BT or any Affiliate of BT
shall be          delivered to TIMB on the Date of the Merger.

| | 3.2 | Termination
of Guarantees
| | --- | -------------------------

The BT Parties shall,
 prior to the Date of the Merger,  use their best efforts to cause all guaranties granted
by BTC, either          in the form of personal  guaranties  (garantias  fidejussórias)
 or in the form of collateral  (garantias reais) in respect of          any third  parties  obligations
to be released by the  respective  creditors.  In the event that any such guaranty may
not be          released, BT shall provide the TI Parties, as the case may be, with
counter-guaranties reasonably satisfactory to them.

| | 3.3 | Financial
information
| | --- | ---------------------

TIMB shall deliver to
BT, within 45 days of the expiry of each calendar  quarter,  the audited (or subject to
limited  review)          financial  statements of TIMB which will be consolidated into
the quarterly financial  statements of its parent company.  TIMB          shall also
timely respond to any reasonable  requests or inquiries of BT with respect to such
 financial  statements  whenever          such  response is  necessary  for BTs own
 reporting  or auditing  requirements  or  obligations,  provided  that TIMB is not
         obligated to disclose any confidential information.

Further,  to the
extent it will be possible and legally  permissible,  TIMINT  shall use  commercially
 reasonable  efforts to          allow BT to designate a Board member in TIMB. Such right
of designation shall in any event  automatically  expire when BT will          cease to
own at least 50% of the participation acquired on the Date of the Merger.

| | 3.4 | Tag-
Along /Drag- Along
| | --- | -----------------------

In the event TIMINT,
 on or prior to the second  anniversary of the date hereof,  intends to sell its
participation in TIMB to          a third party (the  Potential  Buyer),  (i) BT shall
be granted a tag-along right allowing BT to sell its  participation  in          TIMB to
the Potential Buyer on the same terms and conditions  agreed between TIMINT and the
Potential  Buyer;  and (ii) TIMINT          shall be granted a drag-along  right on BT
 participation  in TIMB allowing TIMINT to compel BT to transfer its  participation
         in TIMB to the  Potential  Buyer on the same  terms  and  conditions  TIMINT
 will  transfer  to the  Potential  Buyer its own          participation in TIMB.

The final terms and
conditions of the above rights will be negotiated between the Parties before the Date of
the Merger.

|4. | INTERIM
AGREEMENTS BETWEEN BTC, BT AND TIMB OR ITS SUBSIDIARIES
|-- | ---------------------------------------------------------------

In  anticipation  of
the merger  transaction  that  continues  to be the ultimate  objective  of the parties,
 and, as soon as          practicable  after  signature  of this  Agreement,  BTC,  BT
and TIMB and/or the  Subsidiaries  will,  to the  fullest  extent          permitted by
applicable regulation and antitrust rules, enter into one or more commercial agreements
as follows:

(i) The Subsidiaries
 will provide BTC a National  Roaming  Agreement on a  most-favored-customer  basis
allowing BTC to offer          access to  nationwide  services  to its  customers
 utilizing  GSM  technology,  provided  that BTC shall not have any roaming
         agreement domestically other than with Subsidiaries.

(ii) The Subsidiaries
 will facilitate BTCs access to GSM-based  International  Roaming with  Subsidiaries
 abroad as well as          third-party carriers allowing BTC to offer international
services to its customers.

(iii)  The  relevant
  Subsidiaries  and  BTC  will  enter  into  reciprocal   GSM-based  Regional  Roaming
 Agreements  on  a          most-favored-customer  basis  allowing  each to benefit from
the need to make only such network  expansion  investments  as it          specifically
wants or to substitute for such using said roaming services.

Through these
 agreements BTC will: (a) increase the coverage to the same extent of the  Subsidiaries,
 also  considering  the          planned coverage  expansion of the  Subsidiaries,  and
(b) reduce  expenditures for investments  relative to required capacity          upgrades
that will now be provided by the Subsidiaries.

(iv) BT will be the
preferred  provider of TIMB for leased lines,  cables and backbone  transmission
 facilities  that will be          granted on a most favored customer basis; and

(v) BT will be a
provider of TIMB and the  Subsidiaries,  on a most favored  customer  basis,  for Site
and  Infra-Structure          Sharing to support its Network rollout plan.

The  commercial
 agreements  will  expire at the  earlier of (i) the Date of the  Merger or (ii) one year
of their  execution;          provided that those referred to in items (iv) and (v),
above, shall survive for their stated terms.

|5. | AGREEMENTS
BETWEEN BT ANS TIMB OR ITS SUBSIDIARIES
|-- | --------------------------------------------------

| | 5.1 | Negotiation
of Operational Agreements
| | --- | -------------------------------------

Concurrently  with the
merger of BTC into TIMB and, if applicable,  the other  transactions  referred to in
Section 2.8, it is          envisaged  that BT and TIMB or the  Subsidiaries,  as the
case may be, will, in order to increase for BT the advantages of the          merger,
 enter into a Long  Distance  services  agreement,  pursuant to which BT will  provide
such  services to TIMB,  or the          Subsidiaries,  as the case may be, and into
other operational agreements.  In addition, the existing agreements between BT and
         BTC will be reviewed and amended,  or  integrated  into the new  agreements,  as
necessary  for their terms and  conditions to          reflect  arms length  bases.  The
specific  terms and  conditions  of each of such new  agreements  and of any  amendments
to          existing  agreements  will be negotiated  and agreed to by BT and TIMB, or
the  Subsidiaries,  as the case may be, on an arms          length  basis to the fullest
 extent  permitted  by  applicable  regulations  and  antitrust  rules,  and will be
based on the          following principles:

|(a) | BT
  will rely on the  mobile  network  of TIMB and the  Subsidiaries  to  continue  offering
   its  distinctive  offer  based on                   convergent services, in compliance
  with current regulation;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | BT
  will exploit the highest know-how of the GSM technology  provided by TIMB in order to
  offer innovative value added services                   and mobile office solutions to
  its customers;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | BT
will create synergies between the two distribution networks:
|--- | ---------------------------------------------------------------

| | (1) | BT
  will  increase  the  capillarity  of its  commercial  presence  by  exploiting  the
   distribution  network  of TIMB and the                            Subsidiaries  in
  Region II (more than 3.400 Points of Sale,  of which more than 700  Corporate  and 15
  owned                            Points of Sale), where a range of services would be
  provided,  from a friendly contact point (information                            on BT
  services) to the sale of convergent services, and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | BT
  will earn from the promotion of the services of TIMB and the Subsidiaries through its
  distribution network;
| | --- | ------------------------------------------------------------------------------------------------------------------

|(d) | BT
  will be the preferred  provider of TIMB and the  Subsidiaries  for long  distance
   services,  on a most favored  customer basis, to the extent
  permissible under applicable regulation;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | BT
  will be a preferred provider of TIMB and the Subsidiaries,  for leased lines, cables and
  backbone  transmission  facilities                   that will be granted on a most
  favored customer basis, and subject to any requirements of non-discrimination;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | BT
   will be a  preferred  provider  of  TIMB  and  the  Subsidiaries,  on a most  favored
   customer basis,  for  Site  and                   Infra-Structure Sharing to support
  its Network rollout plan;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | BT
  and TIMB will jointly evaluate the  opportunities of creating  synergies from the
  optimization of operating  processes like                   logistics (e.g. optimal
  management of network and IT spare parts using the warehouses of both operators).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | AGREEMENTS
PENDING THE MERGER
|-- | -----------------------------

The Parties agree as
follows with respect to the period  between the execution of this Agreement and the
 consummation  of the          merger:

| | 6.1 | General
| | --- | -------

Each of the Parties
will use all  reasonable  efforts to take or cause to be taken all actions and to do all
things  necessary          in order to consummate and make effective the  transactions
 contemplated  by this  Agreement,  including  satisfaction of the          merger
conditions set forth in Section 2.10.

| | 6.2 | Operation
of Business
| | --- | ---------------------

BT (i) shall manage
 BTCs  business in the usual,  regular and  ordinary  course  consistent  with past
 practice and without          deviation from the current  budget  parameters,  to be
prepared on a monthly basis from March to September  2005  consistently          with the
 financial  information  and  forecasts to be provided to the  appraiser as per Section
2.3, (ii) will not declare or          pay dividends or make any other distributions to
shareholders,  and (iii) shall not enter into any new agreements,  assume new
         liabilities,  commitments or obligations, or give any guarantees, surety bonds,
endorsements,  insurance or the like in excess          of the  equivalent to the amount
of  1 million on the date hereof for any single  transaction,  except in the case of a
prior          written approval that will not be unreasonably withheld if in the ordinary
course of business.

| | 6.3 | Reasonable
Access
| | --- | -----------------

BT and BTC shall
 permit the TI Parties  and their  respective  representatives,  counsel  and
 accountants  to have access at          reasonable  times,  and in a manner so as not to
interfere  with the normal  operations  of BTCs  business,  to the premises,
         properties,  financial  statements  and  contracts  of, and other  relevant
 information  pertaining  to, BTC,  subject to any          antitrust restrictions
applicable.

|7. | Representations
and Warranties relating to the BT parties
|-- | ---------------------------------------------------------

The BT Parties,
 jointly and  severally,  hereby make the following  representations  and  warranties
 TIMB,  each of which is          material to and is being relied upon by the TIMB:

| | 7.1 | Legal
Status
| | --- | ------------

Each BT Party is duly
organized and validly existing,  and has the full requisite authority  (capacidade) and
power to own and          dispose of its assets and  properties  and to transact  the
 business in which it is engaged,  to do all things  necessary  or          appropriate
in respect of its business and to consummate the transactions or agreements contemplated
by this Agreement.

| | 7.2 | Corporate
Approvals
| | --- | -------------------

Each BT Party has
 authorized  the  execution  and delivery of this  Agreement  and each of the
 transactions  and  agreements          contemplated hereby. No other corporate action
 is necessary to authorize such execution.

| | 7.3 | Validity
and Enforceability
| | --- | ---------------------------

This Agreement shall,
 upon its execution by the BT Parties,  constitute valid and binding  obligations of each
such BT Party,          enforceable against such BT Party, as the case may be, in
accordance with its terms.

| | 7.4 | Authorizations
| | --- | --------------

Other than the
 Authorizations  and filings  mentioned in Section 2.9 and except as may be required for
purposes of Sections 4          and 5  above,  the  execution  by each BT Party  of this
 Agreement,  the  performance  by each BT  Party  of its  obligations          hereunder
and the consummation by each BT Party of the transactions or agreements  contemplated
 hereby do not require such BT          Party,  as the case may be, to obtain  any
 Authorization  or to make any filing  with or give any notice to any  Governmental
         Authority or other third party.

| | 7.5 | No
Conflicts
| | --- | ------------

The execution and
delivery by each BT Party of this Agreement do not, and the  consummation of the
 transactions or agreements          contemplated herein and the compliance with the
terms hereof shall not, (i) materially  conflict,  (ii) result in any material
         violation  of or default  (with or without  notice or lapse of time,  or both),
 (iii) give rise to any right of  termination,          cancellation or acceleration of
any material  obligation  except with respect to BNDES financing  agreement  executed
 between          BT&BNDES prior to the date hereof (iv) give rise to any loss of any
material  right or benefit,  (v) result in the creation of          any Liens upon any of
the  material  assets or  properties  of any of such BT Party,  with or under any
 provision  of (a) the          by-laws  or  articles  of  association  of such BT Party,
 (b) any  material  contract,  agreement,  instrument,  note,  bond,          mortgage,
 indenture,  deed of trust, license, lease, commitment or other arrangement to which such
BT Party, is a party or by          which any of its respective  assets or properties are
bound,  or (c) any applicable  Law,  subject to the conditions set forth          in
Section 2.10(c) above.

| | 7.6 | No
Brokers Fees
| | --- | ----------------

No agent,  broker,
 person or firm acting on behalf of any BT Party or any of its  Affiliates  or related
 parties is, or will          be,  entitled to any  commission  or  brokers  or  finders
 fees from any of the TI Parties or BTC or any of the TI Parties         respective
Affiliates, in connection with any of the transactions contemplated by this Agreement.

| | 7.7 | Permits
| | --- | -------

BTC possesses all
material licenses,  permits,  certificates,  consents,  orders, approvals and other
authorizations from, and          has made all material declarations and filings with,
all Governmental  Authorities,  presently required or necessary to own or          lease,
 as the case may be, and to operate its  properties and to carry on its  businesses as
now conducted  (Permits);  BTC          has  fulfilled  and performed  all of its
material  obligations  with respect to such Permits and no event has occurred  which
         allows,  or after notice or lapse of time would allow,  revocation  or
 termination  thereof or results in any other  material          impairment  of the
 rights  of BTC;  and  BTC has not  received  any  notice  of any  proceeding  relating
 to  revocation  or          modification of any such Permit.

| | 7.8 | Taxes
| | --- | -----

All Tax  returns
 required  to be filed by BTC have been filed and all such  returns  are true,  complete,
 and correct in all          material  respects.  All material  Taxes that are due from
BTC have been paid other than those (i) currently  payable  without          penalty or
interest or (ii) being  contested in good faith and by  appropriate  proceedings  and for
which  adequate  reserves          have been established in accordance with generally
accepted accounting  principles of Brazil,  consistently  applied (GAAP).          To
the knowledge of BTC, after  reasonable  inquiry,  there are no actual or proposed Tax
assessments  against BTC that would,          individually or in the aggregate,  have a
material adverse effect on the financial  standing of BTC. The accruals and reserves
         on the books and records of BTC in respect of any material Tax  liability for
any period not finally  determined  are adequate          to meet any  assessments  of
Tax for any such period.  For purposes of this  Agreement,  the term Tax and Taxes shall
mean          all Federal,  state,  municipal  and foreign  taxes,  contributions,
 social  security  payments or  contributions,  and other          assessments of a
similar nature (whether imposed directly or through withholding),  including any
interest,  additions to tax,          or penalties applicable thereto.

| | 7.9 | Financial
Statements
| | --- | --------------------

The March 31, 2005,
 audited (or subjected to limited  review)  financial  statements and related notes of
BTC (the Financial          Statements)  present fairly the financial  position,
 results of operations and cash flows of BTC, as of the respective dates          and for
the  respective  periods to which they apply and have been prepared in accordance  with
GAAP.  Subsequent to the dates          as of which the Financial  Statements were
prepared (i) BTC has not incurred any liabilities,  direct or contingent,  that are
         material,  individually  or in the  aggregate,  to BTC, or has entered into any
 transactions  not in the  ordinary  course of          business,  (ii)  there  has not
been any  material  decrease  in the  capital  stock or any  material  increase  in
 long-term          indebtedness  or any  material  increase  in  short-term
 indebtedness  of BTC, or any  payment of or  declaration  to pay any          dividends
or any other  distribution  with respect to BTC, (iii) none of the Working Capital
 accounts are deficient  relative          to the business  needs even on an interim
 basis and (iv) there has not been any Material  Adverse  Change in the  properties,
         earnings,  assets,  liabilities  or  financial  condition  of BTC (each of
clauses (i),  (ii) and (iii),  a Material  Adverse          Change). To the knowledge
of BTC after reasonable inquiry,  there is no event that is reasonably likely to occur,
which if it          were to occur, would, individually or in the aggregate, have a
Material Adverse Effect.

| | 7.10 | Agreements
of BTC
| | ---- | -----------------

The BT  Parties
 represent  and  warrant  that (i) all  material  agreements  of BTC have  been  made on
arms  length  bases,          reflecting normal market conditions,  providing for
adequate  compensation,  and that (ii) BTC has entered into no agreements,
         assumed no liabilities,  commitments to pay or obligations, or given any
guarantees, surety bonds, endorsements,  insurance or          the like in excess of an
amount equivalent to  10 million on the date hereof.

| | 7.11 | Absence
of Financial Liabilities
| | ---- | --------------------------------

The BT Parties
 represent  and warrant  that,  except for the vendor  financing  and the  remaining  SMP
license  fees and the          accounts  payable  deemed debt per Section 2.3 also listed
on Schedule  7.11 hereto,  BTC does not have and on the Date of the          Merger
 shall  not have (i) any debt for  borrowed  money;  (ii) any debt  evidenced  by
 debentures,  notes or other  similar          instruments;  (iii) any  liabilities
 assumed as the  deferred  payment for  property,  authorizations,  licenses or the like,
         conditional sale obligations,  or liabilities under any title retention
 (reserva de domínio)  agreement;  (iv) liabilities of          any other type of credit
transaction; or (v) guarantees in respect of any indebtedness referred to in (i) through
(iv).

| | 7.12 | Litigation
| | ---- | ----------

There is no action,
 claim,  suit,  demand,  hearing,  notice of violation or deficiency,  or proceeding,
 domestic or foreign          (collectively,  Proceedings),  pending or, to the
knowledge of BTC, threatened in writing,  that (i) either is not reflected          or
recorded in the  Financial  Statements or that may cause a Loss to BTC in excess of the
 equivalent  of  100,000,  or (ii)          seeks to  restrain,  enjoin,  prevent  the
 consummation  of,  or  otherwise  challenge  any of this  Agreement  or any of the
         transactions contemplated herein.

|8. | REPRESENTATIONS AND WARRANTIES RELATING TO TI PARTIES
|-- | -----------------------------------------------------

The TI Parties,
 jointly and  severally,  hereby make the  following  representations  and  warranties to
BT, each of which is          material to and is being relied upon by BT:

| | 8.1 | Legal
Status
| | --- | ------------

Each TI Party is
company duly  organized and validly  existing under the laws of the  Netherlands  or
Brazil,  as the case may          be, and has the full  requisite  (capacidade)  and
power to own and dispose of its assets and  properties  and to transact the
         business in which it is engaged,  to do all things  necessary or  appropriate in
respect of its business and to consummate the          transactions or agreements
contemplated by this Agreement.

| | 8.2 | Corporate
Approvals
| | --- | -------------------

Each TI Party has
authorized  the execution,  delivery and  performance  of this  Agreement and each of the
 transactions  and          agreements  contemplated  hereby.  No other corporate action
 (including  shareholder or management  approval) is necessary to          authorize such
execution, delivery and performance.

| | 8.3 | Validity
and Enforceability
| | --- | ---------------------------

This  Agreement
 shall,  upon its execution by such TI Party,  constitute  the valid and binding
 obligation of such TI Party,          enforceable against such TI Parties in accordance
with its terms.

| | 8.4 | Authorizations
| | --- | --------------

Other than the
 Authorizations  and filings  mentioned  in Section 2.9 and except as may be required
 for purposes of Sections          4.1 and 5.1 above,  the  execution  and delivery by
each TI Party of this  Agreement  to which it is or shall be a party,  the
         performance  by each  TI  Party  of its  respective  obligations  hereunder  and
the  consummation  by  each TI  Party  of the          transactions  or  agreements
 contemplated  hereby do not  require  such TI Party to obtain any  Authorization  or to
make any          filing with or give any notice to any Governmental Authority or other
third party.

| | 8.5 | No
Conflicts
| | --- | ------------

The execution and
delivery by each TI Party of this Agreement do not, and the  consummation of the
 transactions or agreements          contemplated herein and the compliance with the
terms hereof shall not, (i) materially  conflict,  (ii) result in any material
         violation  of or default  (with or without  notice or lapse of time,  or both),
 (iii) give rise to any right of  termination,          cancellation  or  acceleration of
any material  obligation,  (iv) give rise to any loss of any material right or benefit,
 (v)          result in the creation of any Liens upon any of the material  assets or
properties of any of such TI Party,  with or under any          provision of (a) the
by-laws or articles of association of such TI Party, (b) any material  contract,
 agreement,  instrument,          note, bond, mortgage,  indenture,  deed of trust,
license, lease, commitment or other arrangement to which such TI Party, is a
         party or by which any of its respective  assets or properties are bound, or (c)
any applicable Law,  subject to the conditions          set forth in Section 2.10 above.

| | 8.6 | No
Brokers Fees
| | --- | ----------------

No agent,  broker,
 person or firm acting on behalf of any TI Party or any of its  Affiliates  or related
 parties is, or will          be,  entitled to any  commission or brokers or finders
fees from any of the BT Parties or any of the BT Parties  respective
         Affiliates, in connection with any of the transactions contemplated by this
Agreement.

| | 8.7 | Financial
Statements
| | --- | --------------------

The March 31, 2005,
 audited (or subjected to limited review)  financial  statements and related notes of
TIMB (the Financial          Statements)  present fairly the financial position,
 results of operations and cash flows of TIMB, as of the respective dates          and
for the  respective  periods to which they apply and have been prepared in accordance
 with GAAP.  Subsequent to the dates          as of which the Financial Statements were
prepared (i) TIMB has not incurred any liabilities,  direct or contingent,  that are
         material,  individually  or in the  aggregate,  to TIMB, or has entered into any
 transactions  not in the ordinary  course of          business,  (ii)  there  has not
been any  material  decrease  in the  capital  stock or any  material  increase  in
 long-term          indebtedness  or any  material  increase in  short-term  indebtedness
 of TIMB,  or any payment of or  declaration  to pay any          dividends  or any other
 distribution  with  respect to TIMB,  (iii) none of the Working  Capital  accounts  are
 deficient or          excessive  relative to the business needs even on an interim basis
and (iv) there has not been any Material  Adverse Change in          the  properties,
 earnings,  assets,  liabilities  or  financial  condition of TIMB (each of clauses  (i),
 (ii) and (iii),  a          Material Adverse Change). To the knowledge of TIMB after
reasonable inquiry,  there is no event that is reasonably likely to          occur, which
if it were to occur, would, individually or in the aggregate, have a Material Adverse
Effect.

| | 8.8 | Permits
| | --- | -------

TIMB possesses all
material licenses,  permits,  certificates,  consents, orders, approvals and other
authorizations from, and          has made all  declarations and filings with, all
Governmental  Authorities,  presently  required or necessary to own or lease,          as
the case may be, and to operate its  properties  and to carry on its  businesses  as now
 conducted  (Permits);  TIMB has          fulfilled and performed all of its material
 obligations  with respect to such Permits and no event has occurred which allows,
         or after notice or lapse of time would allow,  revocation or termination
 thereof or results in any other material  impairment          of the rights of TIMB; and
TIMB has not received any notice of any proceeding  relating to revocation or
 modification  of any          such Permit.

| | 8.9 | Taxes
| | --- | -----

All Tax returns
 required  to be filed by TIMB have been filed and all such  returns  are true,
 complete,  and correct in all          material  respects.  All material  Taxes that are
due from BTC have been paid other than those (i) currently  payable  without
         penalty or interest or (ii) being  contested in good faith and by  appropriate
 proceedings  and for which  adequate  reserves          have been  established in
accordance with GAAP. To the knowledge of TIMB,  after  reasonable  inquiry,  there are
no actual or          proposed Tax  assessments  against TIMB that would,  individually
or in the aggregate,  have a material  adverse effect on the          financial  standing
 of TIMB.  The  accruals  and  reserves on the books and  records of TIMB in respect of
any  material  Tax          liability  for any period not  finally  determined  are
 adequate  to meet any  assessments  of Tax for any such  period.  For          purposes
 of this  Agreement,  the term  Tax and  Taxes  shall mean all  Federal,  state,
 municipal  and  foreign  taxes,          contributions,  social  security  payments or
 contributions,  and other  assessments  of a similar  nature  (whether  imposed
         directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto.

| | 8.10 | Litigation
| | ---- | ----------

There is no action,
 claim,  suit,  demand,  hearing,  notice of violation or deficiency,  or proceeding,
 domestic or foreign          (collectively,  Proceedings),  pending or, to the
knowledge of TIMB, threatened in writing, that (i) either is not reflected          or
recorded in the Finacial  Statements  or that may cause a Loss to TIMB in excess of the
 equivalent  of  100,000,  or (ii)          seeks to  restrain,  enjoin,  prevent  the
 consummation  of,  or  otherwise  challenge  any of this  Agreement  or any of the
         transactions contemplated herein.

|9. | IDEMNIFICATION
|-- | --------------

| | 9.1 | Survival
of Representations, Warranties and Covenants
| | --- | -----------------------------------------------------

The representations,
 warranties and covenants of the Parties contained in this Agreement shall be true
correct,  accurate and          not  misleading  as of the date on which they are given
as well as on the Date of the Merger,  and shall  survive for a period          of two
years as of the Date of the Merger,  provided  that those  relating  to Taxes shall
 survive for a period of five years          therefrom.  If  written  notice of a claim
has been  given  prior to the  expiration  of the  applicable  representations  and
         warranties  by any  Party,  then the  relevant  representations  and
 warranties,  as well as the  indemnification  provisions          contained in this
Section 9, shall survive as to such claim.

| | 9.2 | Indemnification
by BT
| | --- | ---------------------

BT shall at all times
indemnify each TI Party and its respective  successors and assigns,  and shall at all
times hold each of          the foregoing  persons harmless for any and all direct or
indirect  (excluding lost profits  lucros  cessantes)  liabilities,          losses,
 damages,  claims,  fees, costs,  expenses,  interest,  awards,  judgments,  fines and
penalties  (including,  without          limitation,  disbursements  or transfers of
economic value for attorneys  fees,  courts costs,  placement of bonds or surety,
         judicial deposits and  out-of-pocket  expenses) (each, a Loss) actually
incurred or suffered by any of the foregoing persons          as a result  of the  breach
 by any BT  Party of any  representation  or  warranty  made in this  Agreement  or any
 covenant,          obligation or agreement contained in this Agreement.

| | 9.3 | TI
Parties Indemnification
| | --- | ---------------------------

The TI Parties shall
at all times  indemnify BT and its respective  successors and assigns and shall at all
times hold each of          the  foregoing  persons  harmless  for any and all direct or
 indirect  Losses  (excluding  lost  profits  lucros  cessantes)          actually
 incurred  or  suffered  by any of  the  foregoing  persons  as a  result  of the  breach
 by the TI  Parties  of any          representation or warranty made in this Agreement or
any covenant, obligation or agreement contained in this Agreement.

| | 9.4 | Indemnification
Procedures
| | --- | --------------------------

If any party that
shall be indemnified in accordance with Sections 9.1 to 9.3 (any of such parties,  an  Indemnified Party)          shall incur or suffer any Loss (other than by reason of a Third Part
Claim,  as  hereinafter  defined)  that may be subject to          indemnification
 pursuant to this  Agreement,  such  Indemnified  Party  shall give  notice (a Claim
 Notice) to the parties          against which  indemnification  shall be sought in
accordance with Sections 9.1 to 9.3 (any of such parties, an Indemnifying Party)
of any matter that the  Indemnified  Party believes has given or could give rise to a
right of  indemnification  under          this Agreement  promptly,  but in no event
later than 90 (ninety) days after the Indemnified Party first learns of such claim,
         stating the amount of the Loss, if known, and method of computation  thereof,
 if possible,  and containing a reference to the          provisions of this  Agreement
in respect of which such right of  indemnification  is claimed or arises,  and requiring
 prompt          indemnification  of such Loss from the  Indemnifying  Parties  (any such
 notice,  an  Indemnity Claim).  The  Indemnifying          Parties  shall,  as soon
as  practicably  possible  after receipt of such notice but in no event later than 5
(five) days from          such receipt,  indemnify and reimburse the Indemnified  Party
for the actual amount of the Loss suffered,  net of any taxes or          withholdings
applicable to the payment or reimbursement of the relevant amount to the Indemnified
Party.

(a)    In the event
any claim or demand in respect of which an Indemnified  Party might seek indemnity  under
Sections  9.1.to 9.3 is          asserted  against  or sought to be  collected  from such
 Indemnified  Party by a Person  other  than a Party  hereto,  or any          Affiliate
 of such Party (a Third Party Claim),  the  Indemnified  Party  shall  deliver a
Claim  Notice  with  reasonable          promptness to the Indemnifying  Party. If the
Indemnified  Party fails to provide the Claim Notice with reasonable  promptness
         after the  Indemnified  Party  receives  notice of such Third Party  Claim,  the
 Indemnifying  Party will not be obligated to          indemnify  the  Indemnified  Party
with respect to such Third Party Claim to the extent that the  Indemnifying  Party has
been          irreparably  prejudiced by such failure of the Indemnified  Party.  The
Indemnifying  Party will notify the Indemnified  Party          as soon as  practicable,
 but in no event  later than  within 5 days of receipt of the Claim  Notice  (the  Dispute
 Period)          whether the Indemnifying  Party disputes its liability to the
Indemnified  Party and whether the  Indemnifying  Party desires,          at its sole
cost and expense, to defend the Indemnified Party against such Third Party Claim.

(b)    If the
 Indemnifying  Party notifies the Indemnified  Party within the Dispute Period that the
 Indemnifying  Party desires to          defend the  Indemnified  Party with  respect to
the Third  Party  Claim,  then the  Indemnifying  Party will have the right to
         defend,  with counsel  reasonably  satisfactory  to the Indemnified  Party,  at
the sole cost and expense of the  Indemnifying          Party,  such Third  Party Claim
by all  appropriate  proceedings,  which  proceedings  will be  diligently  prosecuted
 by the          Indemnifying  Party to a final  conclusion or will be settled at the
discretion of the  Indemnifying  Party (but only with the          consent of the
 Indemnified  Party,  which  consent will not be  unreasonably  withheld,  in the case of
any  settlement  that          provides for any relief other than the payment of monetary
 damages as to which the  Indemnified  Party will be indemnified in          full).  The
 Indemnifying  Party will have  control of such  defense  and  proceedings,  including
 (except as provided in the          immediately  preceding sentence) any settlement
thereof;  provided,  however, that the Indemnified Party may, at the sole cost
         and expense of the Indemnified  Party,  at any time prior to the  Indemnifying
 Partys  delivery of the notice referred to in          the first  sentence  of this
 clause (i),  file any  motion,  answer or other  pleadings  or take any  other  action
 that the          Indemnified Party reasonably believes to be necessary or appropriate
to protect its interests;  and provided further,  that if          requested by the
 Indemnifying  Party,  the Indemnified  Party will, at the sole cost and expense of the
 Indemnifying  Party,          provide  reasonable  cooperation to the  Indemnifying
 Party in contesting any Third Party Claim that the  Indemnifying  Party          elects
to contest.  The  Indemnified  Party may retain  separate  counsel to represent it in,
but not control,  any defense or          settlement of any Third Party Claim  controlled
by the  Indemnifying  Party pursuant to this  clause (i),  and the Indemnified
         Party will bear its own costs and  expenses  with  respect to such  separate
 counsel,  except as  provided  in the  preceding          sentence  and except  that the
 Indemnifying  Party will pay the costs and  expenses  of such  separate  counsel if (x)
in the          Indemnified  Partys  reasonable  judgment,  it is  advisable,  based on
advice of counsel,  for the  Indemnified  Party to be          represented  by separate
 counsel  because a conflict or potential  conflict  exists  between the  Indemnifying
 Party and the          Indemnified  Party or (y) the named parties to such Third Party
Claim include both the Indemnifying  Party and the Indemnified          Party and the
Indemnified  Party  determines  reasonably,  based on advice of counsel,  that defenses
are available to it that          are unavailable to the Indemnifying Party.
 Notwithstanding  the foregoing,  the Indemnified Party may retain or take over the
         control of the defense or  settlement  of any Third Party  Claim the  defense of
which the  Indemnifying  Party has elected to          control if the  Indemnified  Party
 irrevocably  waives its right to  indemnity  with  respect to such Third  Party  Claim
and          Indemnifying Party receives appropriate releases absolving it of any and all
liability thereunder.

If the  Indemnifying
 Party fails to notify the  Indemnified  Party  within the Dispute  Period  that the
 Indemnifying  Party          desires to defend the Third Party Claim, or if the
Indemnifying  Party gives such notice but fails to prosecute  diligently or
         settle the Third Party Claim,  then the Indemnified  Party will have the right
to defend,  at the sole cost and expense of the          Indemnifying  Party,  the Third
Party Claim by all  appropriate  proceedings,  which  proceedings  will be  prosecuted
 by the          Indemnified  Party in good  faith or will be settled at the  discretion
 of the  Indemnified  Party  (with the  consent of the          Indemnifying  Party,
 which consent will not be unreasonably  withheld).  The Indemnified Party will have full
control of such          defense and  proceedings,  including  (except as provided in the
 immediately  preceding  sentence)  any  settlement  thereof;          provided, however,  that if requested by the Indemnified  Party, the Indemnifying Party will, at
the sole cost and expense of          the  Indemnifying  Party,  provide  reasonable
 cooperation to the  Indemnified  Party and its counsel in contesting any Third
         Party Claim which the Indemnified Party is contesting.  Notwithstanding  the
foregoing  provisions of this clause (b),  if the          Indemnifying  Party disputes
its liability  hereunder to the  Indemnified  Party with respect to such Third Party
Claim and if          such dispute is resolved in favor of Indemnifying  Party in the
manner provided in clause (c)  below, the  Indemnifying  Party          will not be
 required  to bear the costs and  expenses  of the  Indemnified  Partys  defense or of
the  Indemnifying  Partys          participation  therein at the Indemnified Partys
request,  and the Indemnified Party will reimburse the Indemnifying Party in
         full for all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation.

(c)    If the
Indemnifying  Party notifies the Indemnified Party that it does not dispute its liability
to the Indemnified Party with          respect to the Third Party Claim or fails to
notify the Indemnified  Party within the Dispute Period whether the  Indemnifying
         Party  disputes its  liability  to the  Indemnified  Party with respect to such
Third Party Claim,  the Loss arising from such          Third Party Claim will be
conclusively  deemed a liability of the Indemnifying  Party and the Indemnifying Party
shall pay the          amount of such Loss to the Indemnified Party on demand following
the final  determination  thereof.  If the Indemnifying Party          has timely
disputed its liability with respect to such claim,  the Indemnifying  Party and the
Indemnified  Party will proceed          in good faith to negotiate a resolution  of such
 dispute,  and if not resolved  through  negotiations  within the  Resolution
         Period, such dispute shall be resolved by arbitration as provided herinafter.

(d)    In the event
any  Indemnified  Party should have a claim  against any  Indemnifying  Party that does
not involve a Third Party          Claim,  the Indemnified  Party shall deliver an
Indemnity  Notice with reasonable  promptness to the  Indemnifying  Party. The
         failure by any Indemnified  Party to give the Indemnity  Notice shall not impair
such partys rights  hereunder  except to the          extent that an Indemnifying Party
 demonstrates that it has been irreparably  prejudiced  thereby.  The Indemnifying Party
and          the  Indemnified  Party will proceed in good faith to  negotiate a
resolution  of such  dispute,  and if not resolved  through          negotiations within
the Resolution Period, such dispute shall be resolved by arbitration as provided
hereinafter.

|10. | TERMINATION
|--- | -----------

| | 10.1 | Termination
| | ---- | -----------

Anything  contained
 herein  to  the  contrary  notwithstanding,  this  Agreement  may  be  terminated  and
 the  transactions          contemplated  hereby  abandoned  at any time  prior to the
Date of the  Merger  by, on one side,  the TI  Parties  (which  for          purposes of
this  Section  shall act  together  and shall be deemed to be a single  party),  and,  on
the other  side,  the BT          Parties (which for purposes of this Section shall act
together and shall be deemed to be a single party):

|(a) | by
  mutual written agreement of the Parties hereto;
|--- | ----------------------------------------------------

|(b) | by
  any TI Party,  if any of the conditions set forth in Section 2.10 shall have become
   impossible of  fulfillment,  and shall                   not have been waived by the TI
  Parties;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | by
  any TI Party,  if the merger does not occur on or prior to November 30, 2005. If, after
  the date of November 30, 2005, a TI                   Party does not terminate this
   Agreement,  BT shall be released from the covenants from the covenants and obligations
                  set forth in Sections 6.2 and 6.3, above;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | by
  any TI Party, upon occurrence of a direct or indirect change of Control of BTC.
|--- | ------------------------------------------------------------------------------------

| | 10.2 | Effects
of Termination
| | ---- | ----------------------

In the event of
 termination of this  Agreement  pursuant to this Section 10, written notice thereof
shall  forthwith be given          to the other party and the transactions  contemplated
by this Agreement shall be terminated,  without further action by either          party.

| | 10.3 | No
Release
| | ---- | ----------

Termination  of this
 Agreement  notwithstanding,  nothing in this Section 10 shall be deemed to release
either party from any          liability for any breach by such party of any of its
 obligations  under this Agreement or to impair the right of either party          to
compel specific performance by the other party of its obligations under this Agreement.

|11. | MISCELLANEOUS
|--- | -------------

| | 11.1 | Notices
| | ---- | -------

Any notices, requests,
 claims, demands,  instructions and other communications to be given hereunder to any
party shall be in          writing and  delivered  in person,  sent by  certified  mail,
 postage  prepaid,  return  receipt  requested,  or by facsimile          transmission
with a confirmed  telephonic  transmission  answer back, to the following  addresses (or
at such other address or          number as is given in writing by other party to the
other pursuant hereto):

If to the TI Parties:

TIM BRASIL SERVIÇOS E
PARTICIPAÇÕES S.A.
Avenida das Américas, 3434 
Bloco 1, 6.o andar

Centro Empresarial Mário Henrique Simonsen 
Barra de Tijuca
 Rio de Janeiro, RJ, Brazil 
Attn. Mr. Mario Cesar Pereira de Araujo - fax n° +55 21
40094205

TIM INTERNATIONAL N.V.
1629 Strawinskylaan  WTC Tower B, 16th floor  1077 ZX Amsterdam,
The Netherlands  Attn. Mr. Francesco Lobianco  fax n° +31 20 3011102

If to BTC (prior to
the Date of the Merger):

14 BRASIL TELECOM
CELULAR S.A. SIA SUL ASP  Lote D, Bloco B, Térreo  parte  Brasília,
DF, Brazil  Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237  Attn. Mr.
Sami Arap Sobrinho (General Counsel) - fax n° +55 61 4151870

If to BT:

BRASIL TELECOM S.A.
SIA SUL, ASP,  Lote D, Bloco B 
Brasília, DF, Brazil
Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237  Attn. Mr. Sami Arap
Sobrinho (General Counsel) - fax n° +55 61 4151870

| | 11.2 | Effects,
Amendments and Assignment
| | ---- | ----------------------------------

This  Agreement,  all
of the  provisions  hereof and the Annexes  hereto shall be binding upon and inure to the
benefit of the          Parties  hereto and their  respective  successors  and permitted
 assigns.  This Agreement may be amended only upon the mutual          written  consent
of the parties hereto.  No party shall assign its rights,  interests,  obligations or
liabilities  under this          Agreement or delegate its duties without the prior
written consent of the other party.

| | 11.3 | Confidentiality
| | ---- | ---------------

The  existence  and
the  coming  into  force of this  Agreement,  as well as all  information  disclosed  by
any Party (or its          representatives)  whether  before or after the date  hereof,
 in  connection  with the  transactions  contemplated  by, or the          discussions
 and  negotiations  preceding,  this  Agreement  to any  other  Party  (or  its
 representatives)  shall  be  kept          confidential  by such other Party and its
 representatives  and shall not be used by any Persons other than as contemplated by
         this Agreement,  except to the extent that the Party  disclosing such
 information can prove (i) it was known by the recipient          when received,  (ii) it
is or hereafter becomes lawfully  obtainable from other sources,  (iii) is necessary or
appropriate to          disclose to a Public Authority having  jurisdiction  over the
Parties,  (iv) as may otherwise be required by law or (v) to the          extent such
duty as to  confidentiality  is waived in writing by the other Party. If this Agreement
is terminated,  each Party          shall use all  commercially  reasonable  efforts to
return,  upon written  request from the other Party,  all  documents  (and
         reproductions  thereof) received by it or its  Representatives  from such other
Party (and, in the case of reproductions,  all          such  reproductions  made by the
receiving  Party) that include  information not within the exceptions  contained in the
first          sentence of this Section 11.3,  unless the recipients provide assurances
reasonably  satisfactory to the requesting Party that          such documents have been
destroyed.

| | 11.4 | Entire
Agreement
| | ---- | ----------------

This  Agreement
 constitutes  the entire  agreement  between the parties with respect to the subject
matter hereof and thereof          and  supersedes  any prior  agreement or
 understanding  between the parties  with  respect to the same  matter.  There are no
         representations,  warranties,  undertakings  or  agreements  between the parties
 with  respect to the subject  matter of this          Agreement except as set forth
herein or therein.

| | 11.5 | Further
Assurances
| | ---- | ------------------

Consistent  with the
terms and conditions  hereof,  each party shall do and perform or cause to be done and
performed all such          further acts and things and shall execute and deliver all
such other  instruments,  certificates,  and other  documents as any          other party
hereto may  reasonably  require in order to carry out the intent and accomplish the
purposes of this Agreement and          the consummation of the transactions contemplated
hereby.

| | 11.6 | Third
Party Beneficiaries
| | ---- | -------------------------

All rights of the TI
 Parties  under this  Agreement  may be  exercised  by TIMB and or any of its
 Subsidiaries  to which the          clients,  activities,  operations,  assets or
liabilities  of BTC are  transferred,  directly or  indirectly,  by TIMB, in any
         manner  whatsoever,  including  spin-off and or merger and or sale.  Except as
 specifically  set forth or referred to herein,          nothing  expressed or implied is
intended or shall be construed to confer upon any person,  other than the Parties  hereto
and          their successors and permitted assigns, any rights or remedies under or by
reason of this Agreement.

| | 11.7 | Controlling
Language
| | ---- | --------------------

The parties may
execute this Agreement in versions in the English and in the Portuguese  languages,
 provided that the English          language  version of this Agreement shall be
controlling  for all purposes  except that of the Protocol,  where the Portuguese
         shall prevail.

| | 11.8 | Severability
| | ---- | ------------

In the event any term
or provision of this Agreement shall be deemed to be illegal,  invalid or unenforceable
 for any reason,          such  illegality,  invalidity  or  unenforceability  will not
affect any other term or  provision  of this  Agreement  and the          parties  shall
 endeavor  to  replace  the  invalid  or null and void  provision(s)  with such  which
 correspond  best to the          intentions of the parties hereto.

| | 11.9 | Governing
Law
| | ---- | -------------

This  Agreement
 (including  the  arbitration  clause set forth in section 11.10) and the other Protocol
shall be governed by,          and construed in accordance with, the laws of Brazil.

| | 11.10 | Arbitration
| | ----- | -----------

Any dispute,
 controversy or claim between the TI Parties, on the one side, and the BT Parties,  on
the other,  arising out of          or relating to this Agreement and to the Protocol
 (including the breach,  termination or invalidity  hereof or thereof) shall          be
finally  settled by binding  arbitration  in accordance  with the Rules of Arbitration
 (the Rules) of the  International          Chamber of Commerce  ICC (the  Chamber),
 in accordance  with the provisions of this Section.  For purposes of this Section
         or any arbitration  initiated  pursuant hereto, (i) the TI Parties shall always
act together as a block and shall be deemed to          be a single  party,  and (ii),
 prior to the Date of Merger,  the BT Parties shall always act together as a block and
shall be          deemed to be a single party.

|(a) | The
 arbitration  tribunal shall consist of three (3)  arbitrators,  elected and replaced in
accordance  with this section and                   with the Chambers Rules.  Each party
shall appoint one (1) arbitrator,  and such  party-appointed  arbitrators shall
                  appoint the third arbitrator, who shall serve as the chairman of the
arbitral tribunal.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The
party  willing to initiate the  arbitration  shall  deliver a written  notice to the
other  party,  which notice shall (i)                   describe in  reasonable  detail
the  dispute,  controversy  or claim,  (ii) demand the  submission  of such  dispute,
                  controversy  or claim to  arbitration,  and (iii) contain the name of
the arbitrator to be appointed by such party to                   the arbitral tribunal.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | The
other party shall have a period of ten (10) days as of the receipt of the notice
 mentioned in the preceding  paragraph to                   appoint the second
 arbitrator  to the arbitral  tribunal.  Should such party fail to timely  appoint its
 arbitrator                   pursuant to this  paragraph,  such  arbitrator  shall be
appointed by the Chamber  pursuant to the  provisions of the                   Rules.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The
two  arbitrators  so appointed  shall,  within ten (10) days as of the date on which the
second  arbitrator was appointed,                   jointly appoint the third arbitrator
and chairman of the arbitral tribunal.  If the two  party-appointed  arbitrators
                  cannot agree on the appointment of the third  arbitrator  within such
10-day period,  then such  arbitrator  shall be                   appointed by the
Chamber, pursuant to the provisions of the Rules.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | The
 arbitration  shall take  place in the City of  Brasilia,  DF,  Brazil,  and the
 language  to be used in the  arbitration                   proceedings shall be English.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | The
arbitrators shall not decide or render judgments in equity.
|--- | ---------------------------------------------------------------

|(g) | The
 arbitration  award shall be issued and  delivered in the City of Brasilia,  DF,  Brazil
, and shall contain (i) a report,                   including the name of the parties and
a summary of the dispute  submitted to arbitration;  (ii) the basis and grounds
                  of the decision,  addressing  the matters of fact and matters of law;
 (iii) the decision,  in which the  arbitrators                   shall solve the matters
 submitted to the arbitration and shall establish the deadline for the parties to comply
with                   the decision,  if applicable;  and (iv) the date on which and the
place where the arbitration  award has been issued.                   The arbitration
 award shall be signed by all of the arbitrators.  The arbitration  award shall be final,
 conclusive                   and binding upon all parties.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(h) | Prior
to the institution of the arbitration,  any party can seek in court the required interim,
urgent, preventive or coercive                   measures.  After the institution of the
arbitration,  the arbitrators shall be authorized to, at their own initiative
                  or at the request of either party, to seek in court any required
urgent,  preventive or coercive measures, as per the                   provisions of
article 22, paragraph 4, of Law No. 9,307 of September 23, 1996.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | Should
a party resist to the institution of arbitration,  such party shall be subject to a
penalty in an amount  equivalent to                    1 million,  payable to the other
 party,  without  prejudice  to such other  partys  right to initiate the lawsuit
                  contemplated by article 7 of Law No.  9,307/96.  Any challenges by a
party to the appointment of an arbitrator  based                   on such arbitrators
suspicion or impediment shall not be deemed as resistance to the institution of the
arbitration.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IN WITNESS WHEREOF,
the parties execute this instrument on the date and in the place first above
written, in five (5) counterparts of same tenor and content, in the presence of the
undersigned witnesses.



TIM INTERNATIONAL
N.V.

|____________________________________Marco De Benedetti | ____________________________________      Francesco S. Lobianco
|------------------------------------------------------ | ---------------------------------------------------------------
|Managing Director                                      | Managing Director                                              

TIM BRASIL SERVIÇOS
E PARTICIPAÇÕES S.A.

|____________________________________Marco E. Patuano | 
|---------------------------------------------------- | 
|Attorney-in-fact                                     | 

BRASIL TELECOM S.A.

|____________________________________Carla Cico | ____________________________________Sami Arap Sobrinho
|---------------------------------------------- | ------------------------------------------------------
|Chief Executive Officer                        | Chief Legal Officer                                   

14 BRASIL TELECOM
CELULAR S.A.

|____________________________________Carla Cico | ____________________________________Sami Arap Sobrinho
|---------------------------------------------- | ------------------------------------------------------
|Chief Executive Officer                        | Chief Legal Officer                                   

Witnesses:

|1. | ____________________________ | 2. | ____________________________
|-- | ---------------------------- | -- | ----------------------------
|   | Name:                        |    | Name:                       
|   | RG:                          |    | RG:                         
|   | CPF:                         |    | CPF:                        



ANNEX 1

PROTOCOL AND
JUSTIFICATION                      OF THE MERGER OF 14 BRASIL TELECOM CELULAR S.A. INTO
TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.

By this private
 instrument,  1) BRASIL  TELECOM S.A., a Brazilian  company with head office at SIA SUL,
ASP, Lote D, Bloco B, Brasília,  DF,  Brazil,  CNPJ/MF no.  76.535.764/0001-43,  herein
 represented  by its  Officers,  [name and  personal  data of signing officers]
 (hereinafter  referred  to as BRASIL  TELECOM);  2) TIM  INTERNATIONAL  N.V.,  a Dutch
 company  with head  office at 1629 Strawinskylaan  WTC, Tower B, 16th floor, 1077 ZX
Amsterdam,  The Netherlands,  herein represented by its  attorney-in-fact,  [name and
personal data of attorney-in-fact]  (hereinafter  TIMINT);  3) 14 BRASIL TELECOM
CELULAR S.A., a Brazilian wholly-owned subsidiary of BRASIL  TELECOM  with  head  office
 at  SIA  SUL  ASP,  Lote  D,  Bloco  B,  Térreo    parte,   Brasília,  DF,  Brazil,
 CNPJ/MF  no. 05.423.963/0001-11,  herein  represented by its Officers,  [name and
personal data of signing officers]  (hereinafter  referred to as BRASIL  TELECOM  CELULAR);
 and 4) TIM BRASIL  SERVIÇOS E  PARTICIPAÇÕES  S.A.,  a Brazilian  company  with head
office at Avenida das Américas,  3434, Bloco 1, 6.o andar, Centro Empresarial Mário
Henrique Simonsen,  Barra de Tijuca, Rio de Janeiro, RJ, Brazil,  CNPJ/MF no.
 02.600.854/0001-34,  herein represented by its Officers,  [name and personal data of
signing officers] (hereinafter referred to as TIM);

WHEREAS, BRASIL
TELECOM is the only shareholder of BRASIL TELECOM CELULAR;

WHEREAS TIMINT is the
controlling shareholder of TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.;

The parties agree to
enter into this Protocol and  Justification of the merger of BRASIL TELECOM CELULAR into
TIM, pursuant to articles 224 and 225 of Law 6,404/76, as follows:

1.       REASONS AND
PURPOSES OF THE OPERATION

The merger of BRASIL
 TELECOM  CELULAR into TIM, once  implemented  and followed by the other actions
 described  below,  will result in higher efficiency for BRASIL TELECOM, the only
shareholder of BRASIL TELECOM CELULAR, and for TIM.

1.1      Background.

The National
 Telecommunications  Agency  Anatel  issued a  competitive  bidding  process in August
2002 for the award of new personal communication service (SMP) in the D and E frequency
sub-bands (the Tender).

BRASIL TELECOM holds
(i) concessions to exploit domestic long distance  (LDN) switched fixed telephony
 service (STFC) and local STFC in Region II under the General Licensing Plan (PGO);
 (ii)  authorizations to exploit Local STFC and LDN STFC in Regions I and III and Sectors
20, 22 and 25 of Region II of the PGO; and  authorizations to exploit  International
 Long Distance (LDI) STFC in Regions I, II and III of the PGO;

BRASIL TELECOM
 CELULAR,  a wholly-owned  subsidiary  (subsidiária  integral) of BT, holds
 authorizations  to render personal mobile  service  (SMP)  in Region II,  Areas 5, 6,
7 covering  all such  Region II of the  PGA-SMP,  (the  BRASIL  TELECOM  CELULAR
Authorizations) and the relevant E radiofrequency  sub-bands associated with the
BRASIL TELECOM CELULAR  Authorizations (the BRASIL TELECOM CELULAR Frequencies);

TIMINT is the
controlling  shareholder of TIM, which,  in turn, is the direct or indirect  controlling
 shareholder of certain companies that hold SMP  Authorizations in Regions I, II and III
of the PGA-SMP and LDN STFC and LDI STFC  authorizations in Regions I, II and III of the
PGO;

ANATEL,  on January
16, 2004,  issued Act no. 41.780,  which was published in the Diário Oficial da União on
January 19, 2004. Such Act acknowledges  certain regulatory overlaps regarding BRASIL
TELECOM,  BRASIL TELECOM CELULAR, and TIM, providing specific rules for their solution.

1.2      The Merger
and Further Transactions.

After  BRASIL  TELECOM
 CELULAR is merged into TIM, it is  envisaged  that its  activities,  assets,
 liabilities  and clients relating to the provision of SMP are absorbed by operational
subsidiaries of TIM (the Subsidiaries).

1.3      Strategic
Advantages of the Merger.

The  implementation
 of the merger and of the  operations  referred to in section 1.2 will enable the group
of Telecom  Italia International  N.V. and BRASIL  TELECOM,  including BTC and TIM, to
eliminate the  overlapping of licenses  referred to in ANATELs Act no. 41.780/2004 and
to comply with ANATELs orders contained in such Act.

The Brazilian market
is characterized by an increasing competition on pricing. The larger,  nationwide mobile
players, capable of exploiting  significant  economies of scale,  will have competitive
 advantages,  leading to a concentration  of the market.  BRASIL TELECOM is aware that
 BRASIL  TELECOM  CELULAR,  as a fourth  entrant  in only one  region,  will face a
 disadvantage  in  developing profitably only a regional business.

In addition, BRASIL
TELECOM, in order to retain its most valuable customers,  needs to provide them a
nationwide mobile offer, enriched by innovative value added services, focusing on
convergent services as distinctive element.

With the merger and
the operations  referred to in section 1.2 above, (i) TIM and the  Subsidiaries,  after
the required prior approvals of Anatel and any prior  consent of CADE,  will absorb the
 operations  and  customers of BRASIL  TELECOM  CELULAR,  (ii) the Licenses  will be
returned to the  Brazilian  granting  authority,  and (iii) TIMs  Subsidiaries  will
 renounce  their long  distance licenses  and, to the extent  permitted by existing
 regulation,  rely on BRASIL  TELECOM for all its long distance  requirements  that would
be granted on a preferred customer basis (subject to any requirements of
 non-discrimination),  providing significant  additional scale to BRASIL TELECOM.

1.4      Regulatory
Approvals.

The merger and the
transactions referred to in section 1.2 above must be submitted for approval of ANATEL
and CADE.

1.5      Operational
Agreements.

Concurrently with the
merger of BRASIL TELECOM CELULAR into TIM and the other operations  referred to in
section 1.2 above, it is envisaged  that BRASIL TELECOM and TIM, or the  Subsidiaries,
 as the case may be, will, in order to increase for BRASIL TELECOM the advantages of the
merger,  enter into a Long Distance services  agreement,  pursuant to which BRASIL
TELECOM will provide such services to TIM, or the Subsidiaries,  as the case may be, and
into other operational  agreements.  In addition, the existing agreements between BRASIL
TELECOM and BRASIL TELECOM CELULAR will be reviewed and amended,  or integrated into the
new agreements,  as necessary for their terms and  conditions to reflect arms length
 bases.  The specific  terms and  conditions  of each of such new  agreements  and of any
amendments to existing  agreements  will be negotiated  and agreed to by BRASIL TELECOM
and TIM, or the  Subsidiaries,  as the case may be, on an arms length  conditions
 respecting  the existing  sectorial and antitrust  regulations,  and will be based on
the following principles:

|a) | BRASIL
   TELECOM will rely on the mobile  network of TIM and the  Subsidiaries  to continue
   offering its  distinctive offer based on convergent services in compliance with current
  regulation;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) | BRASIL
  TELECOM will exploit the highest  know-how of the GSM technology  provided by TIM in
  order to offer innovative value added services and mobile office solutions to its
  customers;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) | BRASIL
  TELECOM will create synergies between the two distribution networks:
|-- | -----------------------------------------------------------------------------

| | (i) | BRASIL
  TELECOM will increase the  capillarity of its commercial  presence by exploiting the
   distribution  network of          TIM and the  Subsidiaries  in Region II (more than
  3.400 Points of Sale,  of which more than 700 Corporate and 15 owned Points          of
  Sale),  where a range of services  would be provided,  from a friendly  contact  point (
   information  on BRASIL  TELECOM          services) to the sale of convergent services,
  and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | BRASIL
  TELECOM will earn from the promotion of services of TIM and the Subsidiaries through its
  distribution network;
| | ---- | -------------------------------------------------------------------------------------------------------------------------

|d) | BRASIL TELECOM will be the preferred provider of TIM and the Subsidiaries for long distance services and on a preferential and on a most favored customer basis, to the extent permissible under applicable regulation;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|e) | BRASIL TELECOM will be a preferred provider of TIM and the Subsidiaries for leased lines, cables and backbone transmission facilities that will be granted on a most favored customer basis and subject to any requirements of non-discrimination;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|f) | BRASIL TELECOM will be a preferred provider of TIM and the Subsidiaries, on a most favored customer basis, for Site and Infra-Structure Sharing to support its Network rollout plan;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|g) | BRASIL
 TELECOM and TIM will jointly  evaluate the  opportunities  of creating  synergies  from
the  optimization  of operating processes like logistics (e.g. optimal management of
network and IT spare parts using the warehouses of both operators).
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1.6      Anticipated
Results of the Merger.

For the reasons above,
it is anticipated  that the merger will result in increased  efficiency for BRASIL
TELECOM and for TIM, namely:

|a) | For
BRASIL TELECOM:
|-- | -------------------

| | (i) | nationwide
 coverage in providing,  whether  directly or indirectly in accordance with existing
 regulation,                   telecommunication services,
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | enhancement
of attractiveness to business customers
| | ---- | ---------------------------------------------------

| | (iii) | economies
of scale,
| | ----- | -------------------

| | (iv) | provision
of long distance services to TIM and the Subsidiaries on a preferred and
non-discriminatory basis,
| | ---- | ------------------------------------------------------------------------------------------------------------

| | (v) | access
to value added services of TIM and the Subsidiaries,
| | --- | -----------------------------------------------------------

| | (vi) | assurance
of technological evolution,
| | ---- | -------------------------------------

| | (vii) | avoidance
of new mobile capital expenses and start-up losses,
| | ----- | -------------------------------------------------------------

| | (viii) | minimized
risk;
| | ------ | ---------------

|b) | For
TIM:
|-- | --------

(i) enrichment of
convergent offer,

(ii) exploitment of
BRT distribution  network and use of the distribution network of TIM and the Subsidiaries
for                   fixed services.

2.       STATUS OF
BRASIL TELECOM CELULAR PRIOR TO THE MERGER

2.1      The  capital
 of  BRASIL  TELECOM  CELULAR,  which has been  fully  paid,  is one  billion  and four
 hundreds  million  reais (R$1,400,000,000.00), divided into 1,400,000 (one million and
four hundred thousands) common shares with no par value.

2.2.     All shares of
BRASIL TELECOM CELULARs capital are free and clear of liens and encumbrances.

2.3      BRASIL
TELECOM CELULAR is a wholly-owned subsidiary (subsidiária integral) of BRASIL TELECOM.

3.       STATUS OF TIM
PRIOR TO THE MERGER

3.1      The capital
of TIM,  which has been fully paid, is R$  9.280.705.828,77,  divided into eleven
 billion  seven  hundred  thirty million five hundred  twenty-three  thousand one hundred
 thirty-two  (11.730.523.131)  common shares with no par value. The authorized capital of
TIM is ten billion reais (R$10.000.000.000,00)

3.2      All shares of
TIMs capital are free and clear of liens and encumbrances.

4.       CRITERIA FOR
THE EVALUATION OF BRASIL TELECOM CELULAR AND TIM, AND DATE OF THE MERGER

4.1      For  purposes
of  determining  the amount of the  increase of TIMs  capital  and the  exchange  ratio
of the shares of BRASIL TELECOM  CELULAR,  BRASIL  TELECOM will hire an  independent
 appraiser.  Such  appraiser  will be Merrill  Lynch as proposed by BRASIL TELECOM and
accepted by TIMINT.  Such  appraiser  will  establish the intrinsic  equity value of TIM
and the intrinsic  equity value of BRASIL TELECOM  CELULAR as of March 31, 2005, in each
case  considering any  intercompany  debt in either BRASIL TELECOM CELULAR or TIM as
equity to the extent such debt will be  capitalized  by the time the merger occurs.
 Similarly the  appraisers  valuation of BRASIL TELECOM CELULAR shall not take into
account any commercial  arrangements  between TIM and BRASIL TELECOM CELULAR entered into
after the date  hereof.  The  valuation  of BTC shall take into  account the effects of
the  indebtedness  of BRASIL  TELECOM  CELULAR (for these purposes,  any vendor
 financing  accounts  payable past due by more than 90 days and any accounts payable with
a maturity greater than 90 days from the date of this  Protocol will also be considered
as debt).  BRASIL  TELECOM  CELULAR will furnish to such  appraiser its audited (or
subjected to limited  review) March 31, 2005 financial  statements,  as well as the
historical  financial  information  and forecasts  normally  required  for similar
 assignments,  to the extent  available,  for such  appraiser to  establish  BRASIL
 TELECOM CELULARs  intrinsic net equity value.  TIM will furnish to such appraiser its
audited (or subjected to limited  review) March 31, 2005 financial statements,  as well
as the historical financial information and forecasts normally required for similar
assignments,  to the extent  available,  for such appraiser to establish  TIMs
 intrinsic net equity value.  All such  information  and forecasts  shall be supplied to
the  appraiser  and used by the  appraiser  solely for the  purposes of  establishing  TIMs
and BRASIL  TELECOM  CELUALRs respective  intrinsic equity value, and will be subject to
a confidentiality  agreement  including a provision that the appraiser shall commit that
the  information  and  forecasts  of one Party are not  furnished to or shared with the
other  without  such Partys  prior consent (except to the extent  unavoidably  reflected
in the appraisal  report).  BRASIL TELECOM will contractually bind such appraiser to
prepare its  appraisal  within 30 days of the date hereof.  The  appraiser  shall also be
required to provide a fairness  opinion to BRASIL TELECOM on the fairness of the
 consideration  to be received by BT in connection with the merger of BRASIL TELECOM
CELULAR into TIM. The appraisers cost shall be borne exclusively by BRASIL TELECOM.  The
values  determined  through the appraisal must be specific point estimates and not a
range or ranges.

4.2      The intrinsic
 equity value (as described  above) of BRASIL TELECOM  CELULAR as per the appraisal
 report will be the value of the capital increase of TIM.

5.       ELEMENTS
WHICH WILL FORM THE ASSETS TO BE MERGED INTO TIM.

5.1      TIM will
succeed BRASIL TELECOM CELULAR in all of its rights and  obligations,  as provided by
applicable  law,  including but not limited to all contracts, agreements, licenses,
agreements related to leased lines, cables and backbone transmission facilities.

6.       INCREASE OF
TIMS CAPITAL

6.1      It is
estimated that the increase of TIMs capital will be in the amount of sixty-seven million
Reais (R$ 67.000.000,00).

6.2      The number of
shares  that will be issued to BRASIL  TELECOM  will be the number  that  assures  BRASIL
 TELECOM a  percentage interest  in TIM after the merger  equal to the ratio  obtained
 by dividing  the  intrinsic  equity  value of BRASIL  TELECOM  CELULAR (resulting from
the appraisal  report as per 4.1 above) by the sum of the intrinsic  value of TIM
(resulting from the appraisal  report as per 4.1 above) and that of BRASIL TELECOM
CELULAR (resulting from the appraisal report as per 4.1 above), as follows:

NS = ES(IEVBTC /IEVT ),

where:

NS = number of new
shares of TIMs capital that will be issued to BRASIL TELECOM

ES = number of
existing shares of TIMs capital

IEVBTC = intrinsic
 equity value of BRASIL TELECOM CELULAR as appraised in the appraisal  report which is
adopted pursuant to paragraph 4 hereof

IEVT = intrinsic
equity value of TIM as appraised in the appraisal report which is adopted pursuant to
paragraph 4 hereof

6.3      It is
estimated  that,  after the merger,  TIMs  capital will be R$  9.347.705.828,77,
 consisting of  11.847.828.360  common shares,  all of which with no par value. The
definitive  figures will be those which result from the foregoing criteria of this
section 6 and the appraisal report.

7.       GENERAL
CONDITIONS OF THE MERGER

|7.1 | The
shares of BRASIL TELECOM  CELULARs capital held by BRASIL TELECOM,  its only
 shareholder,  will be extinguished with the          merger.  The new shares of the
capital of TIM that,  pursuant to paragraph 6.3 hereof,  are created as a result of the
merger,          will be attributed to BRASIL TELECOM.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.2 | The
common  shares  created by reason of the merger will confer upon its holder the same
 rights  currently  conferred  by the          shares of the same type.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.3 | As
a result of the merger,  TIMs by-laws will be amended in order to reflect the capital
 increase set forth in section 6. No          other amendments will be effected in TIMs
by-laws.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.4 | As
a result of the merger, BRASIL TELECOM CELULAR will be extinguished.
|--- | -----------------------------------------------------------------------

|7.5 | The
parties may  execute  this  Protocol in  versions  in the  English  and in the
 Portuguese  languages,  provided  that the          Portuguese language version of this
Protocol shall be controlling for all purposes.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.6 | This
Agreement shall be governed by, and construed in accordance with, the laws of Brazil.
|--- | ------------------------------------------------------------------------------------------

And,  having thus
agreed,  the parties  execute this instrument in four originals of equal form and content
in the presence of the two undersigned witnesses.

Rio de Janeiro, 28
April 2005

| | Brasil Telecom S.A.                     
| | ----------------------------------------
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               
|
|
| | TIM International N.V.                  
|
| | By: ___________________                 
| | Name: Marco De Benedetti                
| | Title: Managing Director                
|
| | By: ___________________                 
| | Name: Francesco Lobianco                
| | Title: Managing Director                
|
|
| | 14 Brasil Telecom Celular S.A.          
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               
|
|
| | TIM Brasil Serviços e Participações S.A.
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               
|
| | By: ___________________                 
| | Name: _________________                 
| | Title: __________________               

Witnesses:

|1. _____________________     | 2. ____________________     
|---------------------------- | ----------------------------
|Name: _________________      | Name: _________________     
|Identity card no.: _________ | Identity card no.: _________