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Exhibits 4.12 




TERM OF
AUTHORIZATION No. 260/2003/SPB-ANATEL 




TERM OF AUTHORIZATION
FOR DELIVERY 
OF FIXED
SWITCHING TELEPHONE SERVICE, MODALITY

NATIONAL
LONG DISTANCE,
 SIGNED BY THE
NATIONAL TELECOMMUNICATIONS AGENCY

(AGÊNCIA NACIONAL DE
TELECOMUNICAÇÕES – 
ANATEL)
AND CTMR CELULAR S.A.  




By way of this instrument, on the one
side Agência Nacional de Telecomunicações, registered
under CNPJ/MF no. 02.030.715/0001-12, agency part of the UNION (UNIÃO), in the
terms of Federal no. 9,472, of July 16th 1997, henceforth herein called
Anatel, in this act represented by its President, LUIZ GUILHERME SCHYMURA DE
OLIVEIRA, Brazilian, married, engineer, RG no. 04.971.252-4 IFP-RJ and CPF/MF no.
810.878.107-87, jointly with Councilor LUIZ TITO CERASOLI, Brazilian, divorced,
engineer, RG no. 38.592/D-CREA/RJ and CPF/MF no.297.487.047-34, and on the other CTMR
CELULAR S.A., CNPJ n.o 02.332.397/0001-44, herein represented by its Power of
Attorney LUIS ROBERTO ANTONIK, Brazilian, married, RG no. 886.827-1 SSP/PR and CPF
n.o 091.935.029-15, sign this TERM OF AUTHORIZATION, henceforth
herein called TERM to be ruled by the following clauses and conditions: 




Chapter I – On
the Object 



Clause 1.1 – The object
of this TERM is establishing the conditions for delivery of Fixed Switching Telephone
Services, meant for use by the public in general (FSTS), delivered in private regime, in
the NATIONAL LONG DISTANCE, with mandatory condition of joint and simultaneous delivery in
the modality INTERNATIONAL LONG DISTANCE services, in the municipalities of Pelotas,
Capão do Leão, Morro Redondo and Turuçu, in the state
of Rio Grande do Sul, according to the Authorization rendered by way of Act no.
37,320, of June 30th 2003, published on the Federal Official Gazette of July
01st 2003. 



Single Paragraph – The
object of this TERM includes, where fitting, the delivery of the services in boundary
and limit areas in the terms of the regulations. 



Clause 1.2 – Fixed
Switched Telephone Services are telecommunication services that, by way of transmission of
voice and other signals, is meant for communication between specific fixed points, using
processes of telephone services. 



Clause 1.3 – The
AUTHORIZED PARTY is entitled to implant, expand and operate the trunks, networks and
switching centers needed to carry out the services, as well as explore these commercially,
in the terms of their regulation. 



Clause 1.4 — The
AUTHORIZED PARTY will ensure delivery of the services to any and all authorized
requesting parties and service users within the Service Delivery Area it addresses,
according to the regulation, and shall be in operation in up to 12 months counted from the
date the extract of this TERM was published on the Federal Official Gazette. 



Clause 1.5 — The
AUTHORIZED PARTY will maintain free of charge access for public emergency services
as defined in the regulation. 




Chapter II – On
the Value of the Authorization 



Clause 2.1 – The value of
the Authorization for delivery of FSTS in the Service Delivery Area(s) found in Clause 1.1
and shall be paid for in the form and condition established by way of specific act issued
by Anatel. 



§ 1o – The
value of the Authorization charge will be collected to the Telecommunication Services
Inspection Fund (Fundo de Fiscalização das Telecomunicações
– FISTEL), by way of Banking Collection Document issued by ANATEL. 



§ 2o — The
value paid for the Authorization does not include the public charge price for the right of
use for radio frequencies. 





Chapter III – On
Using Radio-frequencies and the Conditions for Delivery of Services 





Clause 3.1 – The
AUTHORIZED PARTY may, at onerous title, use, in the terms of the regulation, radio
frequencies for the implementation of fixed land-bound radio communication services,
needed for Delivery of the Services. 



Clause 3.2 — The right of
use for the radio frequencies mentioned in the preceding clause will be for a term of up
to 20 (twenty) years, counted from the date of concession of the radio frequency use
authorization, extendable, one single time, for an equal period, with this authorization
being granted at onerous title. 



Clause 3.3 — The
AUTHORIZED PARTY commits to delivering the service object of the Authorization in such a
way as to fully address obligations inherent to the service delivered under private
regime, which are totally applicable to this case, addressing the provisions of this TERM. 



Single Paragraph – Not
addressing the obligations related to the object of this TERM will render the AUTHORIZED
PARTY liable to the application of the sanctions foreseen in it, temporary suspension by
Anatel or, even, extinction of this Authorization, in the form set out in art.137 of Law
no.9.472, of 1997. 



Clause 3.4 — The
AUTHORIZED PARTY shall explore the service object of this Authorization at its own
responsibility and risk, within the regime of fair and open competition established in Law
no. 9,472, of 1997. 



Single Paragraph — The
AUTHORIZED PARTY will not be entitled to any form of exclusivity, any hypothesis of
financial economic balance, nor will be entitled to claim for rights, when new companies
for delivery of the same services are admitted, in public or private regime. 



Clause 3.5 — The
AUTHORIZED PARTY commits to delivering the service, regardless of the competition
environment existing in the Service Delivery Area of the authorized party. 



Clause 3.6 — The
AUTHORIZED PARTY shall establish a uniform Basic Service Plan and this shall be
mandatorily offered to all tentative users throughout its FSTS service delivery area. 



Clause 3.7 — The
AUTHORIZED PARTY shall establish the prices that it will practice in the delivery
of FSTS, defining the Service Plans using structure, forms, criteria and values that shall
be reasonable and not discriminatory. 



Clause 3.8 — The
AUTHORIZED PARTY may establish Alternative Service Plans with structure, criteria and
values differing from the Basic Service Plan, which shall constitute an option for its
users or tentative users, voided any form of discrimination in treatment. 



Clause 3.9 — the
AUTHORIZED PARTY shall widely divulge its Service Plans, Basic or Alternative, with 2
(two) days advance notice before effective sales, bringing to Anatel’s knowledge
their entire content, in up to 5 (five) working days after the onset of the commercial
sales of each Plan. 



Clause 3.10 — The
AUTHORIZED PARTY shall send Anatel, a copy of the Contract models signed for delivery of
FSTS in up to 10 (ten) working days after the onset of commercial sales. 




Chapter IV – On
Service Quality Criteria. 



Clause 4.1 – Adequate
service quality by the AUTHORIZED PARTY is presumed by this Authorization, with this being
understood as a service that addresses and satisfies the conditions of regularity,
efficiency, security, up to date, general nature and courtesy. 



§ 1o —
Regularity shall be characterized by the uninterrupted delivery of the service with
strict observance of the dispositions contained in the norms issued by Anatel. 



§ 2o —
Efficiency shall be characterized by achievement and maintenance of the parameters
contained in this TERM and by addressing service users within the terms foreseen in this
TERM. 



§ 3o — Security
in service delivery is characterized by confidentiality of the data related to
service usage by users, as well as full protection and preservation of secrecy of the
information transmitted within the scope of the delivery of its services, addressing the
provisions of ofinset V of Clause 7.1. 



§ 4o — Up to
date will be characterized by the modernity of the equipment, facilities and service
delivery techniques, with absorption of technological advances that definitively bring
about benefits for users, respecting the provisions of this TERM. 



§ 5o — General
nature shall be characterized through the non-discriminatory delivery of services to any
and all users, with the AUTHORIZED PARTY being mandated to deliver the services to any
person requesting this, in accordance with the dispositions of clause 1.4, in accordance
with the existing regulation. 



§ 6o — Courtesy
shall be characterized by respectful and prompt delivery to any and all authorized service
users, as well as the observance of the obligations to inform and address promptly and
politely everyone who, user or not, request from the AUTHORIZED PARTY information, steps
or any other form of request, as provided for in this TERM. 



Clause 4.2 — The
AUTHORIZED PARTY shall observe the parameters and indicators of the General Plan for
Quality Targets, approved in Resolution no. 30, of June 29th 1998. 



Single Paragraph – For
the calculation of the indicators, only data from localities with over 180 (one
hundred and eighty) days of uninterrupted commercial operation will be taken into account. 



Clause 4.3 — The
AUTHORIZED PARTY cannot, in the event of the interruption of service delivery, allege
delinquency by Anatel or the Union in fulfilling any of their obligations. 



Clause 4.4 – Delivery of
the authorized service can only be suspended in accordance with the Regulation of the
Fixed Switched Telephone Services, published by Anatel. 




Chapter V – On
the Numbering Plan 



Clause 5.1 – Once having
addressed the regulation, the AUTHORIZED PARTY commits to obeying the Numbering Regulation
for the Fixed Switched Telephone Services published by Anatel, approved through Resolution
no. 86 of December 30th, 1998. 



§ 1o — Costs
related to the necessary investments to allow portability of access codes will be divided
between the AUTHORIZED PARTY and the other telecommunications service delivery operators,
in public or private regime, in the terms of the Regulation for Management of Numbering
Resources, approved in Resolution no. 84 of December 30th 1998. 



§ 2o — Costs
related to managing the process of attribution and occupation of access codes in the
Numbering Regulation shall be ascribed to the AUTHORIZED PARTY, in the terms of the
Regulation for Management of Numbering Resources. 



Clause 5.2 — The
AUTHORIZED PARTY will be attributed the numbering resources, without exclusivity,
in the terms of the regulation. 



Clause 5.3 – The object
of TERM does not include the Operator Selection Code or the Specific Code, with the
provisions of the Regulations for Issuance of Authorization for delivery of FSTS having to
be fully addressed. 




Chapter VI – On
Charging Users 



Clause 6.1 – The billing
documents issued by the AUTHORIZED PARTY shall be produced in a clear and explanatory
manner, and shall list the type and quantity of each service delivered to the subscriber. 



Single Paragraph — The
AUTHORIZED PARTY may enter on the billing document, as long as clearly and explicitly
values owed resulting from the delivery of other services, as well as other commodities or
utilities related to the authorized service. 





Chapter VII – On
the Rights and Guarantees of Users and other Service Companies 






Clause 7.1 – once having
complied with the rules and conditions found in this TERM, the following constitute the
rights of users of the services, object of this Authorization: 



I – access to the service
and its fruition within the standards of quality, regularity and efficiency, foreseen in
this TERM and in the existing applicable regulations; 



II — the possibility of
requesting suspension or interruption of the service; 



III – non-discriminating
treatment in terms of the service access and fruition; 



IV – obtainment of
adequate information related to service delivery conditions and prices practiced; 



V – inviolability and
secrecy of its communication, addressed the legal and constitutional hypothesis and
conditions in terms of breaking of telecommunications secrecy or privacy; 



VI – non-suspension of
service to subscriber, with the latter’s request, except where due to current
outstanding debt resulting from use or for non-compliance with the obligations of the
duties defined in art. 4th of Law no. 9,472, of 1997; 



VII – prior knowledge of
any and all alterations in the service delivery conditions with direct or indirect impact
on the subscriber; 



VIII – privacy of billing
documents and in use or personal data by the AUTHORIZED PARTY; 



IX – prompt and efficient response
to complaints made by the subscriber to the AUTHORIZED PARTY; 



X – referral of
complaints or claims against the AUTHORIZED PARTY before Anatel and consumer defense
agencies; 



XI – reparation of
damages caused by violation of subscribers’ rights; 



XII – requirement of
observance of the contract terms of the contract signed for the delivery of the service;  



XIII – free choice of the
National or International Long Distance Operator; 



XIV – the non-obligation
to consume services or purchase goods or equipment that is not of interest, as well as the
non-obligation to submit to entitlement conditions for the service object of this
Authorization, in the terms of the regulation. 



§ 1o — The
AUTHORIZED PARTY shall observe the right of zealously preserving the secrecy inherent to
telephone services and the confidentiality of data and information, employing all the
means and technologies that ensure users of this right. 



§ 2o — The
AUTHORIZED PARTY shall make available the necessary technology resources for suspending
secrecy of telecommunications upon order from legal authorities, in the form of
regulation. 



Clause 7.2 – The
remaining telecommunications service operators will be assured, in addition to the rights
referred to in the preceding clause, the following rights: 



I – inter-connection to
the AUTHORIZED PARTY’s network in non-discriminatory economic and operational
conditions, under technically adequate conditions, in condition of isonomy and fairness of
prices addressing the strictly necessary for the delivery of the service, addressing the
pertinent Anatel regulations; 



II — on receiving the
service requested from the AUTHORIZED PARTY without any form of discrimination, at market
prices or at prices negotiated by the parties and with any reductions applicable, as a
function of costs avoided, due to large-scale consumption, addressing the pertinent
regulation; and 



III – obtaining
information that the AUTHORIZED PARTY has the duty to maintain, and that are necessary for
the delivery of services operated by them, maintaining the right of the AUTHORIZED
PARTY to preserve any data items included in business secrecy, as well as the rights
of third parties. 



§ 1o — Conflict
between the AUTHORIZED PARTY and other service companies will be settled
administratively by Anatel, in the terms of the regulations. 



§ 2o- Anatel will
perform permanent and on-going follow-up of the relationship between the service companies
that use the hereby authorized services and the AUTHORIZED PARTY, restraining behavior
that imply losses to any of the parties or that result in violation of the economic order
and free competition, informing, in these cases, the Administrative Council for Economic
Defense (ConselhoAdministrativo de Defesa Econômica – CADE), after
having practiced its competence in the form stated in art. 19, inset XIX, of Law no.
9,472, of 1997. 



Chapter
VIII – On Rights, Guarantees, Obligations and Restrictions of the AUTHORIZED PARTY 



Clause 8.1 – In addition
to the other obligations stemming from this TERM and inherent to the delivery of the
service, the AUTHORIZED PARTY will be responsible for: 



I – delivering the
service under strict and complete observance of the dispositions of this TERM, submitting
its activities totally to Anatel regulations; 



II – implementing all the
equipment and facilities needed for delivery of the services, object of this
Authorization, addressing the specifications mentioned in this TERM; 



III – supplying Anatel,
in the form and periods foreseen in the regulations, every piece of data and element
related to the services that might be requested; 



IV – submitting to
inspection by Anatel, allowing access by its agents, to the facilities used in delivering
the services, as well as pertinent accounting records. 



V – maintaining separate
accounting records for each service; 



VI – maintaining adequate
user information and service systems; 



VII – forwarding copies
of agreements and contracts related to the delivery of services with foreign
telecommunication service operators; 



VIII – strictly
respecting the right and obligation to secrecy of telecommunications, addressing the
legal and regulatory provisions; 



IX – respecting privacy
of subscribers in relation to billing documents and any personal information related to
users; 



X – submitting in advance
to Anatel any and all intended alterations to its Articles of Incorporation or By-Laws,
including splitting, merger, transformation, incorporation, as well as transfer of control
or alteration to the company capital; 



XI – ensuring all other
telecommunication service companies’ interconnection with its network, addressing the
terms of the pertinent regulation; 



XII – observing all
rights of the other telecommunications services companies, omitting from practicing any
form of discriminatory behavior, geared to impairing their activities; 



XIII — utilizing,
whenever required by regulations, equipment with certification issued by or accepted by
Anatel; 



XIV – addressing
technical norms and standards in force in Brazil, omitting from any form of discriminatory
practice in relation to goods and equipment produced in the Country; XV –
placing at the disposal of the authorities and civil defense agents, in cases of
public calamity, all the means, systems and availabilities requested for the purpose of
acting in support of or in giving support to impacted populations; 



XVI – addressing with
priority, the President of the Republic, his/her protocol representatives, entourage and
support staff, as well as foreign Heads of State, when on official visits or displacement
in the Brazilian territory; making available the necessary means for adequate
communication by these authorities, addressing the pertinent Anatel regulations; 



XVII – paying all
inspection and facility operation fees, in the form defined in the regulations; 



XVIII – publishing
annually, regardless of the legal regime to which it might subject, Balance sheets and
financial demonstratives prepared at the end of every social and fiscal exercise period,
addressing the provisions of the legislation in force and of Anatel regulation; 



XIX – addressing
the norms in force in the Country related to the use of foreign labor,
including in the higher qualification level functions and positions; 



XX – addressing the
agreements signed between Brazil and other Countries and international organizations, in
the form regulated by Anatel; 



XXI – sending, in the
periods defined by Anatel, a demonstrative chart of all shareholders detaining,
individually or jointly, a share equal or superior to 5% (five percent) of the
company’s voting capital; and 



XXII – delivering to
Anatel, information of technical, operational, economic and financial, society
shareholding and accounting natures, as well as any other requested. 



Single Paragraph — The
AUTHORIZED PARTY, its colligated, controlled or controlling companies must not condition
service offer to the paired consumption of any other service, nor offer advantages to the
user resulting from the fruition of additional services to those object of this TERM, even
when delivered by third parties. 



Clause 8.2 – With no loss
to the other provisions contained in this TERM and the guarantees assured in law, the
following are rights of the AUTHORIZED PARTY to: 



I – deliver services
within the scope of the company’s business strategy, freely defining its investments,
addressing the regulations of Anatel and the dispositions of this TERM; 



II – renounce the
delivery of the authorized service, according to the disposed in art. 142 of Law no.
9,472, of 1997, as long as this intention is manifested expressly, 6 (six) months in
advance, to Anatel and its users; 



III – appoint
representatives to follow up on Anatel’s inspection activities; 



IV — interrupt, according
to the rules established in clause 4.4 of this TERM, or not address the request for
delivery of services to subscribers, whose name is contained on the register of delinquent
subscribers; 



V – make available
the inter-connection with the other FSTS delivery companies, in non- discriminating
economic and operational conditions under technically adequate conditions and at isonomic
fair prices, addressing what is strictly necessary for the delivery of the service
addressing the pertinent Anatel regulations; 



VI – receive services
requested from the other operators free of any discrimination, at market prices or at
prices negotiated by the parties, and with the applicable reductions as a function of
costs avoided due to large-scale consumption regime, addressing the pertinent regulations; 



VII – obtain all
necessary information for the delivery of the services, as per inset VI, including those
related to billing, maintaining the right of other operators to preserve the secrecy of
their business data, as well as any similar third party rights; 



VIII – making available
the numbering resources in accordance with the regulations; 



IX – requesting from
Anatel confidentiality of information collected in the practice of the inspection
activities; and 



X – contracting from
third parties the performance of inherent, ancillary or complementary activities for the
service, as well as the implementation of associated projects. 



Clause 8.3 – During the
TERM of this contract, the AUTHORIZED PARTY shall be the sole responsible, before third
parties, for any acts by its staff, representatives or contracted parties, in delivery of
FSTS, as well as for the use of equipment, facilities or networks, releasing the Union and
Anatel from any complaints and/or indemnities. 



Clause 8.4 — The
AUTHORIZED PARTY cannot impair works of public interest, whatever the nature, whenever the
removal of facilities or telephone service networks becomes necessary in making feasible
interventions promoted, directly or indirectly, by any agency or entity of the Public
Administration. 



Clause 8.5 — The
AUTHORIZED PARTY shall agree directly with each Town Council its part in the delivery of
the services, as well as the other public utility service companies, about the conditions
for placement of posts and crossbars to suspend the aerial lines and cables and, also,
underground ducts and conduits meant for passing cables under streets and public places. 



§ 1o — The
AUTHORIZED PARTY shall show diligence before the owners of public or private assets over
or under which ducts or conduits have to be placed, or even install support structures for
these, obtaining the respective consent or use rights for this purpose. § 2o
— The AUTHORIZED PARTY shall promote before the respective municipal authorities
the necessary negotiations to establish the conditions to overcome the necessary
interferences in the delivery of the service, including felling and pruning of trees. 



Clause 8.6 – In the terms
of the provided for in art. 73 of Law no. 9,472, of 1997, the AUTHORIZED PARTY can deploy
posts, ducts, conduits and use rights belonging to or controlled by other
telecommunication service companies or of other services of public interest. 



§ 1o — Use of
the means referred to in the caput of this clause must be undertaken in a
non-discriminating manner and at fair and reasonable prices. 



§ 2o — The
AUTHORIZED PARTY shall make available to the other telecommunications service companies,
classified by Anatel as being of collective interest, the means owned or controlled by it,
referred to in caput of this clause, respecting the same conditions foreseen in the
preceding paragraph anterior. 



§ 3o — Whenever
the AUTHORIZED PARTY cannot come to an agreement with the other service companies in
relation to the use of the means referred to in this clause, it will be up to Anatel, in
isolation or jointly with the other regulating agencies involved, to define said use
conditions. 



Clause 8.7 — The
AUTHORIZED PARTY shall maintain during the term of this Authorization, a user information
and care center, operating 24 (twenty-four) hours a day, qualified to receive and process
requests and complaints by users handed in personally or through any distance
communication means. 



§ 1o — The
AUTHORIZED PARTY shall disclose to all users the addresses and access codes for the
customer information and care center, which shall mandatorily be clearly mentioned on the
FSTS Contract signed for the purpose of delivery of said services. 



§ 2o — The
AUTHORIZED PARTY shall make available and disclose the easy, free of charge access code
for referral of user complaints via telephone. 



§ 3o — All
requests, complaints or claims forwarded by users, through any means, shall receive a
serial number, which will be informed to users with a view to making follow-up by the
user, possible. 



§ 4o — Users
will be informed by the AUTHORIZED PARTY in the timeframes defined in the General Quality
Target Plan, of the measures that have been adopted as a function of the request or
complaint made. 



§ 5o — Should
Anatel verify the existence of difficulty for users in accessing the user information and
care center, it may determine that the AUTHORIZED PARTY must enhance the means of
access available, liable to considering the provisions foreseen in this, not being
addressed. 



Clause 8.8 – In
contracting services and in acquisition of equipment and materials, linked to the object
of this TERM, the AUTHORIZED PARTY commits to taking into account offers made by
independent suppliers, including national ones, and to basing its decisions, in relation
to the different offers made, on addressing objective pricing criteria, delivery
conditions and technical specifications, established in the pertinent regulation. 



§ 1o — In the
event of cases where there is an equivalence of offers, the AUTHORIZED PARTY commits to
using as tie-breaking criteria, preference for services offered by companies located in
the Country, equipment and materials produced in the Country, and, among these, those
deploying national technology, with the equivalence to which this paragraph refers being
defined cumulatively as: 



I – the national price is
equal to or lower that the imported price, placed in the national territory, including all
applicable taxes; 



II – the term for
delivery is compatible with the requirements of the service; and 



III – the technical
specifications established in the pertinent regulations are addressed and satisfied and
have certification issued or accepted by Anatel, where applicable. 



§ 2o — Services
are understood as those related to research and development, planning, project,
implementation and physical installation, operation, maintenance, supervision and
telecommunication system assessment tests. 



Clause 8.9 – The
AUTHORIZED PARTY, its controlled or controlling companies, or any of its shareholders with
participation, direct or indirect, equal to or higher than 5% (five percent) of the voting
shares of the AUTHORIZED PARTY, may only own non-voting stock from FSTS companies acting
in the same Area of Delivery and the same service modality, up to a limit of 20% (twenty
percent) of the company capital. 




Chapter IX – On
the Transfer and Company Composition Changes 



Clause 9.1 — Transfers
and changes in Company Composition are liable to the conditions established in arts. 7th,
98 and 136 of Law no. 9,472, of 1997, and must address the provisions of Resolution no.
101, of February 04th 1999, in Norm no. 04/98 – ANATEL, approved in
Resolution no. 76, December 16th 1998, in Norm no. 07/99 – ANATEL,
approved by Resolution no. 195, of December 7th 1999, and the subsequent
specific regulation. 




Chapter X – On
the Obligations and Prerogatives of Anatel 



Clause 10.1 – In addition
to other inherent prerogatives of its function as Regulating Agency and other obligations
stemming from this TERM, Anatel will: 



I – follow up and inspect
service delivery, targeting addressing the regulation 



II – regulate the
delivery of the authorized service;


 III – apply the sanctions foreseen in the
service regulation and, specifically, in this TERM; 



IV – show zeal for the
quality of the service, receive, study and solve user claims and complaints, notifying
them, in up to 90 (ninety) days, of the measures taken with a view to interceding on the
repression or the transgression of their rights; 



V – declare extinct the
Authorization of the cases foreseen in Law no. 9,472, of 1997; 



VI – show zeal for the
guarantee of inter-connection, settling any eventual pending issues between the
AUTHORIZED PARTY and other service companies; 



VII –continuous follow-up
of the relationship between the AUTHORIZED PARTY and the other service operators, settling
any conflicts arising from this; 



VIII – inhibit behavior
by the AUTHORIZED PARTY contrary to the competition regime, addressing the competences of
CADE, the pertinent regulation and, in particular, the provisions of Clauses 10.2. and
10.3. of this Chapter; 



IX – carry out inspection
activities of the service according to the provisions of this TERM; and 



X – collect taxes related to
FISTEL, adopting the measures foreseen in legislation. 



Clause 10.2 — Anatel may
initiate administrative procedure meant to raise untruths or lack of consistence in the
conditions declared by the AUTHORIZED PARTY, related to not participating in the control
of other companies and to other impeditive economic concentration prohibitions, whenever
there is evidence of relevant influence by the former, its colligated, controlled or
controlling companies on the companies delivering FSTS, acting in the same Area of
Delivery and in the same modality of the Service, such as: 



I — the existence of
significant, passive or active, funding, under any form, between the AUTHORIZED PARTY, its
colligated, controlled or controlling companies and Operator(s) of FSTS; 



II – posting of real
security, personal or of any other form, by the AUTHORIZED PARTY, its colligated,
controlled or controlling companies to the operator(s) of FSTS, or vice versa; 



III – transfer of assets
between the AUTHORIZED PARTY, its colligated, controlled or controlling companies and
operator(s) of FSTS, in conditions, terms or values different from those practiced on the
market; 



IV – existence of a
process for the transfer of strategic technological knowledge between the AUTHORIZED
PARTY, its colligated, controlled or controlling companies to the operator(s) of FSTS;


V – delivery of telecommunication services or correlated activities, between
the AUTHORIZED PARTY, its colligated, controlled or controlling companies to the
operator(s) of FSTS, stipulating favored or privileged conditions, in relation to the
other companies acting on the market; 



VI – existence of
agreements of inter-connection between the AUTHORIZED PARTY, its colligated, controlled or
controlling companies to the operator(s) of FSTS stipulating favored or privileged
conditions, in relation to those offered to the other companies acting on the market; 



VII – existence of
agreements for sharing of infrastructure between the AUTHORIZED PARTY, its
colligated, controlled or controlling companies to the operator(s) of FSTS stipulating
favored or privileged conditions, in relation to those offered to the other companies
acting on the market; 



VIII – common use of
relevant resources, whether material, technological or human in nature, by the
AUTHORIZED PARTY, its colligated, controlled or controlling companies to the
operator(s) of FSTS; 



IX – existence of any
legal procedure between the AUTHORIZED PARTY, its colligated, controlled or controlling
companies and companies retaining control of an operator of FSTS, whose object is the
transfer of actions between these, or the granting of preference rights in relation to the
transfer of actions between them; 



X – joint contracting of
goods and services by the competition; and 



XI – other behavior
defined in the regulations as characterizing the onset of evidence of economic
concentration or exercise of the power of control between the AUTHORIZED PARTY and
operator(s) of FSTS. 



Single Paragraph- Proof, after
the procedure foreseen in this Clause, of the Existence of any situation characterizing
untruth or lack of grounds for the conditions declared by the AUTHORIZED PARTY shall lead
to annulment of this Authorization, in the terms of art. 139 of Law no. 9,472, of 1997. 



Clause 10.3 — Anatel can
also initiate administrative procedures meant to survey the transgression of the economic
order foreseen in Law no. 8,884, of 1994, and, in particular, adoption of collusive or
restrictive measures against free competition, when, among others, the following evidences
are perceived: 



I – Prolonged stability
of market shares of the competing companies on the market; 



II – Uniform commercial behavior
among the competitors; 



III – Joint contracting
of goods or services by competitors; 



IV – Prolonged stability
of the price levels or structures for the services, or parallel price variation behaviors; 



V – Uniformity of
conditions or offer terms for the services among the competitors; 



VI – Exchange of relevant
information among competitors, related, among other aspects, to technological, financial
or commercial strategies; 



VII – Stable division of
activity on the market among competitors; 



VIII – Complementary
nature in expansion plans or network implementation projects; 



IX – Discrimination of
prices or conditions of service delivery, privileging certain companies, in detriment to,
the other companies acting on the market; 



X — Purchase, sales,
leasing, commodatum or any other form of transfer, temporary or definitive, of
assets with significant value or, of strategic importance between competing companies; 



XI – Common/joint use of
relevant resources, whether material, technological or human by competing companies; 



XII – Existence of
inter-connection agreements stipulating favored or privileged conditions, for certain
companies in relation to the others acting on the market; 



XIII – Existence of
agreements for sharing of infrastructure, stipulating favored or privileged conditions,
for certain companies in relation to the others acting on the market; 



XIV — Distortion,
manipulation, omission or procrastination by competitors in supplying information
requested by Anatel; and 



XV — Other practices
defined in regulation as signs of collusion. 



Single Paragraph – Proof
of practice by the AUTHORIZED PARTY of collusive behavior or restrictive to free
competition may imply, in addition to the application of the sanctions foreseen in this
Term and those applicable by CADE, the forfeiture of this AUTHORIZATION. 




Chapter XI – On
the Authorized Party 



Clause 11.1 — The
AUTHORIZED PARTY is a company duly established under Brazilian law, with head and
administration offices in the Country, addressing the provisions of Law no. 9,472, of 1997
and Decree no. 2,617, of June 5th 1998. 

Page. 16 of 24 




Chapter XII – On
the Inspection Regime 



Clause 12.1 — Anatel
shall inspect the services for the purpose of ensuring compliance with the commitments
defined in this TERM. 



§ 1o — The
inspection to be carried out by Anatel shall include inspection and the follow-up of
activities, equipment and facilities of the AUTHORIZED PARTY, implying free access to all
of the AUTHORIZED PARTY’s data and information, or that of third parties. 



§ 2o —
Information collected in performing the inspection activity will be published in the
Library, except for those that, on request from the AUTHORIZED PARTY, are considered by
Anatel as being of a confidential nature. 



§ 3o —
Information considered confidential in the terms of the preceding paragraph, can only
be used in procedures correlated to this TERM, with Anatel answering for the information
it appoints for any form of disclosure, broad or limited, of this information outside the
scope of this use. 



Clause 12.2 — The
AUTHORIZED PARTY, by way of the appointed representative, will be able to accompany any
and all Anatel inspection activity, and cannot in any way impede or impair the inspection
actions, subject to being liable to the penalties foreseen in this TERM. 




Chapter XIII – On
the Inter-connection 



Clause 13.1 — The
AUTHORIZED PARTY is mandated to allow, facilitate, make available and effectively perform
the inter-connection, to the network it operates, of the networks of other
telecommunications services operators, under public or private regime, whenever they so
require, addressing the regulation and in particular, the General Interconnection
Regulation, approved by Resolution no. 40, of July 23rd 1998. 



Single Paragraph –
Availability of the points for inter-connection must be negotiated directly by the
AUTHORIZED PARTY with the other service operators involved, addressing the pertinent
regulation. 



Clause 13.2 — The
AUTHORIZED PARTY will be remunerated for the use of its network according to what is
foreseen in the Regulation on Remuneration for the use of the networks of the FSTS
operators, approved by Resolution no. 33, of July 13th 1998. 



Clause 13.3 — The
AUTHORIZED PARTY shall have the same rights and must obey the same inter-connection
conditions to which the other FSTS operators are subject. 



Single Paragraph — The
AUTHORIZED PARTY shall make available for inter-connection network elements with the
highest possible technical level of separation, addressing the regulation. 



Clause 13.4 — The
AUTHORIZED PARTY shall charge the other telecommunication services operators, for the use
of their networks, at most, the values defined and established by Anatel, addressing the
regulation. 




Chapter XIV – On
the Sanctions 



Clause 14.1 – In
executing this TERM, the AUTHORIZED PARTY is subject to the following sanctions, which
will be applied by grounded decision by Anatel, assured its right of defense in the terms
disposed in its new Internal Regiment and with no loss to the other penalties foreseen in
the regulation: 



I – through action or
omission contrary to the dispositions found in this TERM leading to losses for the
competition in the telecommunications sector; a fine of up to R$50,000,000.00 (fifty
million Reals); 



II — for violating the
dispositions of this TERM leading to the non-addressing clause 1.4; a fine of up to R$
50,000,000.00 (fifty million Reals); 



III — for violation of
the dispositions of this TERM leading to non-addressing or achieving of quality targets or
parameters in service delivery; a fine of up to R$ 40,000,000.00 (forty million Reals); 



IV — for other action or
omission not dealt with in the preceding insets leading to violation of user rights
defined in this TERM or leading to loss for them; a fine of up to R$ 30,000,000.00 (thirty
million Reals); 



V – for action or
omission violating the provisions of clause 8.8 of this TERM, related to contracting
services and the purchase of equipment and materials produced in the Country; a fine of up
to R$ 30,000,000.00 (thirty million Reals); 



VI — for any action or
omission leading to the obstruction of Anatel performing its fiscal and inspection
activities in this TERM; a fine of up to R$20,000,000.00 (twenty million Reals); and 



VII – for not addressing
any obligation expressly foreseen in this TERM, except for those defined in the preceding
insets; fine of up to R$ 10,000,000.00 (ten million Reals). 



§ 1o — The
transgression defined in inset I and IV above will have their severity defined exclusively
as a function of the general criteria foreseen in clause 14.2 and will be characterized by
behavior of the AUTHORIZED PARTY that, directly or indirectly, might lead to loss for the
competition in the sector, especially: 



     a)    
          posing an obstacle or difficulty in choosing a different provider of the
          service authorized; 



     b)    
          refusing an inter-connection to a telecommunications service operator; 



     c)    
          posing an obstacle or difficulty to the added value service company
          operators; 



     d)    
          executing any telecommunications service not the object of the authorization
          issued by Anatel in its favor, 



     e)    
          not preserving the levels of quality practiced in the inter-connections; and 



     f)    
          procrastinating on the supply of information essential to the activities of
          the other operators, in particular, the data register bases. 



§ 2o —
Transgression of the provisions of inset II of this clause will be characterized by
the repeated non-delivery of the authorized service, it being considered a severe
transgression, in particular: 



     a)    
          the refusal to deliver the authorized service to any interested
          party, according to the definitions contained in clause 1.4. 



§ 3o —
Transgression of the dispositions of inset III above will be characterized by not
addressing the quality parameters defined in the General Plan of Quality Targets and will
have its scale of severity defined as a function of the number of users impacted and the
losses caused, being characterized by violation, of commission or omission, direct or
indirect, of obligation foreseen in this TERM, leading to the violation of user rights, in
particular the: 



     a)    
          interruption in delivery of services for periods exceeding those established
          in the General Plan of Quality Targets; 



     b)    
           non-allocation of the necessary human and material resources for the
          operation and maintenance of the service required to preserve minimum quality
          standards; 



     c)    
          negligence in modernizing the network that affects service quality; 



     d)    
          non-addressing the duty to deliver information to users; 



     e)    
          violation of secrecy in telecommunications, except for the legal hypothesis,
          even when practiced by third parties, in facilities under the responsibility of
          the AUTHORIZED PARTY; 



     f)    
          non- maintenance of an information and customer care center in the format
          described in this TERM; and 



     g)    
          charging prices not in agreement with the rules defined in this TERM and in
          the regulation. 



§ 4o — The
transgressions described in inset V will be characterized by verification of the violation
of the obligation contained in Clause 8.8 and will have its severity defined in accordance
with the regulation. 



§ 5o — The
transgressions described in inset VI above will have its severity defined as a function of
the relevance of the fiscal activity impaired and will be characterized by the violation,
through commission or omission, direct or indirect, of the AUTHORIZED PARTY or of its
representatives, impeding or creating difficulties for the inspection activity carried out
by Anatel, its representatives, agents, in particular by: 



     a)    
          the AUTHORIZED PARTY refusing to address requests for information tendered
          by Anatel, related to the authorized services or the assets linked to it;. 



     b)    
          blocking the action of Anatel’s inspection agents; 



     c)    
          omitting addressing the obligation of public disclosure foreseen in this
          TERM, or in regulation; and 



     d)    
          not sending or the untimely sending of any information, data, report or
          document that, per force of regulation, or of this TERM, should have been
          supplied to Anatel. 



§ 6o — Sanction
foreseen in inset VII will be characterized by checking violation of the obligation in
this Term, not included in the preceding paragraphs. 



§ 7o — Sanction
foreseen in inset I will be applied by Anatel regardless of any measures that might be
adopted by CADE. 



§ 8o — Not
collecting any fine levied in the terms of the provisions of this clause in the Term fixed
by Anatel shall characterize severe fault and will imply a collection of a moratory fine
of 0.33% (zero point three, three percent) a day, up to the limit of 10% (ten percent),
plus the reference rate of the SELIC for federal papers, to be applied on top of the value
of the debt, considering all delinquent payment days, except where defined otherwise in
the specific regulation. 



Clause 14.2 – For
applying the fines foreseen in this Chapter, the rules contained in Title VI of Book III
– On Sanctions, art. 173 to 185 of Law no. 9,472, of 1997, and in the pertinent
regulation thereof, will be addressed. 



§ 1o — In
defining the severity of the sanctions and in fixing fine values, Anatel shall observe the
following circumstances: 



I – proportionality
between the intensity of the sentencing and the severity of the fault, including in so far
as the number of users impacted; 



II — the damages for the
services and for users resulting from the transgressions; 



III – the advantage
obtained by the AUTHORIZED PARTY as a result of the transgression; 



IV — the participation of
the AUTHORIZED PARTY on the market within its geographical Area of Service Delivery; 



V – the economic and
financial situation of the AUTHORIZED PARTY, in particular its revenue generation capacity
and its total assets; 



VI – the precedent of the
AUTHORIZED PARTY; 



VII – the specific
re-incidence, thus understood the repetition of fault of similar or like nature, after
receipt of the previous notification; and 



VIII – the general
aggravating or attenuating circumstances of the transgression. 



§ 2o —
Regardless of the specific grading criteria foreseen in each inset of the preceding
clause and of others foreseen in regulation, penalty grading shall address the following
scale: 



I – the transgression
will be considered light when stemming from involuntary or excusable behavior by the
AUTHORIZED PARTY and from which the latter derives no benefit; 



II – the transgression
will be considered medium severity when stemming from inexcusable behavior, but that does
not bring any benefit or gain to the AUTHORIZED PARTY, nor affects a significant number of
users; and 



III – the transgression
will be considered severe when Anatel verifies the presence of one of the following
factors: 



     a)    
          The AUTHORIZED PARTY behaving in ill faith; 



     b)    
          The transgression results in the direct or indirect benefit for the
          AUTHORIZED PARTY; 



     c)    
          The AUTHORIZED PARTY is recurring in the transgression; and 



     d)    
          The number of users impacted is significant. 



§ 3o —
According to Anatel’s criteria, the transgressions classified as light, when in a
first event, a warning penalty may be issued to the AUTHORIZED PARTY, that will be
formally informed of the sanction, with no loss to publishing the decision in the Official
Press. 



§ 4o — For
application of the sanctions foreseen in this Chapter the Sanction Application Procedure
foreseen in the Internal Regiment of Anatel will be used. § 5o — In
the transgressions foreseen in clause 14.1, for fine levying purposes, Anatel may
determine that the AUTHORIZED PARTY deduct the value to be collected from sums to
be paid as reimbursement to the users impacted, fixing the reimbursement criteria in the
act of applying the penalty, the term for settlement and the maximum deduction value. 



§ 6o — The
hypothesis foreseen in the preceding paragraph may only be adopted when it is verified
that user interests or needs will not elide with the responsibility of the AUTHORIZED
PARTY for the other civil indemnities owed. 



Clause 14.3 – the fines
foreseen in this Chapter will be applied with no loss to characterizing the hypothesis of
declaration of forfeiture foreseen in this TERM. 



Clause 14.4 – the values
of the fines foreseen in this Chapter will be readjusted annually, by applying the IGP-DI,
with the first readjustment being due in one year counted from the date of signature of
this TERM. 




Chapter XV – On
the Extinction of the Authorization 



Clause 15.1 – the
authorization shall be considered extinct by removal, forfeiture, expiry, renouncement or
annulment, according to arts. 138 to 144 of Law no. 9,472, of 1997 and in compliance with
the procedures defined in regulation. 



§ 1o –
Extinction of the Authorization, issued concomitantly for the modality of Local
Service, in the same Area of Delivery, for the same AUTHORIZED PARTY, before December
31st 2005, shall implicate in the extinction of this Authorization. 



§ 2o —
Declaration of extinction will in no way elide the application of the fitting
penalties in compliance with the dispositions of this TERM, for transgressions practiced
by the AUTHORIZED PARTY. 



Clause 15.2 – The
extinction of the Authorization for the modality National Long Distance Services, will
imply the automatic extinction of the Authorization for the modality International Long
Distance, in the same area of delivery, for the same AUTHORIZED PARTY, when there is one. 



Single Paragraph – The
extinction of the Authorization for one of the service modalities, Local, National
Long Distance, International Long Distance may imply the extinction of the others, when
stemming from the application of sanctions for severe fault. 




Chapter XVI – On
the Legal Regime and the Applicable Documents 



Clause 16.1 – the
following rule this Authorization, with no loss to the other norms that are part of the
Brazilian legal order, Law no. 9,472, of 1997, and the regulation stemming from,
especially, the competence of the Executive Power, according to the disposed in art.18 of
the referred Law, the latter prevailing whenever the two conflict. 



Clause 16.2 – In delivery
of services hereby authorized by the Anatel regulation must always be addressed, as part
of this TERM, especially the documents listed below: 



I – General Concession
Plan, approved by Decree no. 2,534, of April 2nd 1998; 



II – General Plan for
Quality Targets for Fixed Switched Telephone Services, approved by Resolution no. 30, of
June 29th 1998;  



III — Regulation of the
Telecommunication Services, approved by Resolution no. 73, of November 25th 1998; 



IV – Regulation of the
Fixed Switched Telephone Service, approved by Resolution no. 85, of December 30th 1998; 



V – General Regulation
for Inter-connection, approved by Resolution no. 40, of June 23rd 1998, with the
alterations introduced by Resolution no. 130, of May 31st 1999;  



VI – Numbering
Regulation, approved by Resolution no. 83, of December 30th 1998; 



VII – Regulation for
Managing Numbering Resources, approved by Resolution no. 84, of December 30th
1998; 



VIII — Regulation about
Remuneration for Use of the Networks of FSTS Operators, Approved by Resolution no. 33, of
July 13th 1998; 



IX – Regulation for
Tenders of Concession, Permission and Authorization of Telecommunication Services and
Authorization for Use of Radio-Frequency, approved by Resolution no. 65, of October
29th 1998; 



X – Regulation of the
Procedures for Contracting Services and Acquisition of Equipment or Materials by Operators
of Telecommunication Services, approved by Resolution no. 155, of August 16th
1999; and 



XI – Regulation for
Issuance of Authorization for Delivery of Fixed Switched Telephone Services for the
general public – FSTS, approved by Resolution no. 283, of November 29th
2001. 



Clause 16.3 – In
interpreting the norms and dispositions contained in this TERM, in addition to the
documents mentioned and listed in this Chapter, the general hermeneutic rules and the
norms and principles contained in Law no. 9,472, of 1997, shall be taken into account. 




Chapter XVII – On
the Forum 



Clause 17.1 – For
settlement of issues stemming from this TERM, the Forum of the Judiciary Section of the
Federal Justice of Brasilia, Federal District, will be used. 




Chapter XVIII –
Final Disposition 



Clause 18.1 – This TERM
will become valid as of the date of the publication of its extract in the Federal Official
Gazette. 



And for being fully in agreement with
the provisions and conditions of this TERM, the Parties sign it in 02 (two) copies of
equal form and content, in the presence of the undersigned witnesses, for it to produce
its legal effects. 



Brasilia,..............of
................. 2003. 





For ANATEL: 










LUIZ GUILHERME
SCHYMURA DE OLIVEIRA
President 








LUIZ TITO CERASOLI

Councilor
For the AUTHORIZED
PARTY:








LUIS ROBERTO
ANTONIK
Power of Attorney 






WITNESSES: 







Name: RICARDO
DE FREITAS FEROLA
RG: 1204563 SSP/DF 








Name: TAÍS
ROSANDRA BEZERRA
RG: 1689211 SSP/DF