Document:

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EXHIBIT 10.32

                         COLLECTIVE BARGAINING AGREEMENT

                                   BETWEEN THE

                              PUERTO RICO TELEPHONE

                                     AND THE

                           INDEPENDENT BROTHERHOOD OF

                           TELEPHONE COMPANY EMPLOYEES

                                 EFFECTIVENESS:

                             FROM JANUARY 1ST., 2004

                             UNTIL DECEMBER 31, 2008

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                                 EFFECTIVENESS:

                             FROM JANUARY 1ST., 2004

                             UNTIL DECEMBER 31, 2008

                                    ARTICLE 1

                         RECOGNITION OF THE BROTHERHOOD

SECTION 1

         The Company recognizes the Brotherhood as the exclusive representative
for all the employees included in the Bargaining Unit, as defined in Article 2
of this Collective Bargaining Agreement for the purposes of negotiation and
collective bargaining in everything relating to salaries, work conditions, job
tenure, complaints, grievances and all those conditions and provisions that
affect the employees covered by this Agreement.

                                    ARTICLE 2

                                 BARGAINING UNIT

SECTION 1

      The Bargaining Unit covered by this Agreement is the one certified by the
Puerto Rico Labor Relations Board, in case P-91-5 D-93-1224 E dated February 10,
1995 and any other position which has been included by the Local Board since
this said date.

SECTION 2

      The Company in a flexible or digital computer disk in Excel format will
send the Brotherhood on or around thirty days after the effective date of this
Agreement, a list of all the positions (by levels) that are included in this
appropriate unit. This list will include the names of the Brotherhood members by
employee number, sex, positions, social security number, hiring date,
birthdates, postal address and actual salaries. The Company on a monthly basis
will provide the information mentioned above for those employees that have
undergone changes.

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                                    ARTICLE 3

                            RIGHTS OF THE MANAGEMENT

SECTION 1

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

SECTION 2

      If any employee understands that he/she has been treated in a
discriminatory, arbitrary or unfair fashion in accordance to the terms of this
contract or any provision of this contract has been violated due to any action
taken by the Company by virtue of the previous Section, such allegation shall be
submitted by the Brotherhood or by the employee to the Grievance Procedure
established in this Agreement.

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                                    ARTICLE 4
                                   UNION SHOP

SECTION 1

         All employees who are covered by this Agreement who at the date of the
signing of the same are a member of the Brotherhood, are obligated as a
condition of employment to continue on as members of the Brotherhood and in the
event of new personnel, the latter will be obligated as a condition of
employment to join the Brotherhood within the thirty (30) days following
beginning to work for the Company and in both cases to pay dues to the
Brotherhood during the effectiveness of this Agreement.

SECTION 2

         The Company, at the written requirement of the Brotherhood, will fire
or suspend from his/her job any employee who is not affiliated or stops being
affiliated as a bona-fide member of the Brotherhood. Said written requirement
must be notified to the Company by certified mail and with a copy to the
affected employee by certified mail.

SECTION 3

         The Company will put a copy of this clause in visible places in
existing departments in the Island of Puerto Rico, for knowledge of the
personnel.

SECTION 4

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

SECTION 5

         The Company and the Brotherhood agree that the Brotherhood shall have
the opportunity to meet during thirty (30) minutes with the recently hired
employees, as part of the general orientation process, for the purpose of
providing them information about the Brotherhood and the Collective Bargaining
Agreement. The time invested during the work shift of each employee given
orientation shall be paid as time worked. This orientation shall be carried out
during the fifteen (15) days following the start of the union member employee or
from the time that the Company notifies the start, whichever occurs first. Said
notification should be sent to the HIETEL with two (2) days of advance notice
prior to the orientation date.

                                    ARTICLE 5
                                 DUES CHECK-OFF

SECTION 1

      During the effectiveness of this Collective Bargaining Agreement, the
Company commits itself to automatically deduct from the salary received by all
the employees covered by the definition of the Bargaining Unit, the sum of the
initiation dues, the regular dues and any uniform special dues which the Union
establishes for its members after receiving the written authorization on the
part of the employee. The authorization for the regular dues shall be for a
minimum term of one (1) year and shall be extended year after year, while the
employee occupies a position within the Bargaining Unit. This authorization
shall be irrevocable for a period of one (1) year from the date of the
authorization. The Brotherhood shall notify the

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Company in writing with regard to the dues to be checked off from the employees
covered by this Agreement. The Brotherhood shall comply with all the applicable
procedures and laws prior to the establishment of said dues and the sum of said
deductions shall be deposited by the Company, by means of a direct deposit to
the HIETEL's bank account.

SECTION 2

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

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

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

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

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

SECTION 3

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

SECTION 4

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

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SECTION 5

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

                                    ARTICLE 6
                   COOPERATION ON THE PART OF THE BROTHERHOOD

SECTION 1

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

                                    ARTICLE 7

                            RESPECT AND CONSIDERATION

SECTION 1

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

SECTION 2

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

                                    ARTICLE 8

                                  PRODUCTIVITY

SECTION 1

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

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

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                                    ARTICLE 9

                          DELEGATES OF THE BROTHERHOOD

SECTION 1

      The delegates shall represent the Brotherhood in the process of
administrating the Collective Bargaining Agreement before the Company.

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

SECTION 2

      The delegates from the Brotherhood shall be limited to dealing with the
grievances and matters relating to the application of the Collective Bargaining
Agreement in their work area.

SECTION 3

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

      The Brotherhood shall be entitled to appoint sub-delegates or substitute
delegates which shall act only in the absence of the official Delegate.

SECTION 4

      The Delegate shall utilize the time in an adequate fashion for the
quickest solution of the grievances. When it is necessary for a Delegate from
the Brotherhood to deal with a grievance or related matter, he/she must:

      a.    Notify his/her immediate supervisor with reasonable time to forego
            his/her regular work and deal with the grievance or related matter.

      b.    The delegates shall receive pay up to a maximum of one and a half (1
            1/2) hour for each grievance.

      c.    Returning to his/her work upon finishing dealing with the matter if
            his/her work schedule has not ended.

      d.    The meetings between the Delegate and the employee which require
            his/her services in accordance with this Agreement work shall be
            carried out in the area immediately next to the employee's work
            area.

      e.    When it is necessary for a Delegate to hold a private conversation
            with an employee during time with or without pay for the Company to
            process a grievance or to deal with a matter relating to the
            application of the Collective Bargaining Agreement in accordance to
            the Grievance Procedure, he must obtain express authorization from
            the Supervisor.

SECTION 5

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

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      The Brotherhood commits itself to comply with and promote the faithful
compliance of this Article in such manner that the time requested by the
Delegate is utilized exclusively for the aforementioned purpose.

SECTION 6

      When the Company expands its services creating additional units and
increases the personnel substantially in the additional services, the parties,
after a previous agreement, will convene the appointment of the corresponding
delegates.

SECTION 7

      The Delegate shall represent the employees covered by this Collective
Bargaining Agreement when the employee so requires it in the different stages of
the Grievance Procedure, with the President of the Brotherhood or the person on
whom he/she delegates in writing being able to participate in said
representation.

SECTION 8

      The Company will not acknowledge any Delegate until the President of the
Brotherhood has informed the Director of the Department of Labor and Employee
Affairs in writing and the Delegate has received his appointment.

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

SECTION 9

      The parties shall reach an agreement as to the time, number and place
where the delegates will act. It being provided that there will not be more than
one Delegate and one Sub-delegate carrying out functions for each of the
Company's operational units.

SECTION 10

      The Area Delegate appointed by the President of the Brotherhood shall be
recognized by the Company and these will receive the same treatment, respect and
courtesy that must be given to the Officers of the Brotherhood. The Company will
not recognize any Area Delegate until the President of the Brotherhood has
informed the Director of Labor and Employee Affairs in writing and he/she has
received his/her designation.

      The Area Delegate shall be appointed to represent and replace the Officers
of the Brotherhood and when they visit the shop or specific areas for which they
have been appointed, they shall have all the prerogatives that the Officers of
the Brotherhood have. The Area Delegate must comply with what is provided in
Section 4 of this Article.

                                   ARTICLE 10

                     VISITS FROM OFFICERS OF THE BROTHERHOOD

SECTION 1

      The President of the Brotherhood or the members of the Executive Committee
shall have access to the Company premises during working hours for the purpose
of resolving grievances, investigating work conditions and verifying compliance
with this Collective Bargaining Agreement. The members of the Elections
Committee during periods of internal elections of the Brotherhood shall have
access to the

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Company premises for the sole purpose of administrating and coordinating said
elections. Prior notice shall be given in writing, of no less than 24 hours, to
the Director of the Department of Labor and Employee Affairs in both situations.

SECTION 2

      Upon the arrival of the President or a member of the Executive Committee
or a member of the Elections Committee, he/she shall identify himself/herself
and inform the purpose of his/her visit and shall go in person before the
officer of the Company that he/she is going to visit or the representative
designated by him/her.

SECTION 3

      The President of the Brotherhood may appoint representatives to carry out
any of the functions of said Committee. The Company will not recognize the
representatives appointed as such until the President of the Brotherhood has
notified the Director or the Department of Labor and Employee Affairs in writing
about their designation as such, including a description of the matters that
said representatives shall be authorized to handle in the name of the
Brotherhood. Not more than one Representative shall be appointed to deal with
one single matter.

      The representatives appointed by the President of the Brotherhood shall be
recognized by the Company and shall receive the same treatment, respect and
courtesy that must be rendered to the officers of the Brotherhood, it being
provided that these representatives shall have access to the Company premises
for the purpose of dealing with the matters authorized to be dealt with in the
name of the Brotherhood. Upon the arrival of these representatives, they shall
identify themselves and inform the purpose of their visit and they shall appear
in person before the Officer of the Company that they are going to visit or the
representative designated by him/her.

SECTION 4

      The visits of the President, Officer or Representative of the Brotherhood
shall not interrupt the operations of the Company and the work of the employees.

                                   ARTICLE 11

                              PERSONNEL ACTIVITIES

SECTION 1

      The Company and the Brotherhood agree that no union propaganda or activity
of any nature whatsoever shall be allowed by employees or representatives of the
Brotherhood will not allow any during their working hours within or outside the
Company's premises, except those expressly contained in the Collective
Bargaining Agreement.

SECTION 2

      No union propaganda or activity of any nature whatsoever shall be allowed
within the Company's premises on the part of the employees, delegates and
officers of the Brotherhood during their free time, if by doing so they are
occasioning any one or more of the following conditions:

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

      b.    Constitutes a disturbance or harm to the Company.

      c.    Occasions a state of disorder or violence.

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SECTION 3

         The Company and the Brotherhood agree that the working hours are for
each employee to devote them to his/her work for the Company and therefore, it
is not permissible to allow working time to matters which are foreign to work
such as, for example: discussions about sports, politics, religion, sales, and
personal activities, etc. Neither are such activities permissible during the
free time of the employee but within the Company's premises if it occasions any
one or more of the conditions in clauses a, b and c of the preceding Section.

SECTION 4

         No employee shall have access to the buildings or premises of the
Company without prior express authorization from the Supervisor of the site or
the Company's Security Department, except for the regular work place and during
his/her regular work schedule. In the event of receiving such authorization, the
employee will be accompanied at all times by said Supervisor or by the person
appointed by him/her unless the Supervisor or the person appointed by him/her
determines, in his/her discretion, that it is not necessary to accompany him/her
and he/she so informs it in writing to the visiting employee. Under no
circumstance will the employee be allowed to enter onto Company property if
there is no Supervisor, or the person appointed by him/her available to
accompany the employee.

                                   ARTICLE 12
                     PUBLICATION, ADJUDICATION OF POSITIONS
                                AND APPOINTMENTS

SECTION 1

      The Company will publish at all the work centers the newly created
positions, the vacant ones or ones which could be left vacant in the near future
corresponding to the Bargaining Unit that is going to be covered, specifically
the requirements for the same. The Company will send the Brotherhood a copy of
said publication. Upon the cancellation of a published position, the Brotherhood
shall be notified about said cancellation and the reasons for its cancellation.

SECTION 2

      All regular employees who meet the requirements for a published position
may apply for the same by submitting the corresponding petition in the form
supplied by the Company within the term established in the publication to the
Recruiting Department, with return receipt requested.

SECTION 3

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

SECTION 4

      All vacant positions or those of new creation shall be adjudicated to the
more senior employee who qualify within the following order of priority except
in the case of promotion or transfer from one classification to another where
seniority shall not be the determinant criteria for the adjudication of the
position pursuant to what is provided in Section 6 of this Article.

<PAGE>

      a. Employees who will be affected by personnel reductions.

      b. Employees who may have suffered an occupational illness or accident
that prevents them from performing the functions that they used to perform in
their positions prior to said illness or accident. This priority shall not have
the scope of postponing the time term provided by law within which an employee
reserves his/her job tenure from the term of the occupational accident or
illness onwards.

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

      d. Employees who request transfer to the same occupational classification.

      e. Employees who have requested promotions. For the purposes of this
Agreement, promotion shall be understood to mean the movement of one employee
from one position to another position which has a superior salary level and
those changes from a position for which the maximum level of the series is
inferior to the maximum level of the new position.

      f. Employees who have requested transfer from one classification to
another. No employee may request a transfer from one classification to another
until after fifteen (15) months have elapsed in one position and he/she must
remain in said position a minimum of fifteen (15) months after said movement. In
addition, upon being granted this transfer, the employee in his/her new
position, must approve a three (3) month probationary period.

      g. Employees who have requested demotions. No employee may request a
demotion until after having been for fifteen (15) months in one position and
he/she must remain in said position a minimum of fifteen (15) months after said
demotion.

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

SECTION 5

      The vacancies which arise due to the adjudication of the positions as a
result of the priorities mentioned in the previous Section, shall be covered in
the first instance by petition for transfer to the same occupational
classification, promotion, then transfer to another occupational classification
and finally demotion and if they were not filled that way, by means of external
recruiting. The transfer to which this Section makes reference is only that type
of transfer which makes the employees work center be closer to his/her
residence, as long as the employee has been more than fifteen (15) months in
his/her position.

SECTION 6

      In those cases in which the adjudication of a vacant position or one of
new creation represents a transfer from one classifications to another or
promotion for the applicant employee, the position will be adjudicated among the
candidates that fulfill the requirements in accordance to the following factors:
seniority; evaluations already written and carried out in the normal course of
employment during the past two (2) years; attendance and punctuality record for
the past two (2) years; disciplinary record for the past two (2) years; related
experience and training.

      The seniority shall prevail over all other factors if this were to turn
out to be equal between the employees being considered to cover the new or
vacant positions.

<PAGE>

SECTION 7

      No employee who has had a position adjudicated to him/her us a result of a
transfer, transfer from one classification to another or a promotion will have
the right to request another position until fifteen (15) months have elapsed
from the date when the adjudication was made effective or until the employee has
reached the maximum of the existing progression for his/her present occupational
classification, whatever happens first.

SECTION 8

      In those cases in which an employee, due to a petition on his/her part,
has a position of a lower level adjudicated to him/her, in other words, which
represents a demotion, his/her salary shall be adjusted to the lower level
position.

SECTION 9

      Nothing that has been previously stated in this Article shall have the
scope of limiting the faculty of the Company to transfer employees due to
service needs nor the Company's rights to recruit external personnel for those
positions, which have not been covered by means of internal recruiting in
accordance to this Collective Bargaining Agreement.

SECTION 10

      Within the five (5) working days following the adjudication of a vacant or
newly created position, the Company must send to the Brotherhood, by certified
mail with return receipt requested, a copy of the adjudication of the same.

SECTION 11

      The Company shall send the Brotherhood a copy of all publications
regarding vacant positions or those of new creation.

                                   ARTICLE 13
                       TIME SUBJECT TO BE CALLED "ON CALL"

SECTION 1

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

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

         The Company will prepare a schedule which will establish the personnel
needs to realize the job or "on call" shifts and the same will be covered with
those that occupy the specialized classifications in an equitable manner
whenever possible.

<PAGE>

SECTION 2

      The employee who is assigned to be "on call" shall be paid a bonus of
$18.00 per day (24 hours shift), for assignment to this work shift. If the
employee is called to work, he shall be compensated with a minimum of two hours
per pay.

      For the non exempt employee that is "on call" and is called to work, the
time worked shall be paid at the rate of double time the rate paid for regular
hours of work. For the exempt employee that is "on call" and is called to work,
the time worked shall be paid at the rate of one and a half time the rate paid
for regular hours of work.

                                   ARTICLE 14

                      PROBATIONARY PERIOD FOR NEW EMPLOYEES

SECTION 1

      Every candidate for entry as employee, must have previously approved those
written or evaluation examinations required by the Company.

SECTION 2

      A condition for regular appointment shall be that the employee has worked
to the satisfaction of the Company for a Probationary Period of one hundred and
twenty (120) days. The training period for the probationary employee at the
training centers recognized by the Company will be part of the Probationary
Period.

SECTION 3

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

SECTION 4

      Each new hired employee who satisfactorily approves the Probationary
Period shall be appointed as a regular employee by means of an official notice
to the employee and to the Brotherhood.

SECTION 5

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

SECTION 6

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

<PAGE>

SECTION 7

         The Company is entitled to order or decree the lay-off of any
probationary employee within the terms of Section 2, without such lay-off giving
rise to any grievance whatsoever before the entities established by this
Collective Bargaining Agreement for the resolution of controversies and
grievances.

                                   ARTICLE 15
                              MEDICAL EXAMINATIONS

SECTION 1

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

SECTION 2

      The Company will compensate the employee for the time that the examination
takes. Such examination should be carried out within his/her regular work day.

SECTION 3

         The Company may take the necessary and pertinent measures to guarantee
the correct use of the benefits disposed on Article 31, Extended Sick Leave and
Article 32, Occupational Sick Leave of this Agreement. Therefore, the Company
reserves its right that a qualified doctor selected by the Company determines if
the employee is in effect unable to work. The employee notification will be with
copy to the Union. In order to continue receiving the economic benefits
established in those Articles, the employee must attend on the required dates to
all the medical tests and exams ordered by the physician.

         If the physician determines that the employee is able to work, the
additional benefits of Articles 31 and 32 will discontinue and the employee will
receive the law benefits of SINOT or FSE which ever is applicable. Nevertheless,
the retention period for this employee will be the provided on Articles 31 and
32, which ever is applicable.

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

         The Company may submit during the year, in order to determine if they
are able, a number of employees not more than 10% of the employees enjoying the
leave of absences under the articles 31 and 32 of the natural year immediately
preceded. The Union shall be informed of the total number of employees making
use of the benefit during such year.

<PAGE>

                                   ARTICLE 16
                                    SENIORITY

SECTION 1

      Seniority shall be understood to mean the total time of service credited
to an employee by the Company. Credited time shall be all the time of regular
work days that an employee has worked in a continuous fashion for the Company as
well as all the leaves with pay. Leaves without pay that are granted to the
employees members of the Executive Committee of the Brotherhood during the terms
for which they have been elected shall be credited to their seniority in the
Company.

SECTION 2

      The seniority right shall expire due to any of the following reasons:

      a.    Resignation

      b.    Dismissal

      c.    Lay-off for twelve (12) consecutive months or upon the receipt of
            the compensation provided in Section 4 of Article 19 - Reduction of
            Personnel and Reinstatement.

      d.    Absence due to occupational illness or accident in excess of his/her
            occupational illness or accident leave.

      e.    Absence due to non-occupational illness or accident in excess of the
            term established in this Agreement or until his/her prolonged
            illness leave is exhausted, whichever is greater.

      f.    By not accepting an available position and for which he/she
            qualifies, while being on preferential employment list.

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

SECTION 3

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

                                   ARTICLE 17

                                   PROMOTIONS

SECTION 1

      A promotion shall be understood to mean the movement of an employee from
one position to another position which has a greater salary level and those
changes when a position for which the maximum level of the period is inferior to
the maximum level of the new position.

SECTION 2

      In the promotions, the employees from the Company who have requested a
promotion and who qualify for the same as required by Article 12 Section 6
relating to Publication, Adjudication of Positions and Appointments, shall be
given priority. Seniority shall prevail over the other factors, if these were to

<PAGE>

turn out to be equal among the employees to be considered for the covering of
the positions in promotion. When an employee changes occupational classification
due to a promotion for which he/she applied, he/she may not request a change
until fifteen (15) months from said promotion have elapsed.

SECTION 3

      All promoted employee shall be subject to a probationary period of ninety
(90) days during which they will have to demonstrate having ability, knowledge,
skills and the efficiency which in the judgement of the Company is required in
the new position. In the cases of promotions, which require special training,
said training period shall be part of this probationary period. The employee may
return to his previous position before the expiration of his probationary
period, if said position is vacant.

SECTION 4

      The progression to a superior level within the same classification, shall
not be considered a promotion. These progressions shall be carried out in
conformity to the requirements established by the Company in the Duty Sheet.

SECTION 5

      In the event that an employee is promoted, he/she shall be entitled to
receive 4% of salary increase for the next salary level to which he/she is
promoted. Example: 10-11.

      If the promotion includes more than one salary level, he/she may receive
4% for the first salary level to which he is promoted and 2% increase for each
additional level of increase. Example: 10-12 = 6% Total Salary increase.

      If after the corresponding percentage increase is granted and the employee
remains under the minimum of the level to which he is promoted, his salary will
be increased for the minimum of the scale.

SECTION 6

      If the employee were not to satisfactorily approve his/her probationary
period, the employee would return to his/her previous position with the salary
that would have corresponded to him/her if he/she had continued in the previous
position. The Company will reinstate to their previous position and salary the
employees who would have been promoted as a result of the vacancy that the
promotion of said employee would have brought about. If as a result of said
promotion a new employee would have been hired, the Company would be free to
separate said new employee.

SECTION 7

      Except in cases where events occur beyond the control of the Company
and/or the service may be adversely affected, the employee shall be placed in
the position of promotion within a period that shall not exceed thirty (30) days
from the date when the Recruiting Department adjudicates the same.

<PAGE>

                                   ARTICLE 18

                                    TRANSFERS

SECTION 1

      For the purpose of this Agreement, transfers shall be understood to mean:

      Any permanent change from one section, division or department to another,
from one work center to another, or from one municipality to another, whether it
is from one position to another in the same classification or to a position in
another classification with the same level.

SECTION 2

      There shall be two (2) types of transfers:

      a.    Transfers due to a formal petition on the part of the employee,
            which is that which is produced upon filing out a written petition,
            through the Recruiting Department. It shall be a requirement to have
            been a minimum of fifteen (15) months in the position occupied by
            the employee to be able to file a petition for transfer. In the
            event that the transfer is to a position which is different from
            that one occupied by the employee, he/she must meet the minimum
            requirements in effect, required for the position to which he/she is
            going to be transferred and he/she shall be subject to a
            probationary period of three (3) months.

      b.    Transfers when the Company determines it due to service need.
            Whenever the Company determines to transfer an employee due to
            service need, the transfer will be made taking into consideration
            employee's seniority so that, the less senior qualified employee
            will be transferred unless that there is a voluntary qualified
            employee more senior.

      a.    The employee may, after this type of transfer has been carried out,
            question it through the Grievance Procedure.

      b.    In the event that there arises a need to cover the position which
            the transferred employees left vacant due to service needs within
            the following one hundred and eighty (180) days after the transfer
            has taken place, he/she, the transferred employee, shall have
            priority to return to said position. Once the hundred and eighty
            (180) days have elapsed, the position shall be filled following the
            process established in Article 12, Publication, Adjudication of
            Positions and Appointments.

SECTION 3

      Except in cases where events occur beyond the control of the Company
and/or the service may be adversely affected, the employee shall be placed in
the transfer position within a period that shall not exceed thirty (30) days
from the date when the Recruiting Department adjudicates the same.

SECTION 4

      When the Company is interested in permanently transferring an employee due
to service needs, it will notify the employee and the Brotherhood with thirty
(30) days of prior notice, except when there are extraordinary circumstances in
which case it will notify with ten (10) days of prior notice. In case of
transfers due to the need of service where the employee remains where his work
center normally resides or when such transfer is between the building around
Plaza Telefonica (Roosevelt 1500, 1513 and 1515), the advance notification will
be with no less than fifteen (15) days.

SECTION 5

         The Company will recognize the right to barter between the employees as
long as the Company determines, in its sole discretion, that there exists
equality of circumstances, category, capacity, efficiency

<PAGE>

and ability. In the event of a barter, the expenses occasioned by the transfer
shall be paid for by the employees.

SECTION 6

      The transfer may not be used in an arbitrary, discriminatory and unfair
fashion or as a disciplinary measure or action.

                                   ARTICLE 19

                    REDUCTION OF PERSONNEL AND REINSTATEMENT

SECTION 1

      When the Company determines the need to carry out personnel lay-off or
transfers due to lack of sufficient work or due to reasons of economy in
particular classifications of employment, it shall prepare a lay-off or transfer
plan, as the case may be, in accordance to the provisions of this Agreement. The
Company will notify by certified mail or in person in writing with regard to the
lay-off or transfer to the employees who are affected and to the Brotherhood
including in the notice a copy of the Plan, with no less than fifteen (15)
working days prior to the date when the lay-off or transfer is to be effective
and such reduction shall be carried out observing the following order:

      a.    Probationary employee in the affected classification

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

      In cases of lay-off or transfers, the employees who are members of the
Boards of Directors and the delegates shall have super-seniority in their
classification.

      The determination of the number of employees that are needed to perform a
task is an exclusively managerial task which may not be questioned through the
Grievance Procedure.

SECTION 2

      a.    In the event that an employee with at least one (1) year of
            seniority is subject to lay-off, he/she may choose to bump another
            employee in a lateral or inferior classification with less seniority
            in which the bumper is qualified to perform the work immediately or
            any other classification in which the bumper may have worked
            previously on more than one occasion and continues being capable of
            carrying out the work immediately.

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

SECTION 3

      Any employee who is laid off and who at the moment of the suspension has
one year or more of seniority, shall be entitled to a compensation equivalent to
two (2) weeks of salary plus one (1) week for each year of seniority up to a
maximum of twenty (20) weeks.

<PAGE>

SECTION 4

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

SECTION 5

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

SECTION 6

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

SECTION 7

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

SECTION 8

      When the possibility of re-employment arises, the Company will get in
touch with the laid-off ex-employee by certified mail and his/her last address,
with copy to the Brotherhood, granting the employee ten (10) working days in
which to accept the position. If he/she were not to accept or answer within the
term, he/she shall lose the right granted in this Article and shall be
eliminated from the corresponding list. If he/she answers within said term
indicating that he/she cannot accept the job due to extraordinary reasons which
in effect make the acceptance of the position being offered impossible and it is
so proven to the Company within said term, the laid-off employee shall not lose
the right to re-employment with regard to any other vacancy that arise later on
in his/her classification within the term of nine (9) months after his/her
lay-off, pursuant to how it is provided further on.

SECTION 9

      The right to re-employment, as provided in this Article, will be
extinguished within nine (9) months after having ceased as a Company employee,
except that he/she does not accept or does not answer a letter offering a
vacancy, pursuant to what is provided in the previous section. If positions are
to be frozen during this period, the right will be extended for a period of time
equal to that of the freeze.

<PAGE>

                                   ARTICLE 20

                                RECLASSIFICATION

SECTION 1

      When the Brotherhood considers that a position has had functions or duties
of a superior position assigned to it or that its duties and functions have
evolved in a substantial and permanent manner toward a position of a superior
level or that functions and duties of greater complexity have been assigned to
it, the President or in his/her absence, the authorized Representative, shall
submit a petition for reclassification in writing to the Director of the
Department of Labor and Employee Affairs indicating the criteria and reasons
justifying the petition.

SECTION 2

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

SECTION 3

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

SECTION 4

      The Director of the Department of Labor and Employee Affairs will notify
the President of the Brotherhood about the Company's position about the petition
for reclassification within a period of ninety (90) days from the receipt of the
same. If it were determined that a position must be reclassified, its
reclassification shall be effective as of the date of the written notice sent by
the Company to the Brotherhood.

SECTION 5

      No petitions for reclassification of positions from the Bargaining Unit
shall be accepted if within the last three (3) years, a petition regarding the
same position has been filed.

SECTION 6

      In the event that an employee is reclassified, he/she shall be entitled to
receive 4% of salary increase for the next salary level to which he/she is
reclassified. Example: 10-11.

      If the reclassification includes more than one salary level, he/she may
receive 4% for the first salary level to which he is reclassified and 2%
increase for each additional level of increase. Example: 10-12 = 6% Total Salary
increase.

      If after the corresponding percentage increase is granted and the employee
remains under the minimum of the level to which he is reclassified, his salary
will be increased to the minimum of the scale.

                                   ARTICLE 21

                                 PERSONNEL FILES

SECTION 1

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

<PAGE>

SECTION 2

                  Any employee may review his personnel file, previous petition
and coordination with his immediate supervisor.

SECTION 3

         The Company agrees in presenting the official personnel file when the
employee has pending hearing a grievance in the third stage of the Grievance
Procedure and the employee has previously requested in writing its presentation
and that the employee understands that in the official file there appear charges
which are not in agreement with the facts. The President or the member of the
Executive Committee may examine the employee file in the third stage of the
Grievance Procedure if the employee so allows it and is present.

SECTION 4

         In addition, the Company agrees in presenting the personnel file to all
union members whose petition for promotion, transfer or change to a position of
an inferior salary level has been denied and he/she requests in writing to
examine his/her file and has a grievance in the third stage regarding his/her
promotion, transfer or change to a position with an inferior salary level
pending.

SECTION 5

         When in the employee's file, after its presentation, there appear
charges or documents which do not adjust themselves to the real fact, the
Company, after investigating the facts, agrees to withdraw the documents
presented and/or correct them if it were necessary.

SECTION 6

         The Company shall send the Brotherhood and deliver to the corresponding
Delegate a copy of all disciplinary actions that are notified in writing to an
employee included in the Bargaining Unit. The Company shall send the Brotherhood
a copy of all personnel movement duly approved and relating to employees from
the Bargaining Unit.

SECTION 7

         The Company will not supply any person or entity different from it,
information which arises from the personnel file of the employee, without
his/her written authorization, unless there is a judicial order, in which case
they will be notified previously. When there is a judicial or legal mandate, the
employee will be notified simultaneously with regard to the handing over of the
document, unless the judicial order or the law expressly forbids it.

SECTION 8

         The employee will be entitled to be supplied a copy of all documents
that are placed in his/her personnel file containing information regarding
his/her person.

                                   ARTICLE 22
                           WORK OF THE BARGAINING UNIT

SECTION 1

      The Company agrees that the personnel employed in the capacity of
supervisor or non-supervisor which are not included within the Bargaining Unit,
will not perform work assigned to employees within the Bargaining Unit, except
in cases of emergency and/or circumstances when employees from the Bargaining
Unit, as it is defined in this Agreement, are not available. None of what has
been previously stated shall

<PAGE>

limit the normal function of the management to instruct, train and direct the
work of employees within the Bargaining Unit.

SECTION 2

      For effects of this article "emergency cases" shall mean cases of Acts of
God such as:

      a.    National Emergency

      b.    Hurricanes

      c.    Fires

      d.    Floods

      e.    Earthquakes

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

SECTION 3

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

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

      b. When work has accumulated in an abnormal fashion and the available
personnel from the Bargaining Unit is not sufficient to cover the needs of the
service. This circumstance may not justify performing work of the appropriate
unit with personnel that is not from the Unit in a specific place or
classification for more than one hundred and eighty (180) days.

      c. When due to the absence of personnel from the Bargaining Unit, the
service is affected, requiring other personnel to perform the work.

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

      During the course of time of the process of exhausting the resource of
bringing personnel from the Bargaining Unit, the Company may take the necessary
measures so that service will not be interrupted as long as the instrument of
these measures do not annul the purpose stated in the preceding paragraph.

      It being understood, however, that the previous provision shall apply
solely and exclusively when the situation being considered in paragraphs b. and
c. are due to or are the direct consequence of the normal outcome of the
services rendered by the Company. Under no circumstances shall it apply when the
situations being considered in paragraphs b. and c. are the direct or indirect
result of actions from personnel from the Bargaining Unit geared toward
producing an abnormal accumulation of work: such as slowdowns, abnormal or
agreed upon absences of personnel from the Bargaining Unit of the Company or any
action of

<PAGE>

the ones stated in the Non-Strike and Non-Lockout Article of the Collective
Bargaining Agreement and/or disciplinary actions taken as a result of the
aforementioned conduct.

      The personnel from the contracting unit shall perform the duties
corresponding to it when the exceptions indicated in this Article arise.

      The intention of the parties in this Agreement is to prevent managerial
personnel from displacing personnel from the Bargaining Unit in their regular
work and in working overtime and at no time whatsoever forbidding that the
operations be carried out in a normal fashion as a public service enterprise.

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

SECTION 4

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

         Both parties recognize that it is indispensable that the Company may be
able to provide a fast and efficient service that adequately responds to the
requirements and needs of the customers in order to compete and be successful to
maintain job security. Accordingly to the aforementioned, the accelerate
technology evolution and the nature of the market, the Company may assign
dispatch functions, tests functions and Special Facilities Installer and
Maintenance Transmission Equipment Technician functions from this Bargaining
Unit to other Bargaining Unit. The assignment of shared work from this
Bargaining Unit to members of the other Bargaining Unit of the Company will not
be used to lay off or transfer HIETEL employees in classifications with the
above mentioned functions, nor those HIETEL classifications and positions will
be converted to classifications and positions of the other Bargaining Unit, nor
those classifications and positions be eliminated.

      The Company may assign work from other bargaining units to the employees
covered by this Collective Bargaining Agreement in all those situations and
circumstances which are not expressly forbidden and/or which are allowed in the
Collective Bargaining Agreements applicable to said other bargaining units. In
situations of scheduled official activities from said other bargaining units,
the employees included in this unit will not be bound to perform the work of
said other bargaining units, but they will not be able to refuse to perform the
work of their own Unit.

                                   ARTICLE 23
                                HEALTH AND SAFETY

SECTION 1

      The Brotherhood and the Company agree that the safety conditions at work
are the responsibility of the employees and the Company.

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

SECTION 2

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

<PAGE>

      The Company's requirement which requires that the employee carry
identification card with them in a visible place, accrediting them as employees,
shall be complied with by all the personnel, the cost of the identification card
shall be paid for by the Company.

SECTION 3

      Any employee who suffers a work accident or who becomes ill during working
hours and that his/her injury or illness results in an emergency case where
immediate medical or hospitalization services are required, shall be entitled,
after receiving the authorization of a supervisor, to have any Company vehicle
that is available be utilized for his/her transportation and such vehicle may be
driven by any person authorized to drive motor vehicles if the driver in charge
of the vehicle is not available or accessible at the time of the accident.

SECTION 4

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

SECTION 5

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

SECTION 6

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

SECTION 7

      In those cases in which the Company determines to establish new work
centers, the Brotherhood shall be notified within thirty (30) days of prior
notice when fifty (50) or more employees are required to work in the work center
and fifteen (15) days prior notice when there are less than fifty (50)
employees, for the purpose of it having the opportunity to examine the same
before beginning operations in said centers and may express its observations and
recommendations. In special cases, the Company and the Brotherhood will reach an
agreement to establish the inspection within a lesser period of time.

SECTION 8

      The Company, through its Accident Prevention Division, agrees to provide
the Brotherhood with the work accident reports and studies performed by any
laboratory on or before thirty (30) calendar days following the accident.

                                   ARTICLE 24
                              DRUG TESTING PROGRAM

SECTION 1

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

<PAGE>

SECTION 2

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

SECTION 3

      For such reason, in order to maintain a work environment free of the
problems associated with the use and abuse of controlled substances and to
protect the health and safety of the employees covered in this Bargaining Unit,
the parties, after a careful and conscious analysis of all the elements involved
in this problem, voluntarily and in free exercise of their contractual
faculties, pursuant to law, agree that the Company may adopt a Drug Testing
Program for the employees in accordance to Act #59 of August 8, 1997. The
guiding criteria of the Program shall be:

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

      -     Non-discrimination against the employee.

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

                                   ARTICLE 25
                                 BULLETIN BOARD

SECTION 1

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

         In these bulletin boards, notices regarding the following matters shall
be posted:

         a.       Summons to meetings, which shall limit themselves to
                  specifying the place, time and date of said activities.

         b.       Appointment of officers, committees and delegates.

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

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

SECTION 2

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

SECTION 3

         It is agreed that the notices which are posted will not contain
political, or religious material or material which tends to slander, defame or
affect the image of the Company or its officers.

         The Company will not allow to post notices which are contrary to and in
violation of this clause.

<PAGE>

                                   ARTICLE 26

                              WORK DAY AND OVERTIME

SECTION 1

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

SECTION 2

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

SECTION 3

      The Company shall assign the overtime work without privileges. As long as
it is operationally possible and the demands of the service so allow it, the
employees who request it voluntarily shall be taken into consideration.

SECTION 4

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

SECTION 5

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

SECTION 6

      The employees covered by this Agreement may enjoy a fifteen (15) minute
rest during the course of each four (4) hour period of work as long as the
service is not affected and the emergencies are handled. The Company will
program the manner in which the employees will enjoy this rest period.

SECTION 7

      All employees are entitled to enjoy one (1) hour for meals, which they
must begin to enjoy not before the end of the third hour nor after the end of
the fifth hour of their regular work shift of daily work. The time worked during
the period destined for the consumption of meals shall be compensated at the
rate at twice (2) the rate per hour of regular work.

SECTION 8

      For the convenience of the employees covered by this Agreement, in the
case of the meal consumption periods that take place outside of the employee's
regular work day, said period shall be obviated (shall not be enjoyed) subject
to not having work performed more than two (2) hours after the regular work day.
This Agreement does not have the effect of eliminating an employee's right to
enjoy his/her meal hour when at any given time he/she has worked more than two
(2) hours after his/her regular

<PAGE>

work day. If this situation were to arise and the employee does not enjoy his
/her meal consumption period, the Company is bound to pay the penalty which the
law provides for that particular hour.

SECTION 9

      The provisions contained in this Article shall apply only to those
employees of the Company covered by this Agreement who are not exempt or who may
not be exempt in the future by any law, regulation, decree or any other
provision referring to the payment of additional compensation for extra hours of
work. Notwithstanding, the exempt employees covered by this Agreement may
receive payment under this Article on the basis of time and a half subject to
the procedure of supplementary compensation for exempt employees which is in
effect. (P-FI-011 June 30, 1995) The Company will not make any changes to this
departmental procedure during the duration of this agreement.

                                   ARTICLE 27
                                   PART TIMER

SECTION 1

      The Company may recruit part time employees (whom will not work less than
20 hours a week not more than 26 hours a week).

      The schedule of monthly hours will be distributed equitably using
seniority as criteria and will be notified with ten (10) days in advance. The
regular part timers employees will be recruited as Sales Consultant and Customer
Service Coordinators (ACD) and Customer Service Coordinators in Financial
Services Division in the Sections of In Bound and Hot Line, Operational Support
Technician I (1283027), Information Systems Support Technician I (1083025),
Customer Service Consultant I (1084004), Whole Sales Coordinator I (1085025),
Whole Sales Accounts Specialist I (1282046), Customer Services Technical Adviser
I (1383013), and Wireline Service Coordinator I (1282023). The benefits and
dispositions included in this contract will apply in proportion to the hours
worked: Vacations, Sick Leave, Extended Sick Leave, Occupational Sick Leave and
Economic Aid for Studies.

      Section 1 and 2 of the Article 51 - Publication of Work Shifts and the
last sentence of Section 1 of Article 26 - Workday and Overtime, will not apply
to regular part time employees.

      The disposition in Article 12 - Probationary Period will apply to these
employees.

SECTION 2

      The implementation of the above mentioned disposition will be prospective
in such a way that sales operations and customer service will not have more than
forty five percent (45%) of its Sales Consultant Positions, and Costumer
Services positions from ACD, Operational Support Technician I (1283027),
Information Systems Support Technician I (1083025), Customer Service Consultant
I (1084004), Wholesales Coordinator I (1085025), Wholesales Accounts Specialist
I (1282046), Customer Services Technical Adviser I (1383013), and Wireline
Service Coordinator I (128203), as part timers except the Financial Services
Division, Sections In Bound and Hot Line which not have more than forty five
percent (45%) of the total positions in said sections.

      This procedure will be implemented gradually. The use of part timers will
not have the effect of replacing regular employee's full timers, nor affect in
any way the benefits of regular full time employees.

<PAGE>

                                   ARTICLE 28
                                 VACATION LEAVE

SECTION 1

      The personnel from the Bargaining Unit shall enjoy the vacation leave in
the following manner:

      a. Those employees who have less than three (3) years of employment shall
enjoy vacation leave during the effective period of this Agreement at the rate
of one and two thirds (1 2/3) working days for each month of work.

      b. Those employees who have three (3) years or more of employment but less
than seven (7), shall enjoy vacation leave during the effective period of this
Agreement at the rate of one and five sixths (1 5/6) working days for each month
of work.

      c. Those employees who have seven (7) years or more but less than ten (10)
years, shall enjoy vacation leave during the effective period of this Agreement
at the rate of two and one sixth working days (2 1/6) for each month of work.

      d. Employees who have ten (10) years or more shall enjoy vacation leave
during the effective period of this Agreement, at the rate of two and a half (2
1/2) working days for each month of work.

      To be entitled to enjoy the days of vacation leave during the working
month, the employee must have worked at least one hundred (100) hours of labor
in said month. The employee who works less than one hundred (100) hours in any
month shall enjoy vacation leave in the proportion that the number of hours
which the employee in fact worked in that month is to one hundred (100) hours;
for example: if an employee who is entitled to enjoy vacation leave under clause
b of this Section works seventy-five (75) hours in a particular month, the
employee shall be entitled to enjoy in that month seventy-five percent (75%) of
(1 5/6) days on the basis of one working day of eight (8) hours, ten percent
point nine (10.99) rounded to eleven (11) hours of vacation leave in that month.
At the beginning of the enjoyment of his/her vacation leave, the employee will
receive the equivalent to the hours accrued on the basis of the applicable
aforementioned formula by multiplying the regular basic rate of pay by employee
hour.

SECTION 2

      The vacation leave will be taken during the period of twelve (12) months
following the date of the anniversary of entry of the employee. It being
provided that if at the end of said period of twelve (12) month it has not been
possible to grant the employee the vacation leave that he/she should have
enjoyed during the same, these shall be paid to him/her at double the regular
rate per hour, and that vacation leave which was accrued during said twelve (12)
month period shall begin to be enjoyed at the time when the afore mentioned
vacation leave is paid. If the enjoyment or continuation of enjoyment of a
license will provoke that the employee can not take the programmed vacations
within said period of twelve (12) months, the employee will take the programmed
vacations that will be overdue and then enjoy or continue to enjoy the other
license. When an employee once programmed its regular vacations they are
suspended due to service needs and are not reprogrammed with the employee and he
(the employee) benefits from any other license and due to this the vacations
become overdue, this will not be attributable to the employee and they will be
paid double the rate per hour. The provisions contained in this Section shall
apply solely to those employees of the Company covered by this agreement who are
not exempt or who may not be exempt in the future by any other law, regulation,
decree, or any other provision whatsoever referring to the payment of additional
compensation for extra hour of work.

<PAGE>

SECTION 3

      The Company shall determine the dates when the annual vacation leave
period that it will grant each employee is to begin and end, taking care in the
first instance of the Company's operational needs. However, any observation made
by the employee with regard to the date of his/her preference for taking his/her
vacation leave shall be taken into consideration if this is possible. If being
provided that if there are two or more interests of employees in conflict with
regard to the date for taking vacation leave, the employee with the greater
seniority shall have preference. The Company may close part of its operations
during the period of December 24 to 31 and charge this time to vacations. If the
employee does not have sufficient accrued vacations the time will be advanced.
Also, the time will be advanced if the Christmas closing provokes he does not
have sufficient accrued vacations to cover the ones already programmed.

SECTION 4

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

SECTION 5

      The employee who is enjoying vacation leave will not be called to work
until he/she has finished said vacation leave, except in an emergency case when
they may have to be interrupted due to service needs. Upon finishing the work
for which he/she was called, the employee shall enjoy the vacation leave which
he/she still has remaining, including the days when he/she was called back to
work.

SECTION 6

      The period of time in which the employee covered by this Collective
Bargaining Agreement is enjoying Sick Leave or Vacation Leave shall count, for
purposes of this Article only as hours worked, once he/she has returned to work.

SECTION 7

      When an employee is enjoying annual vacation leave and becomes ill for a
period of two (2) or more consecutive working days, it must be charged to sick
leave, if the employee requests it as long and as he/she presents medical
evidence, in conformity with Article 29, Section 5, (Sick Leave), that he/she is
ill, in which case the employee upon ending his/her illness shall continue the
vacation leave for a period equivalent to the balance of his/her authorized and
unused vacation leave.

SECTION 8

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

SECTION 9

      The employee may request through written petition the payment in cash of
his/her accrued vacation leave in excess of the maximum number of days of
vacation leave established by law. The granting of this request shall require an
agreement between the Company, the employee and the sindical representative. To
create a bridge between a holyday (as defined in this Agreement) and a weekend,
the Company may close part of its operations and charge those days to vacation
leave. In case the employee does not have sufficient accrued vacations, the time
will be advanced. Also the time will be advanced if the closing provokes he does
not have sufficient vacations to cover the ones already programmed.

<PAGE>

                                   ARTICLE 29

                                   SICK LEAVE

SECTION 1

      The employees covered by this Agreement shall accrue Sick Leave at the
rate of one and a half (1 1/2) working days for each month in which they have
worked at least one hundred (100) hours of labor. Those employees who work less
than one hundred (100) hours in the month will accrue Sick Leave in the
proportion that the number of hours that they worked in the month is to one
hundred (100) hours; in other words, if they work seventy-five (75) hours in the
month, they shall accrue seventy-five percent (75%) of one and a half (1 1/2)
working days on the basis of one day of work of eight (8) hours, in other words,
nine (9) hours of work.

      The period of time in which the employee covered by this Collective
Bargaining Agreement is enjoying Sick Leave or Vacation Leave shall count for
purposes of this Article only as hours worked once the employee returns to work.

SECTION 2

      The Sick Leave unused by the employee during the course of the year shall
be accrued for the successive years up to a maximum of seventy-five (75) days.
On the date of retirement under the benefits of the Company's Pension Plan or
disability determined by the Social Security, the employee shall be paid for the
days of Sick Leave which have accrued up to a maximum of seventy-five (75) days.
This benefit shall be calculated multiplying by eight (8) the regular basic rate
of pay per hour that the employee was receiving at the time of his/her
retirement or disability.

SECTION 3

      The Sick Leave accrued in excess of seventy-five (75) days shall be
liquidated after six (6) months have elapsed since the signing of the Agreement.
The Company will begin to pay the excess of Sick Leave to which the employee is
entitled, within a period of eight (8) weeks from the date of the annual
anniversary of Vacation Leaves, calculating by eight (8) the regular basic rate
of pay per hour which the employee is receiving, at the rate of fifty percent
(50%) during the first two year of the agreement and fifty five (55%) the third
year.

SECTION 4

      In the event of having to be absent from work for whatever reason, the
employee must let his/her immediate Supervisor know about it during the first
twenty four (24) hours of absence.

SECTION 5

      The employee who is absent due to illness in excess of two (2) days must
present to his/her Supervisor upon returning to his/her work a Medical
Certificate in which the date of the consultation to the physician, the
diagnosis and the estimate made by the physician of the days he/she must be out
of work must be specified. In the event that the employee continues ill for a
period greater than three (3) days or more, the employee must make said
certificate reach his/her Supervisor within the first three (3) days of absence
from his/her job, except in the cases of Acts of God when said certificate must
be sent to the Supervisor as soon as possible. The employee shall receive pay
for the benefits provided in this Article only when he/she complies with what is
provided in this Section.

<PAGE>

SECTION  6

         The Company shall inform the employees the balance of days accrued for
Sick Leave on an annual basis.

                                   ARTICLE 30
                                   SICK LEAVE

SECTION 1

      The employees covered by this Agreement shall accrue Sick Leave at the
rate of one and a half (1 1/2) working days for each month in which they have
worked at least one hundred (100) hours of labor. Those employees who work less
than one hundred (100) hours in the month will accrue Sick Leave in the
proportion that the number of hours that they worked in the month is to one
hundred (100) hours; in other words, if they work seventy-five (75) hours in the
month, they shall accrue seventy-five percent (75%) of one and a half (1 1/2)
working days on the basis of one day of work of eight (8) hours, in other words,
nine (9) hours of work.

      The period of time in which the employee covered by this Collective
Bargaining Agreement is enjoying Sick Leave or Vacation Leave shall count for
purposes of this Article only as hours worked once the employee returns to work.

SECTION 2

      The Sick Leave unused by the employee during the course of the year shall
be accrued for the successive years up to a maximum of seventy-five (75) days.
On the date of retirement under the benefits of the Company's Pension Plan or
disability determined by the Social Security, the employee shall be paid for the
days of Sick Leave which have accrued up to a maximum of seventy-five (75) days.
This benefit shall be calculated multiplying by eight (8) the regular basic rate
of pay per hour that the employee was receiving at the time of his/her
retirement or disability.

SECTION 3

      The Company will begin to pay the excess of Sick Leave to which the
employee is entitled, within a period of eight (8) weeks from the date of the
annual anniversary of Vacation Leaves, calculating by eight (8) the regular
basic rate of pay per hour which the employee is receiving, at the rate of fifty
five percent(55%) during the first two year of the agreement, sixty percent
(60%) during the third year, sixty five percent (65%) during the fourth year and
seventy five percent (75%) during the fifth year.

SECTION 4

      In the event of having to be absent from work for whatever reason, the
employee must let his/her immediate Supervisor know about it during his work
shift.

SECTION 5

      The employee who is absent due to illness in excess of two (2) days must
present to his/her Supervisor upon returning to his/her work a Medical
Certificate in which the date of the consultation to the physician, the
diagnosis and the estimate made by the physician of the days he/she must be out
of work must be specified. In the event that the employee continues ill for a
period greater than three (3) days or more, the employee must make said
certificate reach his/her Supervisor within the first three (3) days of absence
from his/her job, except in the cases of Acts of God when said certificate must
be sent to the Supervisor as soon as possible. If the Medical Certificate is not
original, the employee will submit the Medical Certificate in original upon
returning to work. The employee shall receive pay for the benefits provided in
this Article only when he/she complies with what is provided in this Section.

<PAGE>

SECTION 6

      The Company shall inform the employees the balance of days accrued for
Sick Leave on an annual basis.

                                   ARTICLE 31
                               EXTENDED SICK LEAVE

SECTION 1

      In the event that a regular employee is absent for a consecutive period
greater than five (5) working days due to reasons of illness verified by means
of a Medical Certificate which complies with the requirements provided in the
Article regarding Sick Leave, the employee will receive benefits at the rate of
one (1) week at full salary and three (3) weeks at half (1/2) salary for each
year of service up to a maximum of eleven (11) weeks at full salary and
thirty-nine (39) weeks at half (1/2) salary. In the event that the benefit under
the Non-Occupational Disability Insurance Act (Act 139) were to turn out to be
greater than the ones established herein, only the ones which are greater shall
be granted.

      If the employee were not discharged after the aforementioned weeks have
elapsed and at his/her written petition, a Leave Without Pay shall be approved
for the purposes of holding his/her job until completing a maximum of fifty-two
(52) weeks, the employee may be reinstated to his/her job, as long as he/she
complies with the terms and conditions which the law establishes, among other
requirements, that he/she has to have been discharged and be physically and
mentally qualified to exercise the functions of his/her job.

SECTION 2

      The Company reserves itself the right to examine by physicians chosen by
it, those cases which it deems necessary; the expense for these examinations
shall be paid for by the Company.

SECTION 3

      All accidents and/or illnesses of an occupational nature are excluded from
the benefit provided in Section 1 of this Article.

SECTION 4

      The first five (5) consecutive working days of absence prior to the
enjoyment of prolonged sick leave shall be charged to regular sick leave that
the employee has have accrued. The Brotherhood members who request this benefit
may use the sick leave and vacations before enjoyment of the prolonged sick
leave.

SECTION 5

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

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

<PAGE>

                                   ARTICLE 32
                                 MATERNITY LEAVE

SECTION 1

      Any employee in a state of pregnancy shall be entitled to a rest period of
four (4) weeks before and four (4) weeks after the birth, with full pay at the
rate of her regular salary.

SECTION 2

      The employee may choose to take up to one week of pre natal rest and
extend up to seven (7) weeks the post natal rest to which she is entitled as
long as she presents her Supervisor with a medical certificate crediting that
she is in condition to work up to one week before the delivery.

SECTION 3

      If an employee were to suffer a complication after the birth that
prevented her from working for a term exceeding four (4) weeks, to be counted
from the day of the delivery, the Company will grant an additional rest period
for a term which shall not exceed fifteen (15) additional weeks without pay, as
long as before the expiration of the rest period she presents a medical
certificate crediting such complication. It been provided that the employee may
charge the fifteen (15) weeks to her vacations, sick leave or extended sick
leave.

SECTION 4

         The employee that adopts a child younger than seven (7 ) years shall
have the same benefits (maternity leave) as any other employee has for natural
births after presenting legal documentation proving that the adoption process
was completed.

SECTION 5

      With one (1) month of anticipation before the beginning of the leave, the
employee shall present the Company with a medical certification crediting her
condition and indicating the probable date of delivery, or in the case of
adoption the presenting of documents of the date of adoption. Upon complying
with this requirement, the employee shall receive the corresponding pay in
accordance to the provided in Section 1, in advance at the moment that she
begins to enjoy this leave.

SECTION 6

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

SECTION 7

      The employee and her supervisor will coordinate the use of the facilities
and or refrigerators if said refrigerators are necessary and that are available
in the employees work center so that she could extract and preserve the milk.
The employee must be responsible of the adequate use of the stored milk and the
Company's equipment to be used by her for such use. The employee must present
medical evidence that shows that she is lactating. The employee will have five
(5) additional minutes per break for a term of fifteen (15) labor days for the
extraction of the milk.

<PAGE>

SECTION 8

         The absences motivated by this leave will not be considered to the
effect of absenteeism in the performance evaluation.

SECTION 9

         The use and enjoyment of this leave will not cause loss of seniority.

                                   ARTICLE 33
                                 MATERNITY LEAVE

SECTION 1

      Any employee in a state of pregnancy shall be entitled to a rest period of
four (4) weeks before and four (4) weeks after the birth, with full pay at the
rate of her regular salary.

SECTION 2

      The employee may choose to take up to one week of pre natal rest and
extend up to seven (7) weeks the post natal rest to which she is entitled as
long as she presents her Supervisor with a medical certificate crediting that
she is in condition to work up to one week before the delivery.

SECTION 3

      If an employee were to suffer a complication after the birth that
prevented her from working for a term exceeding four (4) weeks, to be counted
from the day of the delivery, the Company will grant an additional rest period
for a term which shall not exceed fifteen (15) additional weeks without pay, as
long as before the expiration of the rest period she presents a medical
certificate crediting such complication. It been provided that the employee may
charge the fifteen (15) weeks to her vacations, sick leave or extended sick
leave.

SECTION 4

      The employee that adopts a child younger than seven (7) years shall have
the same benefits (maternity leave) as any other employee has for natural births
after presenting legal documentation proving that the adoption process was
completed.

SECTION 5

      With one (1) month of anticipation before the beginning of the leave, the
employee shall present the Company with a medical certification crediting her
condition and indicating the probable date of delivery, or in the case of
adoption the presenting of documents of the date of adoption. Upon complying
with this requirement, the employee shall receive the corresponding pay in
accordance to the provided in Section 1, in advance at the moment that she
begins to enjoy this leave.

SECTION 6

      The employee who suffers a miscarriage shall be entitled and may claim the
same benefits enjoyed by the employee who has a normal delivery. However, to
receive such benefits, the miscarriage must be one of

<PAGE>

such nature that it produces the same physiological effect that regularly arise
as a result of the delivery, in accordance to the decree and certification of
the physician taking care of her during the miscarriage. Said benefit shall be
from the miscarriage onward.

SECTION 7

      The employee and her supervisor will coordinate the use of the facilities
and or refrigerators if said refrigerators are necessary and that are available
in the employees work center so that she could extract and preserve the milk.
The employee must be responsible of the adequate use of the stored milk and the
Company's equipment to be used by her for such use. The employee must present
medical evidence that shows that she is lactating.

SECTION 8

      The absences motivated by this leave will not be considered to the effect
of absenteeism in the performance evaluation.

SECTION 9

      The use and enjoyment of this leave will not cause loss of seniority.

                                   ARTICLE 34
                                LEAVE WITHOUT PAY
                             FOR BROTHERHOOD AFFAIRS

SECTION 1

         The Company and the Brotherhood shall reach an agreement about the
number of persons and time without pay to be granted to personnel designated by
the Brotherhood for attendance to a convention or other worker activity.

SECTION 2

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

SECTION 3

         The Brotherhood agrees that, upon making its petition for free time for
Brotherhood activities, it will give the proper consideration to the number of
employees affected for the purpose of there being no interruption to the
Company's operations due to the lack of available personnel.

SECTION 4

         The time that any employee is on leave for Brotherhood affairs shall be
considered as service time purposes of seniority.

         The employee, upon returning to the Company, shall be entitled to the
occupational level and salary corresponding to him/her as if he/she had been
working.

<PAGE>

                                   ARTICLE 35
                    LEAVE FOR ADMINISTRATIVE FUNCTIONS OF THE
                         COLLECTIVE BARGAINING AGREEMENT

SECTION 1

         PRT shall grant two (2) Union Leaves with pay and two Union Leaves
without pay to the Brotherhood for those PRT employees that HIETEL assign to
administer the agreement. It being understood that with regard to this leave,
PRT shall only pay the sum of the salaries, minus the corresponding deductions
of law with the HIETEL having to pay the fringe benefits and any other deduction
or contribution. The total Union leaves for both, PRT and CTI will not exceed of
(3) three leaves with pay and (3) three without pay.

SECTION 2

         Union Leave with pay shall be understood to mean that PRT will pay his
net monthly salary to the employee enjoying said Leave, Christmas bonus and the
Company's contribution to the health plan. It being understood that with regard
to the Union Leave with Pay as well as the Union Leave without Pay the benefits
for Sick Leave, Vacation Leave and any other benefits, deductions or
contributions shall be agreed upon internally between said employee and the
Brotherhood, and in no case whatsoever shall they be paid as an additional and
separate compensation from the salary by the Company.

SECTION 3

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

SECTION 4

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

                                   ARTICLE 36
                    LEAVE FOR ADMINISTRATIVE FUNCTIONS OF THE
                         COLLECTIVE BARGAINING AGREEMENT

SECTION 1

      PRT shall grant THREE (3) Union Leaves with pay and THREE (3) Union Leaves
without pay to the Brotherhood for those PRT employees that HIETEL assign to
administer the agreement. It being understood that with regard to this leave,
PRT shall only pay the sum of the salaries, minus the

<PAGE>

corresponding deductions of law with the HIETEL having to pay the fringe
benefits and any other deduction or contribution. The total Union leaves will
not exceed of (3) three leaves with pay and (3) three without pay.

SECTION 2

      Union Leave with pay shall be understood to mean that PRT will pay his net
monthly salary to the employee enjoying said Leave, Christmas bonus and the
Company's contribution to the health plan. It being understood that with regard
to the Union Leave with Pay as well as the Union Leave without Pay the benefits
for Sick Leave, Vacation Leave and any other benefits, deductions or
contributions shall be agreed upon internally between said employee and the
Brotherhood, and in no case whatsoever shall they be paid as an additional and
separate compensation from the salary by the Company.

SECTION 3

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

SECTION 4

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

                                   ARTICLE 37
                                 MILITARY LEAVE

SECTION 1

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

SECTION 2

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

<PAGE>

                                   ARTICLE 38
                                  FUNERAL LEAVE

SECTION 1

      All regular employees shall be entitled to enjoy a Funeral Leave with pay
consisting of three (3) working days from the date of the death of any of
his/her natural parents or foster parents (one excludes the other), of his/her
spouse, of children or of siblings and one day in the event of the death of
grandparents and in-laws.

SECTION 2

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

SECTION 3

      In the event that an employee needs additional time, the Company may grant
the same charging it to the Vacation Leave that the employee may have accrued.

SECTION 4

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

                                   ARTICLE 39
                           LEAVE FOR JUDICIAL PURPOSES

SECTION 1

      All regular employees will be entitled to enjoy a paid leave for the time
that may be required by a Court of Justice to serve as a member of a jury.

SECTION 2

      The Company shall pay the regular salary of an employee who is officially
subpoenaed by the district attorney's office or by a Court of Justice to appear
as a witness in a criminal case for all the regular working hours to which said
subpoena prevents the employee from being at his/her job. The employee must
inform his/her immediate Supervisor about said subpoena with at least two (2)
days of prior notice unless he/she has been subpoenaed within a shorter period.
The employee must return to his/her duties as soon as his/her interview with the
District Attorney ends or as soon as the employee is dismissed by the Court. The
employee must present written evidence of the subpoena, as well as of his/her
appearance before the District Attorney and/or the Court.

SECTION 3

      Any employee officially subpoenaed to appear before any Court of Justice,
District Attorney, administrative entity or government agency which is not
covered by the two (2) preceding sections, shall be entitled to enjoy Leave
without Pay for the time which said official subpoenas prevent the employee from
showing up at his/her regular work schedule. The employee may, at his/her
option, charge this time to vacation leave.

SECTION 4

      When an employee is subpoenaed, indicted or accused for the alleged
commission of a crime allegedly committed during his/her work, the days utilized
to appear at Court or at the subpoenas, at the petition of the employee, will be
charged to his/her accrued regular vacation leave and not enjoyed or in their
defect Leave without Pay shall be granted, as long as evidence of the
appearances is presented. It being provided that if the employee is exonerated
or the crime for which the employee is being accused is

<PAGE>

filed, such days shall be paid and the time shall be taken into consideration
for all the purposes of law and the Collective Bargaining Agreement as time that
has been worked.

                                   ARTICLE 40
                                    PER DIEMS

SECTION 1

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

SECTION 2

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

a.    If he/she leaves on or before 6:00 a.m. and returns on or after 8:00 a.m.
      of the same day, $5.00 for breakfast for the first year and $5.50 for the
      rest years of agreement.

b.    If he/she leaves on or after 8:00 a.m. and returns on or after 1:00 p.m.
      of the same day, $8.75 for lunch for the first year and $9.50 for the rest
      years of agreement.

c.    If he/she leaves on or after 1:00 p.m. and returns on or after 6:30 p.m.
      of the same day $10.25 for dinner and $10.50 for the rest years of
      agreement.

d.    If the employee were required to spend the night, the employee shall be
      entitled to $70.00 for lodging without receipt for the life of the
      agreement.

e.    The employees who travel to the Island of Vieques and/or Culebra shall
      receive for the concept of per diem the following amounts:

<TABLE>
<CAPTION>
Breakfast                  Lunch                        Dinner
<S>                        <C>                          <C>
 $5.50                     $9.50                        $10.50
</TABLE>

SECTION 3

      In the event that an employee has to work in a place outside of the
municipality where his/her work center is normally located for a period greater
than one day, during which term of time the employee has to have his/her meals
and sleep in said place, the Company will pay the amount of $94.00 daily for the
first year and $95.00 for the rest years of the agreement, an amount which shall
cover all the expenses in which the employee incurs and for which amount the
employee will not have to present a receipt or vouchers. In addition, if he/she
were required to continue working up to after seven (7) hours after the end of
his/her daily work day, they will be paid a per diem for the amount of $9.00 for
the first year and $9.25 for the rest years of the agreement.

SECTION 4

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

<PAGE>

a.    To the employees who work exclusively in the dawn work shifts which are
      the work shifts that regularly end after 12:00 midnight, they shall be
      paid a snack for the amount of $5.00 for the first year and $5.50 for the
      rest years of the agreement.

b.    In the case of employees who work any work day (daily) of eight (8) hours
      and they are required to continue working for 1 1/2 hours, they will be
      paid a per diem for the amount of $8.50 for non-exempt employees and $9.00
      for exempt employees and they will be paid a second per diem if they
      continue working until after seven (7) consecutive hours after the end of
      their daily work shift, for the amount of $ 15.50 for non-exempt employees
      and $17.50 for exempt employees.

c.    In the case of employees required to work the sixth, seventh or holiday in
      the municipality where his/her work center is normally located, they will
      be paid a per diem for the amount of $9.00 if he works 4 hours or more but
      less than 8 hours. If they continue working 8 hours or more they will be
      paid a per diem of $9.25. In addition they will be reimburse for the
      transportation expenses incurred from their work center and back.

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

SECTION 5

      In the event that the employee is required to work outside the
municipality where his/her work center is normally located and during this
period of time holidays occur between two (2) working days, the Company shall
pay per diems and lodgings for said holidays.

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

      In those cases where an employee is required to work outside of the
municipality where his/her work center is normally located and the he/she
becomes ill during this time, the Company will be obligated to pay the per diems
provided in this Article, as long as the employee spends the night in the
lodging in the municipality where he/she is required to work and complies with
the provisions of the Article regarding Sick Leave and never for a period
exceeding two (2) days.

SECTION 6

            Any employee assigned regularly to Bayamon, Levittown and Catano who
is required to work temporarily in Carolina, Isla Verde or Trujillo Alto, and in
like manner, any employee assigned regularly to Carolina, Isla Verde or Trujillo
Alto who is required to work temporarily in Bayamon, Levittown or Catano will be
entitle to the per diem as follows.

      In these cases a per diem of $8.00 for the first year and $8.50 for the
rest years of the agreement, each day that the employee works temporarily shall
be paid up to a maximum period of thirty (30) calendar days. Upon finishing the
temporary assignment, the aforementioned per diem for each day worked shall be
suspended and the employee shall be reassigned to his/her work center of origin
or shall be reassigned regularly to the work center where he/she is found
rendering his/her services temporarily. The Company may extend the temporary
period for an additional period in which case the employee will continue
receiving the per diems of $8.00 for the first year and $8.50 for the rest years
of the agreement until the Company determines that the work that the employee
had been assigned has ended.

<PAGE>

SECTION 7

         Any employee who is required by the Company to attend to testify in its
favor at hearings of the Department of Consumer Affairs (DACO),
Telecomunications Regulatory Board and/or any other government, state or federal
agency and/or state or federal court, shall receive the per diems in conformity
to Section 2 of this Article.

SECTION 8

         The payment of per diems, lodging and mileage shall be determined by
the personnel approving it utilizing the following criteria:

         a.       The time that the employee reasonably needs to show up from
                  his residence to the new place of work and return to his/her
                  residence.

         b.       The distance between the employee's municipality or residence
                  to the new work place and return. The approving personnel
                  shall pass judgement when the distances are taken from the
                  employee's residence.

         c.       Need for the employee to show up in optimum conditions of
                  physical and mental rest by the nature of his/her functions.

         d.       The payment of traveling time incidental to the employee's
                  trip.

SECTION 9

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

SECTION 10

         The personnel from the areas of Marketing, Sales, or any personnel
under their supervision, assigned to work during conventions held at hotels for
a duration of more than four hours, may claim the actual expense of lunch and/or
dinner (including the tip) up to a maximum of $30.00 although it takes place in
their municipality of work. A requirement for the reimbursement shall be the
presentation of the receipts of the hotel where the activity is held. In the
cases in which lunch or dinner is provided free of charge the per diem cannot be
charged.

SECTION 11

      In the event that an employee is required to travel outside of Puerto
Rico, the Company pay the following:

      a.    Stipend of $45.00 daily, amount that will cover all expenses of per
            diem incurred by the employee without receipt.

      b.    Reimbursement of lodging expense will be according to invoice
            presented and previously approved.

      c.    Reimbursement of hotel tips and airport tips as follows:

                  -     Bell boy $1.00 per service

<PAGE>

                  -     Maid service $2.00 per day

      d.    Reimbursement of the lease of a coat if the trip is during winter
            time. Expenses for scarfs, gloves, socks cap, and undergarments that
            are reasonably needed may be reimburse.

      e.    Reimbursement of the cost of a telephone all up to a maximum of five
            minutes daily.

      f.    Reimbursement of transportation cost incurred from the house to the
            airport and viceversa.

      g.    If public transportation is needed at the training or work site, the
            cost of automobile rent will be reimbursement, if the same is
            cheaper than public transportation.

                                   ARTICLE 41
                                    PER DIEMS

SECTION 1

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

SECTION 2

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

a.    If he/she leaves on or before 6:00 a.m. and returns on or after 8:00 a.m.
of the same day, $5.00 for breakfast for the first year and $5.50 for the rest
years of agreement.

b.    If he/she leaves on or after 8:00 a.m. and returns on or after 1:00 p.m.
of the same day, $8.75 for lunch for the first year and $9.50 for the rest years
of agreement.

c.    If he/she leaves on or after 1:00 p.m. and returns on or after 6:30 p.m.
of the same day $10.25 for dinner and $10.50 for the rest years of agreement.

d.    If the employee were required to spend the night, the employee shall be
entitled to $70.00 for lodging without receipt for the life of the agreement.

e.    The employees who travel to the Island of Vieques and/or Culebra shall
receive for the concept of per diem the following amounts:

<TABLE>
<CAPTION>
Breakfast              Lunch                  Dinner
<S>                    <C>                    <C>
  $5.50                $9.50                  $10.50
</TABLE>

SECTION 3

      In the event that an employee has to work in a place outside of the
municipality where his/her work center is normally located for a period greater
than one day, during which term of time the employee has to have his/her meals
and sleep in said place, the Company will pay the amount of $94.00 daily for the
first year and $95.00 for the rest years of the agreement, an amount which shall
cover all the expenses in which the employee incurs and for which amount the
employee will not have to present a receipt or vouchers. In

<PAGE>

addition, if he/she were required to continue working up to after seven (7)
hours after the end of his/her daily work day, they will be paid a per diem for
the amount of $9.00 for the first year and $9.25 for the rest years of the
agreement.

SECTION 4

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

a.    To the employees who work exclusively in the dawn work shifts which are
the work shifts that regularly end after 12:00 midnight, they shall be paid a
snack for the amount of $5.00 for the first year and $5.50 for the rest years of
the agreement.

b.    In the case of employees who work any work day (daily) of eight (8) hours
and they are required to continue working for 1 1/2 hours, they will be paid a
per diem for the amount of $8.50 for non-exempt employees and $9.00 for exempt
employees and they will be paid a second per diem if they continue working until
after seven (7) consecutive hours after the end of their daily work shift, for
the amount of $15.50 for non-exempt employees and $17.50 for exempt employees.

c.    In the case of employees required to work the sixth, seventh or holiday in
the municipality where his/her work center is normally located, they will be
paid a per diem for the amount of $9.00 if he works 4 hours or more but less
than 8 hours. If they continue working 8 hours or more they will be paid a per
diem of $9.25. There will be no pyramidal pay.

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

SECTION 5

      In the event that the employee is required to work outside the
municipality where his/her work center is normally located and during this
period of time holidays occur between two (2) working days, the Company shall
pay per diems and lodgings for said holidays.

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

      In those cases where an employee is required to work outside of the
municipality where his/her work center is normally located and the he/she
becomes ill during this time, the Company will be obligated to pay the per diems
provided in this Article, as long as the employee spends the night in the
lodging in the municipality where he/she is required to work and complies with
the provisions of the Article regarding Sick Leave and never for a period
exceeding two (2) days.

SECTION 6

      Any employee assigned regularly to Bayamon, Levittown and Catano who is
required to work temporarily in Carolina, Isla Verde or Trujillo Alto, and in
like manner, any employee assigned regularly to Carolina, Isla Verde or Trujillo
Alto who is required to work temporarily in Bayamon, Levittown or Catano will be
entitle to the per diem as follows.

<PAGE>

      In these cases a per diem of $8.00 for the first year and $8.50 for the
rest years of the agreement, each day that the employee works temporarily shall
be paid up to a maximum period of thirty (30) calendar days. Upon finishing the
temporary assignment, the aforementioned per diem for each day worked shall be
suspended and the employee shall be reassigned to his/her work center of origin
or shall be reassigned regularly to the work center where he/she is found
rendering his/her services temporarily. The Company may extend the temporary
period for an additional period in which case the employee will continue
receiving the per diems of $8.00 for the first year and $8.50 for the rest years
of the agreement until the Company determines that the work that the employee
had been assigned has ended.

SECTION 7

      Any employee who is required by the Company to attend to testify in its
favor at hearings of the Department of Consumer Affairs (DACO),
Telecommunications Regulatory Board and/or any other government, state or
federal agency and/or state or federal court, shall receive the per diems in
conformity to Section 2 of this Article.

SECTION 8

      The payment of per diems, lodging and mileage shall be determined by the
personnel approving it utilizing the following criteria:

      a. The time that the employee reasonably needs to show up from his
residence to the new place of work and return to his/her residence.

      b. The distance between the employee's municipality or residence to the
new work place and return. The approving personnel shall pass judgment when the
distances are taken from the employee's residence.

      c. Need for the employee to show up in optimum conditions of physical and
mental rest by the nature of his/her functions.

      d. The payment of traveling time incidental to the employee's trip.

SECTION 9

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

SECTION 10

      The personnel from the areas of Marketing, Sales, or any personnel under
their supervision, assigned to work during conventions held at hotels for a
duration of more than four hours, may claim the actual expense of lunch and/or
dinner (including the tip) up to a maximum of $30.00 although it takes place in
their municipality of work. A requirement for the reimbursement shall be the
presentation of the receipts of the hotel where the activity is held. In the
cases in which lunch or dinner is provided free of charge the per diem cannot be
charged.

SECTION 11

      In the event that an employee is required to travel outside of Puerto
Rico, the Company pay the following:

      a. Stipend of $45.00 daily, amount that will cover all expenses of per
diem incurred by the employee without receipt.
<PAGE>

      b. Reimbursement of lodging expense will be according to invoice presented
and previously approved.

      c. Reimbursement of hotel tips and airport tips as follows:

            -     Bell boy $1.00 per service

            -     Maid service $2.00 per day

      d. Reimbursement of the lease of a coat if the trip is during winter time.
Expenses for scarf's, gloves, socks cap, and undergarments that are reasonably
needed may be reimburse.

      e. Reimbursement of the cost of a telephone all up to a maximum of five
minutes daily.

      f. Reimbursement of transportation cost incurred from the house to the
airport and vice versa.

      g. If public transportation is needed at the training or work site, the
cost of automobile rent will be reimbursement, if the same is cheaper than
public transportation.

SECTION 12

      The Company will retain in its origin all law or by law deductions.

                                   ARTICLE 42
                                 TRANSPORTATION

SECTION 1

      When an employee is required to work at a place outside of where his/her
work center is normally located, the Company, according to what the case may be,
will provide the transportation, will pay in advance or reimburse the
transportation expenses that he/she incurs in, as is provided further ahead.

SECTION 2

      The transportation expenses must be approved and paid by the Company prior
to their being incurred in or shall be reimbursed later on if they cannot be
paid in advance; it being provided that the transportation expenses which an
employee normally spends in going and/or coming (from his/her residence) to
his/her work center will not be considered reimbursable expenses. In addition,
transportation expenses shall not be paid when the transportation is provided by
the Company.

SECTION 3

      The employees authorized to utilize their private vehicles shall be paid
at the rate ($0.41) cents per mile for vehicles with public liability insurance
as included by the Compulsory Insurance and ($0.45) per mile for vehicles with
public liability insurance which includes the following minimum:

            -        Bodily Injury              $25,000 per person

            -        Bodily Injury              $50,000 per occurrence

            -        Private Property Damage    $25,000 per occurrence

<PAGE>

      To determine the miles for purposes of claiming the payment, the distance
charts between the towns prepared by the Roads Authority and the one for the
Metropolitan Area prepared by the Company will be used. When the distance charts
cannot be used, the reimbursement system will be utilized and the employee must
report the distance traveled.

SECTION 4

      In all the cases in which an employee is required to use his/her
automobile in official endeavors of his/her job, due to the fact that there is
no fleet vehicle available or belonging to others and physical damages to third
parties that may have arisen as a result of an accident due to the utilization
of said automobile, if the vehicle is no insured. If the vehicle is insured, the
Company will only be liable for the excess of the damages to the property of
others and bodily damages to third parties not covered by the vehicle's
insurance.

SECTION 5

      The employee will have to notify the police immediately and his/her
immediate Supervisor as soon as possible (within 24 hours) and shall remain at
the site of the events until the Police arrives and renders the corresponding
report, except when it is not feasible. The employee will render all the reports
required by the Company including the revised Form 603, as per instructions
imparted.

SECTION 6

      When the Company orders an employee to carry out an official trip due to
the needs of the service or when he/she is assigned to some temporary jobs
outside of his regular work center, it will provide said employee with the means
of transportation from his/her work center, or in its place, will pay in advance
for the transportation expenses for the miles that the employee has to travel on
said official trip or for the ones that the employee has to travel due to the
temporary assignment from his/her regular work center.

      This Section applies only when the employee shows up at his/her regular
work center and is sent to work to another place during the same day.

SECTION 7

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

SECTION 8

      When an employee is required to utilize public transportation, he/she
shall be reimbursed in accordance to the effective rate in the transportation
method utilized. The employee will not be reimbursed on the basis of the rate
for one means when the means utilized is another one. The use of a taxi shall be
authorized by the director of the department or the superior level by means of
written justification and shall be conditioned to the employee's presenting
together with the petition for reimbursement the following information: taxi
license, name of the line and taxi number.

<PAGE>

SECTION 9

      To be entitled for payment or reimbursement of any expense provided in
this Article, the employee must complete the form established in the Company for
this purpose.

SECTION 10

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

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

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

      The exclusions to the benefits of this Section are the permanent transfers
carried out within the limits of the boundaries of San Juan, Santurce, Hato Rey,
Rio Piedras, Pueblo Viejo, Puerto Nuevo and Caparra and any other area within
those boundaries, as well as the transfers carried out at the petition of the
employee.

SECTION 11

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

SECTION 12

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

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

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

                  1)    San Juan- Santurce - Isla Verde

                  2)    Hato Rey - Rio Piedras

                  3)    Pueblo Viejo (includes Caparra and Puerto Nuevo)

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

<PAGE>

SECTION 13

      For exclusive purposes of transfers motivated by relocation of work center
the metropolitan area telephone company shall be considered as one single
municipality including all of the following: San Juan, Santurce, Hato Rey, Rio
Piedras, Guaynabo, Pueblo Viejo, Levittown, Catano, Bayamon, Carolina, Trujillo
Alto, Isla Verde and any other area within these boundaries. However, all
employees regularly assigned to Bayamon, Levittown or Catano who are permanently
transferred to Carolina, Isla Verde or Trujillo Alto or vice versa, shall be
entitled to the mileage for the term provided in this Article.

SECTION 14

      The transfers which occur at the petition of the employee are excluded
from the benefits of this Article.

SECTION 15

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

SECTION 16

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

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

SECTION 17

            The Company will retain in its origin all law or by law deductions.

<PAGE>

                                   ARTICLE 43
                                   HEALTH PLAN

SECTION 1

                  During the effective period of this Collective Bargaining
Agreement, the Company binds itself to provide a Health Plan with the same
benefits provided by the Health Plan that was in effect as of the signature of
this Agreement for the employees represented by the Brotherhood. The employee
will select one of the following alternatives offered by the provider of medical
services and will contribute the amounts indicated below on a bi-weekly basis
according to his/her selection.

                                               Contribution during the effective
                                               period of this Collective
                                               Bargaining Agreement

A.    INDIVIDUAL

            1.   Basic (H-MQ-A) + Major                   $ 0.00
                 Medical (M-3) + Dental (D-34)
                 + Pharmacy

B.    Family

            1.   Basic (H-MQ-A) + Major                   $16.39
                 Medical (M-3) + Pharmacy

            2.   Basic (H-MQ-A) + Major                   $24.77
                 Medical (M-3) +  Dental (D-34)
                 + Pharmacy

      In all the aforementioned Pharmacy coverage, if bioequivalent generic
medications are utilized, a deductible of $1.00 shall be applied. If brand name
medications are utilized, these shall have a $3.00 deductible for each one. The
over the counter medications or medications without federal literature
prescribed shall have a deductible at the rate of $3.00 for each one of them.

SECTION 2

      The employee, upon subscribing the petition for application provided by
the company providing the medical services, shall accept the terms and
conditions that this Company has imposed. The Brotherhood and the employee
accept that the terms and conditions of the Health Plan selected are not
negotiable. The employee must remain in the alternative selected until the
anniversary of the Plan occurs, on which date he/she may change from one of the
two alternatives offered under the family coverage, in conformity to the
requirements of eligibility and coverage for dependents, except when any of the
exceptions considered in the Plan occurs.

SECTION 3

      The Company shall maintain in effect the coverage selected while the
employee remains actively employed with the Company. The Company shall cancel
the coverage when the employee, due to any reason, is fired, laid off, resign,
dies or is suspended for thirty (30) days or more. If an arbitrator, reinstall
the employee suspended with back pay and presents evidence of all the medical
expenses incurred, the Company will reimburse the cost of said expenses
according with the term of the Health Plan.

<PAGE>

SECTION 4

      The Brotherhood authorizes the deduction for the corresponding
contribution according to the alternative selected by the employee and in
conformity to how it is provided in Section 1 of this Article for each employee
belonging to the Union. Said contribution shall not be altered during the
effective period of this Agreement.

SECTION 5

      To obtain the hospitalization services for conditions of mental health
which are related to the rehabilitation for the use of substances (drugs) and
alcohol through the Health Plan, the employees must request the services of the
Employee Aid Program (EAP) of the Company and obtain a pre-authorization from
them. If they do not request the services and do not obtain the EAP
pre-authorization, is not obtained, the benefits are not be covered and their
payment shall be the responsibility of the employee. This requirement applies to
the employee covered by the Health Plan.

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

SECTION 6

      The Company will concede the benefit of eyeglasses or contact lenses for
the employees and their direct dependents only, up to the maximum amount of one
hundred ($100.00) dollars every year. These services will be reimbursed without
the application of any amount whatsoever toward the cash deductible.

SECTION 7

      The Brotherhood and the employees who are union members agree and commit
themselves to the adequate use of the Health.

SECTION 8

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

      During the contract renovation process to select the Health Plan Provider,
the Company will share with the Brotherhood the analysis that each provider had
submitted.

SECTION 9

      The selection of the Administrator of the Health Plan, the administration
of the Medical Plan and all the terms and conditions relating to the
aforementioned between the Company and the provider will not be subject to the
Grievance Procedure or to the arbitration process established in this Collective
Agreement.

      In exceptional cases, the employee may request revision to any denied
claim by the Health Plan Provider. The same will be evaluated according to the
procedure established by the Health Provider.

<PAGE>

                                   ARTICLE 44
                                   HEALTH PLAN

SECTION 1

                  For the duration of this Agreement, the Company commits to
providing a Health Plan with the same benefits as those covered by the Health
Plan which has been effective until the signing of this Agreement for the
employees affiliated to HIETEL. For medical treatment received outside of Puerto
Rico, reimbursement will be limited to the cost of said treatment in Puerto
Rico. In case of emergency, medical treatment received during travel outside of
Puerto Rico, reimbursement will not be limited to the cost of said treatment in
Puerto Rico. The Company will not pay the cost of Health Plan benefits for any
optional dependent. Employees with optional dependents will select one of the
following alternatives offered by the health care service provider and will
contribute biweekly the quantities indicated below:

            Contribution during the effective period of this Collective
Bargaining Agreement

A.    Individual

             1.  Basic (H-MQ-A) + Major                         $ 0.00
                 Medical (M-3) + Dental (D-34)
                 + Pharmacy

B.    Family

             1.  Basic (H-MQ-A) + Major                         $16.39
                 Medical (M-3) + Pharmacy

             2.  Basic (H-MQ-A) + Major                         $24.77
                 Medical (M-3) +  Dental (D-34)
                 + Pharmacy

      In all cases of Pharmacy coverage mentioned above, if bioequivalent
generic medications are used, a $1.00 co-payment will be applied. Brand
medication will require a co-payment of $8.00 for the first year, $9.00 for the
second and third year and $10.00 for the fourth and fifth years of this
Agreement. Over the counter medications or those prescribed, but without the FDA
label, will require a co-payment of $3.00 each one during the first 3 years of
this Agreement and $5.00 each one for the fourth and fifth years.

SECTION 2

      The employee, upon signing the application supplied by the health care
service provider, accepts the terms and conditions imposed by said Company. The
Union and the employees recognize and accept the terms and conditions
established by the selected health care service provider selected are not
subject to negotiation. The employee must remain in the selected coverage
category until the period specified for renovation, when changes will be
accepted to any of the two categories/alternatives offered for family coverage,
according to eligibility requirements and dependents' coverage, except when any
of the exceptions specified by the service provider apply.

      The employee will supply evidence required by the health care service
provider to establish dependents' eligibility.

<PAGE>

SECTION 3

      The Company will maintain effectiveness of the health plan coverage
selected by the employee while the employee remains actively employed by the
Company. The Company will cancel coverage when the employee, for whatever
reason, is: dismissed, laid off, quits, dies or is suspended for more than
thirty (30) days. If an arbiter restitutes an employee to its regular standing
and the employee presents evidence of medical expenses incurred upon, the
Company will reimburse said expenses according to the terms of the current
Health Plan coverage.

SECTION 4

      HIETEL authorizes the corresponding deduction, according to the coverage
alternative selected by each employee and to Section 1 of this Article for its
members. Said contribution will not be altered during this Agreement's
effectiveness.

SECTION 5

      To obtain hospitalization services for mental health conditions associated
to rehabilitation from drugs or alcohol abuse through the Health Plan benefits,
employees must request the services from the Employee Assistance Program (known
as PAE) and obtain a pre-authorization from said program. If services and the
pre-authorization are not requested from the Employee Assistance Program (PAE),
hospitalization benefits will not be covered by the Health Plan and all related
expenses will thus be will be the employee's responsibility. This requisite
applies to employees covered by the Health Plan.

      If the employee is hospitalized and it is determined that is was due to
use or abuse of drugs or alcohol, subsequent hospitalizations and ambulatory
treatments will also require pre-authorization from the Employee Assistance
Program (PAE).

SECTION 6

      The Company will concede the benefit of eye glasses or contact lenses for
employees or direct dependents up to the amount of ($100.00) for each of the
first three (3) years of the duration of this Agreement and $150.00 for the
fourth and fifth years of this Agreement. These services will be reimbursed
without applying a co-payment amount.

SECTION 7

      The Union and its affiliated employees agree and commit to adequate use of
the Health Plan.

SECTION 8

      The Company may modify the effective Medical Health Plan upon this
Agreements' conclusion, in which case, if deemed necessary, it will notify the
Union its intention so the HIETEL may present any suggestions deemed pertinent.

      During the contract renewal process, upon selection of a health care
service provider, the Company will share with the Union the analysis presented
by each service provider.

SECTION 9

      The selection Health Plan's administrator, its administration and the
terms and conditions in the contract between the Company and the health care
service provider are not subject to the complaints procedure or arbitrage, as
established in this Agreement.

<PAGE>

      In exceptional cases, an employee may request revision for a claim denied
by the health care service provider and it will be evaluated according to the
procedure established by the service provider.

<PAGE>

                                   ARTICLE 45
                                  SALARY SCALE

      The minimum, midpoints and maximum points of the actual Salary Scale shall
prevail except as follows:

            -     1st. year - The maximum points of the salary scales increases
                  60(cent)

            -     2nd. year - The maximum points of the salary scale, increases
                  60(cent)

            -     3rd. year - The maximum points of the salary scale increases
                  65(cent)

            -     4th. year - The maximum points of the salary scales increases
                  70(cent)

            -     5th. Year - The maximum points of the scales salary increases
                  75(cent)

<TABLE>
<CAPTION>
                  1st. year   2nd. Year   3rd. year   4th. Year   5th. Year
Level  Minimum     maximum     maximum     maximum     maximum     maximum
<S>    <C>        <C>         <C>         <C>         <C>         <C>
 6     $11,440     $23,161     $24,409     $25,761     $27,217     $28,777
 7      11,900      25,649      26,897      28,249      29,705      31,265
 8      13,500      28,552      29,800      31,152      32,608      34,168
 9      15,400      32,354      33,602      34,954      36,410      37,970
10      17,600      36,617      37,865      39,217      40,673      42,233
11      20,000      41,686      42,934      44,286      45,742      47,302
12      23,000      47,677      48,925      50,277      51,733      53,293
13      26,000      53,668      54,916      56,268      57,724      59,284
14      29,400      60,580      61,828      63,180      64,636      66,196
15      33,200      68,299      69,547      70,899      72,355      73,915
</TABLE>

<PAGE>

                                   ARTICLE 46
                                    SALARIES

SECTION 1

      During the effective period of this Agreement, the following raises shall
be applied, effective upon the granting of the same and its successive
anniversaries.

<TABLE>
<CAPTION>
January 1, 2004   January 1, 2005   January 1, 2006  January 1, 2007   January 1, 2008
<S>               <C>               <C>              <C>               <C>
   60(cent)*          60(cent)         65(cent)          70(cent)        75(cent)
</TABLE>

* Already implemented in January 1st. 2004.

      Those regular employees who find themselves at the top of the Salary Scale
at the moment of effectiveness of the aforementioned raises, will not be
entitled to said raise. Notwithstanding, the employee will be granted a bonus
equivalent to the amount not received in substitution of the raise. Said bonus
shall not form part of the salary base or be utilized for the retirement
calculations.

SECTION 3

      Those regular employees who, surpass the ceiling of the Salary Scale with
the raise shall be entitled to the proportional part of the same until reaching
the salary ceiling and with regard to the excess, if any, they shall be granted
the difference in a bonus, which shall not form part of their salary base nor
will it be utilized toward retirement calculations.

SECTION 4

      The employees who are on Probationary Period at the moment of the granting
of this Agreement, shall receive the agreed upon raise for the first year of
effectiveness, effective on the date when they become regular employees. The
employees who join after the signature of this Agreement shall be entitled to
the raises that shall be granted on the first, second and third anniversary, as
long as they are regular employees as of the date when these raises are granted.

                                   ARTICLE 47
                                  DIFFERENTIALS

SECTION 1

TEMPORARY WORK

      a.    When the Company requires an employee to carry out the duties of
            another position with a higher salary level within the same Unit on
            a temporary basis, for a period greater than five (5) consecutive
            working days, the Company shall pay a differential of $1.00 per
            hour. If applicable, this differential shall be paid from the
            beginning of the temporary assignment and for the total hours
            worked.

<PAGE>

      b.    The employee who is absent during the temporary work assignment for
            more than five (5) consecutive labor days, when return to work, a
            new period of five (5) consecutive labor days have to elapse to be
            entitle to receive said differential per hour.

SECTION 2

SHIFT DIFFERENTIALS

      a.    The Company shall pay a differential to the employees who work night
            shifts and dawn hour shifts, which are those work shifts which
            regularly end between 9:00 p.m. and 7:00 a.m.

            The Compensation of differential for the eligible employees shall be
            equivalent to ten percent (10%) of the basic hourly rate.

      b.    The payment of the differential for work shifts shall cease when the
            employee is reassigned a work shift that ends between 9:00 p.m. and
            7:00 a.m. to a regular day work shift.

SECTION 3

TECHNICAL TRAINING

      a.    For the purpose of being able to utilize the knowledge, skills and
            experience of the professionals and technicians affiliated to the
            HIETEL, the Company and the Brotherhood agree with the consent of
            the employee, that when it is necessary and required by the Training
            and Development Department, this personnel will temporarily develop
            courses related to their specialty and or offer training according
            to the request received from the different areas of the Company.

      b.    It is established a supplementary compensation, in other words, a
            differential as economic incentive to any employee who devotes time
            to teach courses and/or specialized training in Telecommunication. A
            differential payment shall be granted consisting of fifteen percent
            (15%) of the basic salary per hour for the amount of hours devoted,
            required by the Training and Development Department.

            The differential of fifteen (15%) of the basic salary per hour shall
            also apply to the necessary hours before, during and after the time
            that the training is offered for the purpose of making it more
            effective: preparation of documents, utilization of audio-visual
            equipment and other resources necessary for the effectiveness of the
            training.

      c.    In those cases where it applies, the employee will receive the per
            diem, mileage, lodging and all the benefits to which he is entitled,
            in conformity to what I established in this agreement.

      d.    The participation of the members of the HIETEL in these training
            functions shall not be utilized by PRT to ask that they be excluded
            from the bargaining unit. Neither will they be performing tasks of
            personnel not belonging to the union nor of personnel included in
            other bargaining units and they will no supervise any personnel
            whatsoever.

<PAGE>

                                   ARTICLE 48
                                 CHRISTMAS BONUS

      All regular employees covered by this Agreement who meet the requirements
provided by the Bonus Act shall be entitled to receive a Christmas Bonus as
provided by the Law, except that the same shall be 8.0% over the total of
salaries received during the bonus year. The bonus shall be payable between the
1st. and the 15th. of December of each year of that this Agreement is in effect.
The term salary shall include exclusively the following:

            1.    Basic Salary

            2.    Overtime

            1.    Differential per Work Shift

            2.    Vacation Leave

            5.    Liquidation of Sick Leave to Retired Employees

            6.    Excess of Sick Leave

            7.    Internships

            8.    Payment of Incentives

                                   ARTICLE 49
                                 RETIREMENT PLAN

SECTION 1

      The Company agrees to maintain in effect the Retirement Plan known as
"Puerto Rico Telephone Company Retirement Plan for Salaried Employees", known
before as "ITT Telephone Retirement Plan for Salaried Employees", put into
effect on September 1, 1968 and agrees that the benefit shall be payable by the
Company in its entirety.

SECTION 2

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

      5 to 15 years of service          3 months of salary
      16 to 20 years of service         4 months of salary
      21 to 25 years of service         5 months of salary
      26 to 29 years of service         6 months of salary
      30 or more years of service       8 months of salary

SECTION 3

      The Company shall continue providing the employees represented by the
Brotherhood, the Long Term Disability Insurance free of cost.

SECTION 4

      All the employees from the bargaining unit who choose to receive the
retirement benefits after the signature of this Collective Bargaining Agreement,
shall be eligible to participate in a family medical plan which shall be similar
to the one provided to the employees covered by this Collective Bargaining
without dental coverage. Nevertheless, the retire may select to continue in the
Dental Plan offered by the Company, but must be totally paid by the retiree.

      Employees affiliated to HIETEL retiring after March 31, 2004, will pay -
beginning the second year of this agreement - half of the annual cost increase
if any, each year, in the Company's Health Plan.

<PAGE>

This clause will no apply to employees affiliated to HIETEL retiring before
April 1, 2004. To retain the Company's Health Plan benefits, eligible retiring
employees must subscribe to Medicare benefits, including Part B, prescription
medicine discount card and prescription card and prescription medicine benefits.

      The increase in contribution to the Health Plan by retirees for the year
2005 will be calculated as follows: 50% of the increase, if any, in PRT's Health
Plan per capita monthly cost for the year 2004 compared to the year 2003. In
2006 and subsequent years, the same comparison will be made of the two (2)
previous years to determine any additional contribution, if any, to be made by
employees retiring for the duration of this Agreement, beyond contributions
already being made.

      Instead of the Company's Health Plan and the contribution described above,
retiring employees will have the option of applying the Company's contribution,
which will not be higher than X to another health plan of choice, including the
one mentioned in the next paragraph.

      The Company and the Union will make the best possible effort to identify
an alternate health plan for retirees, which would be effective in 2005, with a
monthly cost no higher than X. If the effort I not fruitful, the content of this
section will no be annulled.

      X, for the year 2005 equals PRT's Health Plan per capita monthly cost for
the year 2003, plus the 50% increase if any, for the year 2004, and so on for
the following years in relation to previous ones.

      In addition, the Company will supply the Union the necessary information
to verify the Company's Health Plan annual cost.

SECTION 5

      To be entitle to the Health Plan, the retired employee will have to make
the contributions as indicated in Article 44 (Health Plan) during the effective
period of this Collective Bargaining Agreement.

                                   ARTICLE 50
                           PUBLICATION OF WORK SHIFTS

SECTION 1

      The Company shall prepare and publish the work shifts for any group of
employees or for each employee with fifteen (15) days of advance notice. The
fixed work shifts that comprise the schedule from 8:00 A.M. to 12:00 noon and
from 1:00 P.M. to 5:00 P.M., from Monday to Friday, shall not be published.

SECTION 2

      The Company shall assign the work shifts abiding by the following
principle: the work shifts shall be assigned in accordance to seniority in the
Company it being provided that in those technical areas where weekends, holidays
or night shifts are worked, personnel with less seniority but with at lease 6
months of seniority in the area will be assigned. Employees working weekends,
holidays or night will not realize any supervisory job. The employee with
greater seniority may grant his/her work shift to another employee with lesser
seniority. To be able to grant a work shift, the employee must notify his/her
immediate Supervisor with at least fifteen (15) days of advance notice and must
obtain his/her written authorization.

SECTION 3

      A pregnant employee working a night or one in the dawn hours shall be
entitled to replace the employee of lesser seniority working in her work center
and in her same classification during the daytime work shift, as long as she is
qualified to perform the work, during her seventh and eighth month of pregnancy.
Upon her return, after her Maternity Leave, the employee shall return to her
corresponding work shift system.

<PAGE>

                                   ARTICLE 51
                                  PROGRESSIONS

      In all positions included in the Bargaining Unit with levels of
progression, the employee may be promoted to the following level, if he/she has
obtained satisfactory evaluations, complied with the required time in the
previous level and if his/her supervisor recommends him/her.

      All employees who rise to the next level shall receive 4% salary increase
for each level of progression.

                                   ARTICLE 52
                         ECONOMIC AID FOR STUDY EXPENSES

SECTION 1

      All regular employees with a year or more of service with the Company, who
is interested in aid for studies relating to his/her job and is not currently
under a performance improvement plan and/or as absenteeism as a result of the
annual performance evaluation, or who is on a long term disability, occupational
sick leave or leave without pay at the time of requesting the economic aid will
submit at the Management Development Division of the Human Resources Department
a petition before been admitted to an educational institution. If at the time of
filing the economic aid for studies, the employee is under a performance
improvement program for absenteeism that is not as a result of the annual
performance evaluation, he would not be entitle to receive the benefit conceded
in this article until he completes said program.

SECTION 2

      Once said application has been approved and the studies have been
satisfactorily completed in the teaching institutions credited by the Council of
Higher Education or the Department of Education, the employee may request that
the Company reimburse him/her (90%) of the total cost of the tuition for an
associate degree, degree, certificate, courses for licensee examinations and
first bachelors degree. The Company may reimburse the 80% of the total cost of
the tuition for a second bachelor degree if it is the first paid by the company
and is directly related to the employee's working area. The employee may request
the reimbursement of 35% of studies expenses for a second bachelor, whenever it
is the first paid by the Company and is directly related to his working area but
the studies must be related to works within the appropriate unit a 40% may be
reimburse for masters degree. Incidental expenses such as construction fees,
membership association dues, etc. are excluded from the tuition's fees. The
costs of books required up to a maximum of $200.00 per academic year including
summer session will be reimbursed.

SECTION 3

      Upon completing each period of studies, the employee shall be entitled to
request reimbursement for the courses satisfactorily approved (C or higher).
This right shall expire within six (6) months after having finished the same.
The employee may not claim those expenses that have been paid by means of
another study aid program. For this purpose, the employee shall provide the
necessary authorizations to verify the existence or not of other sources of aid.

<PAGE>

SECTION 4

      The employee will have to accompany with his/her petition for
reimbursement with the documents, in original or official copies, that evidence
the payment of the tuition and books, as well as the grade obtained.

      The studies must be carried out during the employee's non-working hours
and they must be geared toward obtaining an academic degree, for the purpose of
expanding his/her opportunities and development on the job.

SECTION 6

      When the Company decides to put a Study Scholarship Program into effect,
it shall give consideration to the employees in the Bargaining Unit. The
applicant must comply with the requirements established by the Company for the
granting of said scholarships.

                                   ARTICLE 53
                          PROFFESIONAL MEMBERSHIP FEES

SECTION 1

      The Company will reimburse the membership fees to those employees on the
classifications where as a condition of work are required to be collegiate, and
those classifications which can be created during the life of the agreement,
which are required as a condition of work.

                                   ARTICLE 54
                                 LIFE INSURANCE

SECTION 1

      The Company agrees to provide the same existing life insurance to all the
regular employees of the Bargaining Unit, except that the coverage shall
increase $50,000 and other $50,000 for accidental death and dismemberment.

SECTION 2

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

SECTION 3

      The Company shall maintain the coverage and contribution of the employee
in the optional life insurance's (option I and II) in effect, which are paid by
the employees in their entirety.

      The Brotherhood may select an alternate provider (National Life
Insurance), for the optional life insurance's (option I and II).

<PAGE>

                                   ARTICLE 55
                            UNIFORMS AND SAFETY SHOES

SECTION 1

      In the event that the Company requires the use of uniforms as a condition
of employment, the Company shall provide five (5) uniforms upon the employee's
entry and five (5) additional uniforms as of the date of his/her service
anniversary or within the year of having handed over the previous ones without
any cost whatsoever to the employee. In those cases where the Company
understands that is necessary the use of overalls in addition to the uniforms,
the Company will provide the employees two (2) overalls as the moment of the
hiring and two (2) at his/her anniversary or within the year of having handed
over the previous ones.

The employees shall use these uniforms only while they are performing the
official functions of their job, with the employee having to make good use of
the same.

SECTION 2

      Beginning on the third year, the employee must hand over five (5) used
uniforms so that the Firm will hand over to him/her five (5) new uniforms. Loss
of uniforms must be notified at once to the immediate supervisor and the
employee must present documents explaining the loss.

SECTION 3

      If the Company does not hand out the uniforms on the scheduled date, this
will not have the effect that it is not obligated to hand over the same; then,
on the next delivery, they must supply the entirety of the uniforms owed up to
that moment.

SECTION 4

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

                                   ARTICLE 56
                            NO-STRIKE AND NO LOCKOUT

SECTION 1

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

SECTION 2

      During the effective period of this Agreement, the Brotherhood commits
itself to going to the Grievance Procedure provided by this same Agreement
instead of going to strike.

      To honor the terms of this Article and guaranteeing a permanent and
constructive industrial peace, the Brotherhood shall utilize all the available
resources and the ones that are in agreement with this Article.

<PAGE>

SECTION 3

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

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

SECTION 4

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

                                   ARTICLE 57
                               GRIEVANCE PROCEDURE

SECTION 1

      The term grievance comprises all controversies which involve the interest
of one or more employee and/or offense, complaint or claim relating to the
interpretation, application, administration or alleged violation of this
Agreement.

SECTION 2

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

SECTION 3

      Any complaint or grievance shall be dealt with exclusively in accordance
to the mechanisms established in this Article. The parties agree that if
controversies arise during the effective period of this agreement, these wild be
resolved exclusively through the procedure which is provided as follows:

FIRST STAGE

      a. Any grievance which arises shall be presented in writing in the first
instance within the term of five (5) working days from the time that this
grievance arises or the employee has knowledge of it and the same shall be
presented by the delegate of the Brotherhood and/or the employee to the
employee's immediate supervisor.

      b. The Supervisor, the Delegate and the employee shall meet to discuss and
analyze the grievance and try to resolve the same. The Supervisor will have up
to five (5) working days, from the time that the grievance is received, to
answer the same.

SECOND STAGE

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

<PAGE>

THIRD STAGE

      a. If the Brotherhood is not in conformity with the decision issued in the
case in the second stage or after the term for answering has elapsed, any
Officer from the Brotherhood may appeal filing the same within the ten (10)
working days following the receipt of the decision or the termination of the
period to answer in the previous stage if it has not been answered. The appeal
shall be filed in writing before the office of the Director of the Department of
Labor and Employee Affairs accompanied by a summary of the facts, as well as the
result of the previous stage.

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

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

      d. Once the grievance has been discussed, the Director of the Department
of Labor and Employee Affairs, or his/her Representative, will answer the same
in writing, by means of certified mail, within the next ten (10) working days.
If the Brotherhood is not in agreement with the answer from the Director of the
Department of Labor and Employee Affairs, it may recur to Arbitration as is
indicated further on.

      e. The grievances regarding the claims of salary shall be filed in writing
in the first instance in the third stage within the term of ten (10) working
days from the time that the grievance arises or that the employee has knowledge
of it. The Director of the Department of Labor and Employee Affairs or his/her
Representative shall summon the President of the Brotherhood or his/her
Representative once the grievance has been within the ten (10) working days
following the receipt of the grievance, indicating the time, place and date,
which shall not be later than ten (10) working days following the date of the
summons. The Director of the Department of Labor and Employee Affairs or his
Representative, shall have a term of fifteen (15) working days in which to
answer the grievance after the meeting has been held for the consideration of
the same.

ARBITRATION

      a. When the grievance has not been resolved in the previous stage, the
same may be submitted to Arbitration within ten (10) working days following the
receipt of the decision of the Director of the Department of Labor and Employee
Affairs or after the term in which the answer has elapsed, whatever occurs
first. The Arbitrators to be utilized shall be those from the Conciliation and
Arbitration of the Department of Labor and Human Resources, except when another
thing is agreed upon between the parties and the same shall be selected in
conformity to three arbitrator choice selection procedure and to the norms of
said Bureau. For this Article the prevailing norms will be the ones in effect at
the Bureau as of December 26, 2002 and no amendment or new norms will be
applicable under this agreement. The decision of the Arbitrator shall be final
and unappeasable, which shall be followed and complied with by the parties, as
long as it is in conformity to law. The parties will submit to the Arbitrator
the written submission of the grievance to be resolved.

      b. The salary claims will be excluded from the arbitration procedure.

SECTION 4 - CASES OF SUSPENSION AND DISMISSAL

      a. If an employee considers his/her suspension or separation to be unfair,
he/she should present his/her grievance to the Brotherhood.

<PAGE>

      b. In the event that the Brotherhood also considers the employee's
suspension or separation to be unfair, the Brotherhood shall present a grievance
in writing within ten (10) working days following the suspension or notice of
separation of the employee before the Director of the Department of Labor and
Employee Affairs for the Company.

      c. In those cases in which the suspension or dismissal of the employee is
based on a report from the Company's Safety Department, at the petition of the
employee or of the Brotherhood, a copy of the report shall be supplied within
the following 48 hours.

      d. And from here on the procedure it shall be proceeded with as is as
provided from clause b of the Third Stage of this Article onwards.

SECTION 5 - CASES RELATED TO THE DRUG TESTING PROGRAM

      Grievances related to the application of Article 24, Drug Testing Program,
will be filed in third step as stated in Section 3 of this Article.

SECTION 6 - CASES OF PUBLICATION AND ADJUDICATION OF POSITIONS, TRANSFERS AND
PROMOTIONS

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

      b. And from here on it shall be proceeded with as provided from clause b
of the Third Stage of this Article onwards.

SECTION 7 - CASES OF RECLASSIFICATION OF POSITIONS

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

      In the event that the Brotherhood is not in agreement with the
determination of the department in charge of the classification of positions
regarding the petition for reclassification of a position and that it determines
filing a grievance, the same shall be filed before the Director of the
Department of Labor and Employee Affairs within the seven (7) working days
following the receipt of the notice of the determination or seven (7) working
days after the time for informing the Brotherhood about the determination of the
petition has elapsed.

      And from here on it shall be dealt with as provided from clause b of the
Third Stage of this Article onwards.

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

<PAGE>

SECTION 8 - GRIEVANCES BETWEEN THE PARTIES

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

      In both cases, these grievances shall be commenced in the third stage.
When the grievance is a Company grievance, the President of the Brotherhood or
his/her representative shall meet with the Director of the Department of Labor
and Employee Affairs within ten (10) working days from the receipt of the
grievance on the part of the Brotherhood. When the grievance is on the part of
the Brotherhood, the Director of the Department of Labor Affairs shall meet with
the President of the Brotherhood within the ten (10) working days following the
receipt of the grievance on the part of the Company. If the meeting is not held
on the terms indicated herein, the injured party may go directly to arbitration
in the terms indicated in Section 3(Arbitration) once the term has expired.

      The grievances of the Brotherhood and of the Company will have to be
presented within a period of ten (10) working days after the event which
motivated the grievances have occurred or from the time that the grievance had
knowledge of the facts that motivated the grievance.

      If no agreement is reached between the parties, it shall be proceeded with
in conformity to what is established in Section 3 (Arbitration) of this Article.

SECTION 9 - GENERAL PROVISIONS

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

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

      c. The terms for beginning the different stages of this procedure are of a
jurisdictional nature.

      d. In those cases in which the Company summons an employee for the purpose
of this Article, it must do so within his/her working hours.

SECTION 10 - SUBSTANTIVE MATTERS

      a. A typewritten transcript of the Arbitration Hearings shall be prepared
by the Reporter supplied by the Bureau of Conciliation and Arbitration, if there
is one available. In the event that the Bureau cannot supply said Reporter, the
Arbitrator will notify the parties prior to the Arbitration Hearing so that any
of them, if they wish to obtain a typewritten transcript, will supply the
Reporter and pay the cost of the same. If both parties wish a copy of the
typewritten transcript, they will pay for it in equal parts. In the event that
one of the parties decides to submit a brief, the Arbitrator shall grant a term
no greater then thirty (30) working days in which to submit the same.

<PAGE>

      b. The Arbitrator will have no power or faculty to in any way alter,
amend, change, modify, add or subtract from any of the provisions of this
Agreement, including from any of the provisions of the Article regarding
"Management Rights". An award in violation of what has been indicated above
shall be void and without effect.

      c. The Arbitrator shall not have authority to grant damages, penalties
interests, honorary or lawyer expenses.

All disciplinary actions should be based on just cause. If the Arbitrator
determines that there is no just cause he can modify, reduce or lapse the
disciplinary measure questioned in the grievance and can provide a reinstatement
remedy with or without back pay and benefits omitted. The corresponding salary
deductions of income earned by the employee while dismissed or suspended will be
done to employees back pay due to his obligation to mitigate damages.

                                   ARTICLE 58
                           STABILITY OF THE AGREEMENT

SECTION 1

      In the event of the merger of the Company or of any of its facilities with
a private or public entity or that the Company sells, transfers or leases
property where there are employees covered by this Agreement working, the
Brotherhood must be notified with no less than twenty (20) days of notice prior
to the merger, sale, closing, transfer, lease, or expropriation. In addition,
the Company is obligated to inform the aforementioned new entity about the
existence of this Agreement.

SECTION 2

      In the event that due to said merger, sale, transfer, lease, closing or
expropriation, employees from the Bargaining Unit are displaced, the affected
regular employees shall be considered for relocation in other activities of the
Firm pursuant to the provisions of this Agreement.

SECTION 3

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

SECTION 4

      In the event that any transfer, sale, merger, lease of facilities or
expropriation were to take place, the Company, notwithstanding what is provided
in the Article relating to the effectiveness regarding the duration of this
Agreement, shall be released from there on from any obligation under the same,
except with regard to obligations which may have already been incurred in under
the Article of the grievance procedure.

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

<PAGE>

                                   ARTICLE 59
                              SEPARABILITY CLAUSES

SECTION 1

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

SECTION 2

      In the event that any Article or Section were to be declared invalid or
the compliance or observation of such Article or Section would have been
declared in suspense, the parties affected by such action will enter into
immediate collective negotiations, for the purpose of reaching an agreement
about a mutually satisfactory substitute provision for such Article or Section.

SECTION 3

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

                                   ARTICLE 60
                                SPECIAL TRAINING

SECTION 1

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

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

      c.    If sufficient candidates which qualify from among the affected
            employees do not arise, the Company shall publish the position in
            conformity to Section 1 of Article 12 regarding Publication,
            Adjudication of Positions and Appointments. If there do not turn out
            to be sufficient internal candidates which qualify, the Company will
            retain the right to include in the training qualified personnel from
            external recruiting.

<PAGE>

SECTION 2

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

SECTION 3

      The employees who approve the training's in which they participate shall
be maintained in said positions. However, those employees who do not approve
their training's satisfactorily or who were not selected for the same shall be
reassigned to another position, as long as there exists another vacant position
and that they qualify for the same. If there is no vacant position or if the
employee does not qualify for the vacant positions which may exist, then it
shall be proceeded with in accordance to the Personnel Reduction and
Re-employment article.

                                   ARTICLE 61
                                  WELFARE FUND

SECTION 1

      The Company agrees to contribute .04(cent) for each hour worked by each
employee covered by this Agreement during the first, second, and third year of
this agreement and .5(cent) during the fourth and fifth year of the Agreement
for the Welfare Fund established in this Article.

SECTION 2

      The Fund shall be ruled by a Trust which shall be created within the 30
days following the signature of this Agreement to administrate the funds in
which the Company and the Brotherhood shall have equal participation. The
parties, by mutual agreement, shall prepare a regulation which will establish
the controls and the use given to the funds, which shall be to provide benefits
and aid to the employee's represented by the Brotherhood. The ratification of
this regulation must not exceed 60 days from the signature of this Agreement,
unless the parties, extend this term, by mutual agreement.

SECTION 3

      Until the Trust is created and the regulation is ratified by the parties,
the Company's contributions shall be deposited in a separate savings account.
Once the Trust has been created and the regulation has been ratified, the funds
in the savings account shall be transferred to the Trust account which must be
separate from any other account of the Brotherhood. Later, the Company will
forward to the Fund's administrators, after the rendering of the required bonds,
the sum of the contribution indicated in Section 1 of this Article. The same
shall be made during the ten (10) calendar days following the payment that is
made every two weeks, except when there are extraordinary circumstances in which
case the term shall not exceed ten (10) additional calendar days.

SECTION 4

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

SECTION 5

      In the event that any Court, Agency or any other entity with jurisdiction
declares by means of an order, resolution and/or final judgment that this
Article or the Trust created under the same is illegal, the Company

<PAGE>

may discontinue the contributions to the Fund until the illegality is corrected
and if it is not able to be corrected or if it were not to be corrected, the
existing Funds shall be returned to the Company.

                                   ARTICLE 62

                              SUPPLYING INFORMATION

SECTION 1

      The Company shall supply the Brotherhood, simultaneously, copy of all
communications, documents, notices, circulars, bulletins or brochures directed
for general distribution among the employees making up the Bargaining Unit. The
Vice-president of Human Resources will supply a copy to the Brotherhood of any
administrative Practice, Regulation and Procedure of Human Resources that
applies and/or covers the members of the Bargaining Unit.

                                   ARTICLE 63
                                LEGAL ASSISTANCE

SECTION 1

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

                                   ARTICLE 64
                              CHILD DAY CARE CENTER

SECTION 1

      During the effective period of this Collective Bargaining Agreement, the
Company will pay on a monthly basis to institutions dedicated to child day care
center which count with the corresponding permits required by the laws
applicable to it, under the conditions provided further on. Said payment shall
be for the concept of the day care of the children of employees covered by this
Agreement, which maximum age is up to five years or until the moment when they
begin in the school system, what occurs first.

SECTION 2

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

<TABLE>
<CAPTION>
                     MAXIMUM NUMBER    MAXIMUM MONTHLY
      YEAR            OF CHILDREN          BENEFIT
---------------      --------------   ----------------
<S>                  <C>              <C>
Duration of the            40             $100.00
  Agreement
</TABLE>

<PAGE>

SECTION 3

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

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

      The payment corresponding to the first year shall have effect from the
beginning of the school year corresponding to the year 2003.

SECTION 4

      The children of employees of the Bargaining Unit, whose parents will
benefit from this help shall be chosen by means of a lottery to be held no later
than the month of June of each year, during the effective period of this
Agreement. Each employee may request this benefit for a son or daughter, so that
a greater number of employees can be benefited. In the lottery there will
participate the employees who have certified to the Company, prior to the
lottery, having young children, of up to five (5) years of age. Said lottery
shall be coordinated between the Company and the Brotherhood. In the event that
the total number of children is not covered, a second lottery will be held, in
which another child of the employees who have turned out to be benefited in the
first lottery may participate.

SECTION 5

      The selected employee shall certify that he/she has his/her child in a
duly authorized Day Care Center, operating with all the necessary permits. The
Company reserves for itself the faculty to require any other relevant
information and evidence of the required permits.

                                   ARTICLE 65
                                   CONTRACTING

      The sub-contracting of work, tasks, services and functions shall not be
utilized to lay off employees covered by the Bargaining Unit.

                                   ARTICLE 66
                            CHAUFFEUR SOCIAL SECURITY

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

                                   ARTICLE 67
                         NOTICE REGARDING ACCRUED LEAVE

      The Company shall inform each employee in writing every twelve (12) months
about the balance of the accrued regular vacation and sick leaves that each
employee has.

<PAGE>

                                   ARTICLE 68
                              ACCIDENTAL DEATH AND
                             DISMEMBERMENT INSURANCE

SECTION 1

      The Company will continue providing the benefit for Accidental Death and
Dismemberment Insurance benefits which it is providing at the present time free
of cost to the employees of the Unit. The Company reserves for itself the
exclusive right of changing the insurance provider, as long as the benefits in
existence at the present time are not affected. It includes Accidental Insurance
during official trips.

SECTION 2

      With regard to the Voluntary Accidental Insurance, the employees that so
desire it may select to continue or be covered by this insurance at their own
cost. The Company does not guarantee that either the coverage or the cost of the
insurance will continue to be equal to or identical to the ones in effect as of
the signature of this Agreement.

                                   ARTICLE 69
                              INCENTIVES FOR SALES

      The Company in its sole discretion, may improve, modify, change, condition
and/or eliminate the incentives for existing sales, or create new incentives in
conformity to the economic condition of each profit center by means of a written
notice to the Brotherhood (HIETEL) with 30 days advance notice.

                                   ARTICLE 70
                                 TOTAL AGREEMENT

      The contracting parties recognize that, during the negotiations that
culminated in this Agreement, each one of them had the right and the unlimited
opportunity to formulate demands and propositions with regard to all the matters
not excluded by law in the area of collective contracting and that all the
agreements and covenants reached by them by means of the exercise of such rights
and opportunities, appear stated in this Agreement.

      In like manner, the parties recognize that this Agreement contains all the
work conditions agreed upon by both of them and that from this date onwards they
shall be the only work conditions ruling between the parties.

      This Agreement may not be modified, amended, changed or considered to be
ended except by means of a written stipulation duly signed by the authorized
representatives of the parties and it is the intention of the contracting
parties to reserve for any future agreement which begins to rule after the
expiration of this Collective Bargaining Agreement any and all matters which are
not expressly covered by this Collective Bargaining Agreement.

                                   ARTICLE 71
                                    DURATION

      This Collective Bargaining Agreement shall be in effect during sixty (60)
months and shall begin to rule from January 1st, 2004 until midnight of December
31, 2008 except for the following articles which will be effective from the date
of the Agreements signature:

      -     Leave for Administrative Functions of the Collection Bargaining
            Agreement

      -     No strike and Lockout

<PAGE>

      -     Dues Check-off

      -     Union Shop

      Section 3 and 9 (Arbitration) of the Grievance Procedure Article and
Article 49, Retirement Plan, will be retroactive to October 23, 2003.<PAGE>

EXHIBIT 10.33

                              TERM CREDIT AGREEMENT

                            Dated as of May 17, 2004

      TELECOMUNICACIONES DE PUERTO RICO, INC., a Puerto Rico corporation (the
"Borrower"), PUERTO RICO TELEPHONE COMPANY, INC., a Puerto Rico corporation
("PRTC" or the "Guarantor"), the LENDERS parties hereto (collectively, the
"Lenders"), and BANCO BILBAO VIZCAYA ARGENTARIA PUERTO RICO ("BBVAPR"), as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

      SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

      "Administrative Agent's Account" means the account of the Administrative
Agent maintained by the Administrative Agent at The Chase Manhattan Bank with
its office at New York, New York ABA No. 021000021, Account No. 001-0974301,
Banco Bilbao Vizcaya Argentaria Puerto Rico, Attention: Corporate Banking.

      "Advance" means the Term Credit Advance.

      "Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.

      "Applicable Lending Office" means, with respect to each Lender, such
Lender's LIBOR Lending Office.

      "Applicable Margin" means 0.57%, for any Interest Period.

      "Assignment and Acceptance" has the meaning assigned to that term in
Section 9.07.

      "Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the higher of:

   (a) the rate of interest announced publicly by Citibank, N.A. in New York,
   New York, from time to time, as Citibank, N.A.'s base rate that is offered to
   its customers generally (before giving effect to any applicable margin); and

<PAGE>

            (b) -1/2 of one percent per annum above the Federal Funds Rate.

      For purposes hereof, the Base Rate is not intended to be the lowest or
best rate of interest charged by any Lender to a customer, with each change in
such rate to be effective for purposes hereof on the day in which any such
change is announced as herein provided, whether or not such change is notified
to the Borrower by the Administrative Agent. The Base Rate will be computed on
the basis of a 360 day year for the actual number of days elapsed occurring in
the period for which such interest is payable.

      "Base Rate Advance" means a Term Credit Advance that bears interest based
upon the Base Rate as provided in Section 2.06(a)(i).

      "Borrower" has the meaning specified in the recital of parties.

      "Borrower's Account" means the account of the Borrower maintained by the
Borrower at Banco Popular de Puerto Rico with its office at Popular Center, Hato
Rey, Puerto Rico, Account No. 030-303664.

      "Bonds" means the following series of senior notes issued by the Borrower:
(i) $400,000,000 of 6.65% Senior Notes due 2006; and (ii) $300,000,000 of 6.80%
Senior Notes due 2009.

      "Borrowing" means the Term Credit Borrowing.

      "Business Day" means a day of the year on which banks are not required or
authorized by law or executive order to close in New York City or San Juan,
Puerto Rico, provided that, if the applicable Business Day relates to any LIBOR
Rate Advances, "Business Day" means a day of the year on which banks are not
required or authorized by law or executive order to close in New York City or
San Juan, Puerto Rico and on which dealings are carried on in the London
interbank market.

      "Commitment" has the meaning specified in Section 2.01.

      "Consolidated" refers to the consolidation of accounts in accordance with
GAAP.

      "Consolidated Assets" means the total assets of the Borrower and its
Subsidiaries as shown on the audited consolidated balance sheet or unaudited
consolidated balance sheet, as the case may be, as of the end of the most recent
fiscal quarter.

      "Controlling Interest" means (a) ownership of at least 35% plus one share
of the Voting Stock of the Borrower and (b) the ability to appoint a majority of
the Board of Directors of the Borrower.

      "Convert", "Conversion" and "Converted" each refers to a conversion of
Term Credit Advances of one Type into Term Credit Advances of the other Type
pursuant to Section 2.07 or 2.08.

      "Debt" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than trade payables
incurred in the ordinary course of such Person's business for which collection
proceedings have not been commenced, provided that trade payables for which
collection proceedings have commenced shall not be included in the term "Debt"
so long as the payment of such trade payables is being contested in good faith
and by proper proceedings and for which appropriate reserves are being

<PAGE>

maintained), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such Person
created or arising under any conditional sale or other similar title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
obligations of such Person as lessee under leases that have been, in accordance
with GAAP, recorded as capital leases, (f) all obligations, contingent or
otherwise, of such Person in respect of acceptances, letters of credit or
similar extensions of credit, (g) all net obligations of such Person in respect
of Hedge Agreements, (h) all Debt of others referred to in clauses (a) through
(g) above or clause (i) or (j) below guaranteed directly, or indirectly through
a Subsidiary, by such Person, or in effect guaranteed directly, or indirectly
through a Subsidiary, by such Person through a written agreement either (1) to
pay or purchase such Debt or to advance or supply funds for the payment or
purchase of such Debt, or (2) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Debt or to assure the holder of such Debt
against loss, and (i) all Debt referred to in clauses (a) through (h) above
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.

      "Debt to EBITDA Ratio" of any Person at any date means the ratio of (a)
Debt of the types that, in accordance with GAAP, would be classified as
indebtedness on a Consolidated balance sheet of such Person on such date to (b)
EBITDA for the period of four fiscal quarters of such Person ended on or
immediately prior to such date, provided that for purposes of clause (a) of this
definition, Debt shall not include (1) the obligations specified in clause (g)
of the definition thereof set forth above or (2) with respect to the Borrower,
any obligations which may be assumed by the Borrower for guaranties of any
indebtedness of the Borrower's employee stock ownership plan up to an aggregate
principal amount of $29,745,000.

      "Default" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.

      "Disclosed Litigation" has the meaning specified in Section 3.01(b).

      "EBITDA" means the sum, determined on a Consolidated basis, of the
Borrower's (i) net income (or net loss), (ii) interest expense, (iii) income tax
expense, (iv) depreciation expense, (v) amortization expense, and (vi) non-cash
severance charges in an aggregate amount not to exceed $20,000,000 in calendar
year 2004 and $20,000,000 in calendar year 2005.

      "EBITDA to Interest Ratio" of any Person on any date means the ratio of
(a) EBITDA for the period of four fiscal quarters of such Person ended on or
immediately prior to such date to (b) interest payable on, and amortization of
debt discount in respect of, all Debt of such Person for the period of four
fiscal quarters of such Person ended on or immediately prior to such date,
provided that for purposes of clause (b) of this definition, Debt shall not
include the obligations specified in clause (g) of the definition thereof set
forth above.

      "Effective Date" has the meaning specified in Section 3.01.

      "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender that
is a financial institution and is majority-owned by such Lender; (iii) any
commercial bank organized under the laws of the Commonwealth of Puerto Rico
having total assets in excess of $1,000,000,000 and with an unsecured long-term
debt credit rating equal to or greater than BBB+ from S&P and Baa1 from Moody's;
(iv) any other commercial bank having total assets in excess of $1,000,000,000
and with an unsecured long-term debt credit rating equal to or greater than BBB+
from S&P and Baa1 from Moody's that has an Applicable

<PAGE>

Lending Office that is not subject to deduction or withholding of Taxes; and (v)
any other Person approved by the Administrative Agent and the Borrower (so long
as no Default has occurred and is continuing), such approvals not to be
unreasonably withheld.

      "Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

      "Environmental Law" means any federal, state, local (including the
Commonwealth of Puerto Rico) or foreign statute, law, ordinance, rule,
regulation, code, order, judgment, decree or judicial or agency interpretation,
policy or guidance relating to pollution or protection of the environment,
health, safety or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials and including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act, the Clean Water Act, the Toxic Substances Control Act, the Clean Air Act,
the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide and Rodenticide Act and the Occupational Safety and Health Act, each
as amended from time to time.

      "Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

      "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
is a member of the Loan Parties' controlled group, or under common control with
the Borrower, within the meaning of Section 414 of the Internal Revenue Code.

      "ERISA Event" means (a) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC; (b)
the application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to terminate
such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
the cessation of operations at a facility of any of the Loan Parties or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by any of the Loan Parties or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (f) the imposition of a lien under
Section 302(f) of ERISA with respect to any Plan; (g) the adoption of an
amendment to a Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to
terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that is reasonably
expected to result in the termination of, or the appointment of a trustee to
administer, a Plan.

      "Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

<PAGE>

      "Eurodollar Rate Reserve Percentage" of any Lender for any Advance means
the reserve percentage applicable during the relevant Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a term equal
to such Interest Period.

      "Events of Default" has the meaning specified in Section 6.01.

      "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

      "GAAP" means (a) in the case of the preparation of all financial reporting
requirements, generally accepted accounting principles in the United States, as
in effect from time to time, and (b) in the case of the calculation,
certification and compliance with all financial tests and covenants, generally
accepted accounting principles in the United States, as in effect on the date of
the financial statements delivered to each Lender in accordance with Section
4.01(e), in each case applied on a consistent basis both as to classification of
items and amounts.

      "Guaranteed Obligations" has the meaning specified in Section 7.01.

      "Guarantor" has the meaning specified in the recital of parties to this
Agreement.

      "Guaranty" has the meaning specified in Section 7.01.

      "Hazardous Materials" means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

      "Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.

      "Interest Period" means, for each LIBOR Rate Advance comprising part of
the Term Credit Borrowing, the period commencing on the date of such LIBOR Rate
Advance or the date of the Conversion of any Base Rate Advance into such LIBOR
Rate Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and, thereafter, with respect to such LIBOR
Rate Advances, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be for monthly periods of one, two, three or six
months, or any such other periods (as may be agreed to by the Administrative
Agent), as the Borrower may, upon notice received by the Administrative Agent
not later than 11:00 A.M. (Puerto Rico Time) on the third Business Day prior to
the first day of such Interest Period, select; provided, however, that:

            (i)   the Borrower may not select any Interest Period that ends
                  after the Termination Date;

<PAGE>

            (ii)  Interest Periods commencing on the same date for LIBOR Rate
                  Advances comprising part of the Term Credit Borrowing shall be
                  of the same duration;

            (iii) whenever the last day of any Interest Period would otherwise
                  occur on a day other than a Business Day, the last day of such
                  Interest Period shall be extended to occur on the next
                  succeeding Business Day, provided, however, that, if such
                  extension would cause the last day of such Interest Period to
                  occur in the next following calendar month, the last day of
                  such Interest Period shall occur on the next preceding
                  Business Day; and

            (iv)  whenever the first day of any Interest Period occurs on a day
                  of an initial calendar month for which there is no numerically
                  corresponding day in the calendar month that succeeds such
                  initial calendar month by the number of months equal to the
                  number of months in such Interest Period, such Interest Period
                  shall end on the last Business Day of such succeeding calendar
                  month.

      "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

      "LIBOR Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "LIBOR Lending Office" opposite its name on
Schedule I hereto or opposite its name in the Assignment and Acceptance pursuant
to which it became a Lender or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Administrative Agent.

      "LIBOR Rate" means, for any Interest Period for each Advance comprising
part of the Term Credit Borrowing, an interest rate per annum equal to the rate
per annum obtained by dividing (a) the average (rounded upward to the nearest
whole multiple of 1/16 of 1% per annum, if such average is not such a multiple)
of the rate per annum at which deposits in U.S. dollars are offered to prime
banks in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period as quoted by Bloomberg
Professional (currently on page BBVAM1, or any succeeding page dealing with such
quotes), in an amount approximately equal to the Advance comprising part of such
Borrowing to be outstanding during such Interest Period and for a period equal
to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period, if any. The Eurodollar Rate
for any Interest Period for each Advance comprising part of the same Borrowing
shall be determined by the Administrative Agent on the basis of applicable rates
as quoted by Bloomberg Professional (currently on page BBVAM1, or any succeeding
page dealing with such quotes), two Business Days before the first day of such
Interest Period. If for any reason such quotations are no longer published by
Bloomberg Professional, then the quote shall be obtained from Moneyline Telerate
Markets page 3750, or any succeeding page dealing with such quotes.

      "LIBOR Rate Advance" means a Term Credit Advance that bears interest as
provided in Section 2.06(a)(ii).

      "Lenders" means the Lenders and each Person that shall become a party
hereto pursuant to Section 9.07."

      "Lien" means any lien, security interest or other charge or encumbrance of
any kind.

<PAGE>

      "Loan Documents" means this Agreement, the Term Credit Notes, and, on and
after the date of delivery thereof, each guarantee, mortgage, pledge, assignment
or other security instrument required to be delivered under the terms of this
Agreement or any other Loan Document, in each case as amended or otherwise
modified from time to time.

      "Loan Party" means each of the Borrower, the Guarantor and each other
Person (other than the Administrative Agent or any Lender) which is or becomes
or, under the terms of any Loan Document, is required to become a party to a
Loan Document.

      "Majority Lenders" means at any time Lenders holding at least 51% of the
then aggregate unpaid principal amount of the Notes held by Lenders, or, if no
such principal amount is then outstanding, Lenders having at least 51% of the
Commitments.

      "Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any Loan Party and its Subsidiaries
taken as a whole.

      "Material Adverse Effect" means a material adverse effect on (a) the
ability of any Loan Party to conduct its business on substantially the same
basis as conducted on the Effective Date, or (b) the ability of any Loan Party
to service its Debt obligations on a timely basis.

      "Moody's" means Moody's Investors Service, Inc.

      "Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

      "Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than such Loan Party
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.

      "Note" means a Term Credit Note.

      "Notice of Term Credit Borrowing" has the meaning specified in Section
2.02(a).

      "Other Taxes" has the meaning specified in Section 2.13(b).

      "PBGC" means the Pension Benefit Guaranty Corporation (or any successor).

      "Permitted Liens" means, with respect to any Person, (a) Liens for taxes,
assessments and governmental charges and levies to the extent not required to be
paid under Section 5.01(i) hereof; (b) pledges or deposits to secure obligations
under workers' compensation laws or similar legislation; (c) pledges or deposits
to secure performance in connection with bids, tenders, contracts (other than
contracts for the payment of money) or leases to which such Person is a party;
(d) deposits to secure public or statutory obligations of such Person; (e)
materialmen's, mechanics', carriers', workers', repairmen's or other like Liens
in the ordinary course of business, or deposits to obtain the release of such
Liens to the extent such Liens, in the aggregate, would not have a Material
Adverse Effect; (f) deposits to secure surety and appeal bonds to which such
Person is a party; (g) other pledges or deposits for similar purposes in the
ordinary course of business; (h) Liens created by or resulting from any
litigation or legal proceeding which

<PAGE>

at the time is currently being contested in good faith by appropriate
proceedings; (i) leases existing on property acquired, in the ordinary course of
business; (j) landlord's Liens under leases to which such Person is a party; (k)
zoning restrictions, easements, licenses, and restrictions on the use of real
property or minor irregularities in title thereto, which do not materially
impair the use of such property in the operation of the business of such Person
or the value of such property for the purpose of such business; and (l) bankers'
liens, rights of set-off or analogous rights granted or arising by operation of
law to any deposits held by or other indebtedness owing by any lender or any
affiliate thereof to or for the credit or account of such person.

      "Permitted Receivables Financing" means any financing pursuant to which
the Borrower or any Subsidiary of the Borrower may sell, convey, or otherwise
transfer to a Receivables Subsidiary or any other Person (in the case of
transfer by a Receivables Subsidiary), or grant a security interest in, any
accounts receivable (and related assets) of the Borrower or such Subsidiary,
provided that such financing shall be on customary market terms and shall be
non-recourse to the Borrower and its Subsidiaries (other than the Receivables
Subsidiary) except to a limited extent customary for such transactions. The
grant of a security interest in any accounts receivable of the Borrower or any
Subsidiary of the Borrower (other than a Receivables Subsidiary) to secure Debt
under any credit facility shall not be deemed a Permitted Receivables Financing.

      "Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.

      "Plan" means a Single Employer Plan or a Multiple Employer Plan.

      "Receivables Subsidiary" means a bankruptcy-remote, special-purpose wholly
owned Subsidiary formed in connection with a Permitted Receivables Financing.

      "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc.

      "Services Agreement" means the Services Agreement, dated as of March 2,
2004, by and among the Borrower, PRTC and Verizon Corporate Services Group
Incorporated, as amended, modified, renewed or replaced from time to time.

      "Significant Subsidiary" means at any time any Subsidiary, other than a
Receivables Subsidiary, the assets of which, in the aggregate, exceed five
percent (5%) of the Consolidated Assets , determined in accordance with GAAP.

      "Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

      "Solvent" and "Solvency" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a

<PAGE>

transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability after taking into account any
indemnification pursuant to the terms of any agreements entered into in
connection therewith.

      "Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.

      "Subsidiary Existing Debt" has the meaning specified in Section 5.02(d).

      "Taxes" has the meaning specified in Section 2.13(a).

      "Term Credit Advance" means an advance by a Lender to the Borrower as part
of the Term Credit Borrowing and refers to a Base Rate Advance or a LIBOR Rate
Advance.

      "Term Credit Borrowing" means the borrowing consisting of simultaneous
Term Credit Advances made by each of the Lenders pursuant to Section 2.01.

      "Term Credit Note" means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A hereto, evidencing
the aggregate indebtedness of the Borrower to such Lender resulting from the
Term Credit Advance made by such Lender.

      "Termination Date" means the earlier of (a) May 17, 2005 and (b) the date
of termination in whole of the Commitments pursuant to Section 2.04 or 6.01.

      "Type" means, as to any Term Credit Advance, whether such Advance is a
Base Rate Advance or a LIBOR Rate Advance, each of which shall constitute a type
of Advance under this Agreement.

      "Verizon" means Verizon Communications, Inc., a Delaware corporation.

      "Voting Stock" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.

      "Withholding Tax Change" means the approval by either the House of
Representatives or the Senate of the Commonwealth of Puerto Rico of any proposal
to change any applicable law, treaty or government rule, regulation or order
which would require the Borrower to deduct or withhold any Taxes from or in
respect of any sum payable hereunder or under any Note to any Lender or the
Administrative Agent.

<PAGE>

      SECTION 1.02 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".

      SECTION 1.03 Accounting Terms. All terms of an accounting or financial
nature not specifically defined herein shall be construed in accordance with
GAAP.

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

      SECTION 2.01 The Term Credit Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make the Term Credit Advances
to the Borrower on the Effective Date in the aggregate amount set forth opposite
such Lender's name on the signature pages hereof, as such amount may be reduced
pursuant to Section 2.04 (such Lender's "Commitment"). The Term Credit Borrowing
shall be in an aggregate amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof. Within the limits of this Section 2.01, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.09 and
may Convert Borrowings of one Type into Borrowings of another Type as provided
for in Section 2.08, provided, however, that any amounts repaid or prepaid may
not be reborrowed.

      SECTION 2.02 Making the Term Credit Advances.

            (a) The Term Credit Borrowing shall be made on notice, given not
later than 11:00 A.M. (Puerto Rico Time) on the Business Day of the Effective
Date by the Borrower to the Administrative Agent, which shall give to each
Lender prompt notice thereof by telecopier or telex. The notice of the Term
Credit Borrowing (the "Notice of Term Credit Borrowing") shall be by telephone,
confirmed immediately in writing, or telecopier or telex in substantially the
form of Exhibit B hereto, specifying therein the requested (i) date of the Term
Credit Borrowing, (ii) Type of Advances comprising the Term Credit Borrowing,
(iii) aggregate amount of the Term Credit Borrowing, and (iv) in the case that
the Term Credit Borrowing consists of LIBOR Rate Advances, initial Interest
Period for each such Term Credit Advance. Each Lender shall, before 12:00 noon
(Puerto Rico Time) on the Effective Date, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such Term
Credit Borrowing. After the Administrative Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the Borrower at the
Borrower's Account.

                  (b) Anything in subsection (a) above to the contrary
notwithstanding, the Borrower may not select a LIBOR Rate Advance for the Term
Credit Borrowing if the aggregate obligation of the Lenders to make LIBOR Rate
Advances shall then be suspended pursuant to Section 2.07 or 2.11.

                  (c) The Notice of Term Credit Borrowing shall be irrevocable
and binding on the Borrower. In the case that the Term Credit Borrowing consists
of LIBOR Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in the Notice of Term Credit Borrowing
for the Term Credit Borrowing the applicable conditions set forth in Article
III, including, without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or

<PAGE>

reemployment of deposits or other funds acquired by such Lender to fund the Term
Credit Advance to be made by such Lender as part of the Term Credit Borrowing
when such Term Credit Advance, as a result of such failure, is not made on such
date.

                  (d) Unless the Administrative Agent shall have received notice
from a Lender prior to the time of the Term Credit Borrowing that such Lender
will not make available to the Administrative Agent such Lender's ratable
portion of the Term Credit Borrowing, the Administrative Agent may assume that
such Lender has made such portion available to the Administrative Agent on the
Effective Date in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Term Credit Advances comprising the Term Credit Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Term Credit Advance as part of the Term Credit
Borrowing for purposes of this Agreement and the Borrower shall be relieved of
its obligations to repay such amount under this Section 2.02(d).

            (e) The failure of any Lender to make the Term Credit Advance to be
made by it as part of the Term Credit Borrowing shall not relieve any other
Lender of its obligation hereunder to make its Term Credit Advance on the
Effective Date, but no Lender shall be responsible for the failure of any other
Lender to make the Term Credit Advance to be made by such other Lender on the
Effective Date.

      SECTION 2.03 Facility Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee on the
aggregate amount of such Lender's outstanding Advances from the Effective Date
until the Termination Date at a rate per annum equal to 0.125%, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing on June 30, 2004, and on the Termination Date.

      SECTION 2.04 Termination or Reduction of the Commitments. The Borrower
shall have the right, upon at least three Business Days' notice to the
Administrative Agent, to permanently terminate in whole or permanently reduce in
part the unused portions of the respective Commitment of the Lenders, provided
that each partial reduction shall be in the aggregate amount of $10,000,000 or
an integral multiple of $1,000,000 in excess thereof and shall permanently
reduce the Commitments of the Lenders on a pro-rata basis.

      SECTION 2.05 Repayment of Term Credit Advances. The Borrower shall repay
to the Administrative Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Term Credit Advances then
outstanding.

      SECTION 2.06 Interest.

<PAGE>

            (a) Scheduled Interest. The Borrower shall pay interest on the
unpaid principal amount of the Term Credit Advance owing to each Lender from the
date of such Advance until such principal amount shall be paid in full, at the
following rates per annum:

                  (i) Base Rate Advances. During such periods as such Term
            Credit Advance is a Base Rate Advance, a rate per annum equal at all
            times to the Base Rate in effect from time to time, payable in
            arrears on the last day of such Interest Period and, if such
            Interest Period has a duration of more than three months, on each
            day that occurs during such Interest Period every three months from
            the first day of such Interest Period, and on the date such Base
            Rate Advance shall be Converted or paid in full.

                  (ii) LIBOR Rate Advances. During such periods as such Term
            Credit Advance is a LIBOR Rate Advance, a rate per annum equal at
            all times during each Interest Period for such Term Credit Advance
            to the sum of (x) the LIBOR Rate for such Interest Period for such
            Term Credit Advance, plus (y) the Applicable Margin, payable in
            arrears on the last day of such Interest Period and, if such
            Interest Period has a duration of more than three months, on each
            day that occurs during such Interest Period every three months from
            the first day of such Interest Period and on the date such LIBOR
            Rate Advance shall be Converted or paid in full.

            (b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), the Borrower shall pay interest on
(i) the unpaid principal amount of the Term Credit Advance owing to each Lender,
payable in arrears on the date such amount shall be paid in full and on demand
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Term Credit Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Term Credit Advances pursuant to clause (a)(i) above.

      SECTION 2.07 Interest Rate Determination.

            (a) The Administrative Agent shall give prompt notice to the
      Borrower and the Lenders of the applicable interest rate determined by the
      Administrative Agent for purposes of Section 2.06(a)(i) or (ii). If, with
      respect to any LIBOR Rate Advances, any Lender notifies the Administrative
      Agent that the LIBOR Rate for any Interest Period for such Advances will
      not adequately reflect the cost to such Lender of making, funding or
      maintaining their respective LIBOR Rate Advances for such Interest Period,
      the Administrative Agent shall forthwith so notify the Borrower and the
      Lenders, whereupon (i) each LIBOR Rate Advance will automatically, on the
      last day of the then existing Interest Period therefor, Convert into a
      Base Rate Advance, and (ii) the obligation of the Lenders to make, or to
      Convert Term Credit Advances into, LIBOR Rate Advances shall be suspended
      until the

<PAGE>

      Administrative Agent shall notify the Borrower and the Lenders that the
      circumstances causing such suspension no longer exist.

                        (b) If the Borrower shall fail to select the duration of
any Interest Period for any LIBOR Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Advances will automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.

                        (c) On the date on which the aggregate unpaid principal
amount of LIBOR Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.

            (d) Upon the occurrence and during the continuance of any Event of
Default under Section 6.01, (i) each LIBOR Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, continue or to
Convert Advances into, LIBOR Rate Advances shall be suspended.

                        (e) If on any date the Administrative Agent is unable to
determine the LIBOR Rate for any LIBOR Rate Advances to be made on such date,

                  (i) the Administrative Agent shall forthwith notify the
            Borrower and the Lenders that the interest rate cannot be determined
            for such LIBOR Rate Advances,

                  (ii) with respect to LIBOR Rate Advances, each such Advance
      will automatically, on the last day of the then existing Interest Period
      therefor, Convert into a Base Rate Advance (or if such Advance is then a
      Base Rate Advance, will Continue as a Base Rate Advance), and

                  (iii) the obligation of the Lenders to make LIBOR Rate
      Advances or to Convert Term Credit Advances into LIBOR Rate Advances shall
      be suspended until the Administrative Agent shall notify the Borrower and
      the Lenders that the circumstances causing such suspension no longer
      exist.

         SECTION 2.08 Optional Conversion of Term Credit Advances. The Borrower
may on any Business Day, upon notice given to the Administrative Agent not later
than 11:00 A.M. (Puerto Rico Time) on the third Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.08 and
2.12, Convert all Term Credit Advances of one Type comprising the same Borrowing
into Term Credit Advances of the other Type; provided, however, that any
Conversion of LIBOR Rate Advances into Base Rate Advances shall be made only on
the last day of an Interest Period for such LIBOR Rate Advances and any
Conversion of Base Rate Advances into LIBOR Rate Advances shall be in an amount
not less than $1,000,000. Each such notice of a Conversion shall, within the
restrictions specified above, specify (i) the date of such Conversion, (ii) the
Term Credit Advances to be Converted and (iii) if

<PAGE>

such Conversion is into LIBOR Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

      SECTION 2.09 Prepayments of Advances. The Borrower may, upon at least two
Business Days' notice to the Administrative Agent stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding principal amount of the Term Credit
Advances comprising part of the same Borrowing in whole or in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (x) each partial prepayment shall be in an
aggregate principal amount of $1,000,000 or an integral multiple of $1,000,000
in excess thereof, (y) the Borrower shall be obligated to reimburse the Lenders
in respect thereof pursuant to Section 9.04(b) and (z) each partial prepayment
shall permanently reduce in the amount of the prepayment the Commitments of the
Lenders on a pro-rata basis.

      SECTION 2.10 Increased Costs.

            (a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
written guideline or request from any central bank or other governmental
authority (whether or not having the force of law), there shall be any increase
in the cost to any Lender of agreeing to make or making, funding or maintaining
LIBOR Rate Advances (excluding for purposes of this Section 2.10 any such
increased costs resulting from (i) Taxes or Other Taxes (as to which Section
2.13 shall govern) and (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or has
its Applicable Lending Office or any political subdivision thereof, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost (whether or not such increased costs arise prior
to the receipt of written notification from such central bank or other
governmental authority); provided that the Borrower shall not be required to pay
any such increased costs to the extent such increased costs accrued prior to the
date that is six months prior to the date of such notice. A certificate as to
the amount of such increased cost, submitted to the Borrower and the
Administrative Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error in the calculation of such amount.

            (b) If any Lender determines that compliance with any law or
regulation or any written guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender (excluding any reserves
included in the computation of the LIBOR Rate) and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type (taking into consideration
such Lender's policies and the policies of any corporation controlling such
Lender with respect to capital adequacy) then, upon demand by such Lender (with
a copy of such demand to the Administrative Agent), the Borrower shall pay to
the Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation (whether or not such amounts arise prior to the
receipt of written notification from such central bank or other governmental
authority) in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable (in the
proportion that such Lender's Commitment hereunder bears to all of such Lender's
commitments of this type) to the existence of such Lender's commitment to lend
hereunder; provided that the Borrower shall not be required to compensate such
Lender to the extent such amounts arose prior to the date that is six months
prior to such notice. A certificate as to such amounts submitted to the Borrower
and the Administrative Agent by such Lender shall be conclusive and binding for
all purposes, absent manifest error in the calculation of such amounts.

<PAGE>

                        (c) Any Lender claiming any additional amounts payable
pursuant to this Section 2.10 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to minimize such
additional amounts and to change the jurisdiction of its Applicable Lending
Office if the making of such a change would avoid the need for, or reduce the
amount of, any additional amounts that may thereafter accrue and would not, in
the reasonable judgment of such Lender, be otherwise notably disadvantageous to
such Lender. The Borrower shall reimburse such Lender for such Lender's
reasonable expenses incurred in connection with such change or in considering
such a change in an amount not to exceed the Borrower's pro rata share of such
expenses based on such Lender's Commitment and Advances and the total lending
commitments and loans of such Lender to its similarly situated customers.

      SECTION 2.11 Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority having relevant jurisdiction asserts that it is unlawful, for any
Lender or its Applicable Office to perform its obligations hereunder to make
LIBOR Rate Advances or to fund or maintain LIBOR Rate Advances hereunder, (i)
each LIBOR Rate Advance made by such Lender will automatically, upon such
demand, Convert into a Base Rate Advance, as the case may be, and (ii) the
obligation of such Lender to make LIBOR Rate Advances or to Convert Term Credit
Advances into LIBOR Rate Advances shall be suspended until the Administrative
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

      SECTION 2.12 Payments and Computations.

            (a) The Borrower shall make each payment hereunder and under the
    Notes not later than 11:00 A.M. (Puerto Rico Time) on the day when due in
    U.S. dollars to the Administrative Agent at the Administrative Agent's
    Account in same day funds. The Administrative Agent will promptly thereafter
    cause to be distributed like funds relating to the payment of principal or
    interest or facility fees ratably (other than amounts payable pursuant to
    Sections 2.09, 2.10 or 9.04(c)) to the Lenders for the account of their
    respective Applicable Lending Offices, and like funds relating to the
    payment of any other amount payable to any Lender to such Lender for the
    account of its Applicable Lending Office, in each case to be applied in
    accordance with the terms of this Agreement.

            (b) All computations of interest and of facility fees shall be made
by the Administrative Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or facility fees are payable.
Each determination by the Administrative Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error in the
calculation of such interest rate.

            (c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or facility fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or

<PAGE>

principal of LIBOR Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

                        (d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the time on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

      SECTION 2.13 Taxes.

            (a) Subject to subsections (e) and (f) below, any and all payments
by the Borrower hereunder or under the Notes shall be made, in accordance with
Section 2.12, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto imposed by the Commonwealth of Puerto Rico, the
United States or any political subdivision of either (or in the case of any
payments by or on behalf of the Borrower through an account or branch outside
the United States or the Commonwealth of Puerto Rico or by or on behalf of the
Borrower by a payor that is not a United States person or not organized or
resident in the Commonwealth of Puerto Rico such payments shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto imposed by a foreign jurisdiction or any political subdivision thereof),
excluding, in the case of each Lender and the Administrative Agent, taxes
imposed on its overall net income, and franchise taxes imposed on it in lieu of
net income taxes (x) in the case of a Lender pursuant to the laws of the
jurisdiction (or any political subdivision or taxing authority therein) in which
it is organized or in which the principal office of such Lender or Applicable
Lending Office of such Lender is located, or (y) in the case of any payment to
the Administrative Agent in its capacity as Administrative Agent, the
jurisdiction (or any political subdivision or taxing authority therein) in which
it is organized or in which the principal office of the Administrative Agent is
located or in which the office designated by the Administrative Agent to act as
Administrative Agent is located (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes"). Subject
to subsections (e) and (f) below, if the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Administrative Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.13) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law. Within 30 days after the date of any payment
of Taxes, the Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing payment thereof. For purposes of this subsection (a) and subsection
(e), the terms "United States" and "United States person" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

            (b) In addition, the Borrower agrees to pay any stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with

<PAGE>

respect to, this Agreement or the Notes as a result of the introduction of any
change in or in the interpretation of any law or regulation after the Effective
Date (hereinafter referred to as "Other Taxes").

                        (c) Subject to subsections (d), (e) and (f) below, the
Borrower shall indemnify each Lender and the Administrative Agent for the full
amount of Taxes or Other Taxes (to the extent not previously paid under
subsection (a) or (b) above) imposed on or paid by such Lender or the
Administrative Agent (as the case may be) on or with respect to any payment by
or on account of any obligation of any Loan Party hereunder or under any other
Loan Document and any liability (including penalties, interest and expenses but
excluding any taxes imposed by any jurisdiction on amounts which may be paid or
payable by the Borrower to a Lender or the Administrative Agent under this
Section 2.13) arising therefrom or with respect thereto. This indemnification
shall be made within 30 Business Days from the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor.

            (d) Each Lender organized under the laws of a jurisdiction outside
of the Commonwealth of Puerto Rico from time to time as requested in writing by
the Borrower (but only so long as such Lender remains lawfully able to do so),
shall provide each of the Administrative Agent and the Borrower with two
properly and accurately completed and duly executed original copies of any form,
document or other certificate that is necessary for such Lender to be exempt
from, or entitled to a reduced rate of Taxes or payments hereunder or under the
Notes or for the Borrower to determine the applicable rate of deduction or
withholding of any Taxes. If any Lender which is organized under the laws of a
jurisdiction outside of the Commonwealth of Puerto Rico is unable to provide the
above-described forms, documents or other certificates for a relevant interest
period (or if the Lender's appropriate personnel responsible for providing the
forms, documents or other certificates actually become aware that the forms,
documents or other certificates provided by it are inaccurate), such Lender
shall notify the Borrower in writing prior to or immediately upon the
commencement of such relevant interest period.

            (e) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form, document or other certificate
requested by the Borrower in accordance with Section 2.13(d) (other than if such
failure is due to a change in any applicable law, treaty or government rule,
regulation or order, or any change in the interpretation, administration or
application of law occurring subsequent to the date hereof such that such Lender
is not lawfully able to provide the Borrower with the appropriate form, document
or other certificate, or if such form, document or other certificate is no
longer required to establish an exemption from the applicable tax), such Lender
shall not be entitled to indemnification under Section 2.13(a) or (c) with
respect to Taxes by reason of such failure and the Borrower shall be entitled to
withhold Taxes from payments to such Lender; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form,
document or other certificate required hereunder, the Borrower shall take such
steps at such Lender's expense as such Lender shall reasonably request to assist
such Lender to recover such Taxes.

                        (f) Notwithstanding anything else contained in this
Section 2.13, the Borrower shall only be required to pay additional sums with
respect to Taxes (subject to subsection (h) below) to a Lender (or the
Administrative Agent, as the case may be) pursuant to subsection (a) or (c)
above if the obligation to pay such Taxes results from such Lender's inability
to obtain a complete exemption from Taxes as a result of (i) any amendment to
the laws (or any regulations thereunder), or any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority adopted or enacted
after the date hereof (or in the case of an entity that becomes a Lender after
the date hereof, the date such entity becomes a Lender), (ii) an amendment,
modification or revocation of any existing applicable tax treaty ratified,
enacted or amended after the date hereof (or in the case of an entity that
becomes a Lender after the date hereof, the date such entity becomes a Lender),
or (iii) the ratification of a new tax treaty ratified after the date hereof (or
in the case of an entity that becomes a Lender after the date hereof, the date
such entity

<PAGE>

becomes a Lender).

            (g) In the event that the Borrower makes an additional payment under
Section 2.13(a) or 2.13(c) for the account of any Lender and such Lender, in its
sole opinion, determines that it has finally and irrevocably received or been
granted a credit against, or relief or remission from, or repayment of, any tax
paid or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to such additional payment, such Lender
shall, to the extent that it determines that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or repayment, pay
to the Borrower such amount as such Lender shall, in its sole opinion, have
determined is attributable to such deduction or withholding and will leave such
Lender (after such payment) in no worse position than it would have been had the
Borrower not been required to make such deduction or withholding. Nothing
contained herein shall (i) interfere with the right of a Lender to arrange its
tax affairs in whatever manner it thinks fit or (ii) oblige any Lender to claim
any tax credit or to disclose any information relating to its tax affairs or any
computations in respect thereof or (iii) require any Lender to take or refrain
from taking any action that would prejudice its ability to benefit from any
other credits, reliefs, remissions or repayments to which it may be entitled.
Each Lender and the Administrative Agent shall reasonably cooperate with the
Borrower at the Borrower's written request and sole expense, in contesting any
Taxes or Other Taxes the Borrower would bear pursuant to this Section 2.13,
provided, however, that (i) no tax return of such Lender or the Administrative
Agent is or would be held open as a result of such contest, (ii) neither such
Lender nor the Administrative Agent is required to reopen a tax year that has
already closed and (iii) such Lender and the Administrative Agent shall, in the
sole opinion of such Lender and the Administrative Agent, respectively, have
determined that such contest will leave such Lender and the Administrative
Agent, respectively, in no worse position than it would have been in had it not
contested such Taxes or Other Taxes. Nothing contained herein shall interfere
with the right of a Lender or the Administrative Agent to arrange its tax
affairs in whatever manner it thinks fit, if in the sole judgment of such Lender
or the Administrative Agent, such contest would be disadvantageous to such
Lender or the Administrative Agent. In pursuing a contest in the Lender's or the
Administrative Agent's name, such Lender or the Administrative Agent will be
represented by counsel of such Lender's or the Administrative Agent's choice,
and will defend against, settle or otherwise control the contest and will not
relinquish control or decision making over the contest.

                        (h) (i) Any Lender claiming any additional amounts
payable pursuant to this Section 2.13 or (ii) upon a Withholding Tax Change,
each Lender, agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to avoid or minimize such
additional amounts and to change the jurisdiction of its LIBOR Lending Office if
the making of such a change would avoid the need for, or reduce the amount of,
any additional amounts that may thereafter accrue and would not, in the
reasonable judgment of such Lender, be otherwise notably disadvantageous to such
Lender. The Borrower shall reimburse such Lender for such Lender's reasonable
expenses incurred in connection with such change or in considering such a change
in an amount not to exceed the Borrower's pro rata share of such expenses based
on such Lender's Commitment and Advances to the Borrower and the total lending
commitments and loans of such Lender to its similarly situated customers.

      SECTION 2.14 Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely to
repay outstanding loans under that certain Term Credit Agreement dated as of May
16, 2002 by and among the Borrower, the Guarantor, the Lenders parties thereto
and the Administrative Agent.

      SECTION 2.15 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.10, 2.13, 9.04(c) or 9.07) in excess of its ratable share
of payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith

<PAGE>

purchase from the other Lenders such participations in the Advances made by them
as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of the amount of such Lender's required repayment to the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.

                                   ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

      SECTION 3.01 Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date, but in no event later than May 17, 2004, (the "Effective Date") on which
the following conditions precedent have been satisfied:

                        (a) There shall have occurred no Material Adverse Change
since December 31, 2003.

            (b) There shall exist no labor dispute, action, suit, investigation,
litigation or proceeding affecting any of the Loan Parties or any of their
respective Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that (i) could be reasonably likely to have a Material
Adverse Effect other than the matters described on Schedule 3.01(b) hereto (the
"Disclosed Litigation") or (ii) is initiated by any Person other than a Lender
in its capacity as a Lender that purports to affect the legality, validity or
enforceability of this Agreement, any Note, any other Loan Document or the
consummation of the transactions contemplated hereby, and there shall have been
no material adverse change in the status, or financial effect on any Loan Party,
of the Disclosed Litigation from that described on Schedule 3.01(b) hereto.

                        (c) All governmental and third party consents and
approvals necessary in connection with the execution, delivery and performance
of this Agreement, the Notes and any other Loan Document shall have been
obtained (without the imposition of any conditions that could reasonably be
expected to materially adversely affect the ability of any Loan Party to perform
its obligations hereunder) and shall remain in effect, and no law or regulation
shall be applicable that restrains, prevents or imposes adverse conditions upon
the transactions contemplated hereby that could reasonably be expected to
materially adversely affect the ability of any Loan Party to perform its
obligations hereunder.

                        (d) The Borrower shall have paid all costs and expenses
of the Administrative Agent and the Lenders in connection with the preparation,
negotiation, execution and, if applicable, filing and recording of this
Agreement and the other Loan Documents (including the accrued fees and expenses
of counsel to the Administrative Agent and the Lenders) to the extent invoiced
and subject to the terms and conditions of Section 9.04(a) herein.

<PAGE>

                        (e) The Borrower shall have notified each Lender and the
Administrative Agent in writing of the proposed Effective Date.

                        (f) On the Effective Date, the following statements
shall be true and the Administrative Agent shall have received for the account
of each Lender a certificate signed by a duly authorized officer of the
Borrower, dated the Effective Date, stating that:

                  (i) The representations and warranties contained in Section
      4.01 are correct on and as of the Effective Date, and

                  (ii) No event has occurred and is continuing that constitutes
      a Default.

            (g) The Administrative Agent shall have received on or before the
Effective Date the following, each dated such day, in form and substance
satisfactory to the Administrative Agent:

                  (i) The Term Credit Notes to the order of the Lenders,
      respectively.

                  (ii) Certified copies of the resolutions of the Board of
      Directors of each Loan Party approving the transactions contemplated by
      this Agreement and the Notes and of all documents evidencing other
      necessary corporate action and governmental approvals, if any, with
      respect to this Agreement and such Notes.

                  (iii) A certificate of the Secretary or an Assistant Secretary
      of each Loan Party certifying the names and true signatures of the
      officers of each Loan Party authorized to sign this Agreement and the
      Notes and the other Loan Documents to be delivered hereunder.

                  (iv) A certificate, in substantially the form of Exhibit C
      hereto, attesting to the Solvency of each Loan Party after giving effect
      to the Borrowings contemplated hereunder, from the chief financial officer
      of each such Loan Party.

                  (v) A favorable opinion of Sandra Torres, Esq., Director of
      the Legal and Regulatory Affairs Department for the Loan Parties,
      substantially in the form of Exhibit D hereto.

                  (vi) Certificates of good standing dated not more than ninety
      (90) days prior to the execution of this Agreement showing that each Loan
      Party is in good standing in the Commonwealth of Puerto Rico, and a copy
      certified by the Secretary of each Loan Party, dated not more than thirty
      (30) days prior to the date of execution of this Agreement, of the
      Articles of Incorporation and By-Laws of such Loan Party.

                  (vii) A certificate of a duly authorized officer of the
      Borrower certifying that the Borrower and the Guarantor have in effect the
      insurance coverage required pursuant to Section 5.01(b).

<PAGE>

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

      SECTION 4.01 Representations and Warranties of the Borrower. In order to
induce the Lenders to make the Term Credit Advances hereunder, the Borrower
makes the following representations and warranties to the Lenders:

                        (a) Each Loan Party is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.

            (b) The execution, delivery and performance by each Loan Party of
this Agreement and the Notes executed by it and the consummation of the
transactions contemplated hereby, are within such Loan Party's corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene (i) such Loan Party's charter or by-laws (or other equivalent
organizational documents) or (ii) any law or any material contractual
restriction binding on or affecting such Loan Party or, to the knowledge of the
chief financial officer of the Borrower, any other contract the breach of which
would limit the ability of any Loan Party to perform its obligations under this
Agreement or the Notes. No Loan Party is in violation of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to it, or in breach of any indenture, agreement, lease or instrument,
the violation or breach of which is reasonably likely to have a Material Adverse
Effect.

            (c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any other
third party is required for the due execution, delivery and performance by any
Loan Party of this Agreement or the Notes.

            (d) This Agreement has been, and each of the Notes when delivered
hereunder will have been, duly executed and delivered by the Borrower. This
Agreement has been duly executed and delivered by the Guarantor. Assuming that
this Agreement has been duly executed by the Administrative Agent and each of
the Lenders, this Agreement is, and each of the Notes when delivered hereunder
will be, the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with their respective terms. Assuming that
this Agreement has been duly executed by the Administrative Agent and each of
the Lenders, this Agreement is the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms.

                        (e) The Consolidated balance sheet of the Borrower and
its Subsidiaries as at December 31, 2003, and the related Consolidated
statements of income and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, accompanied by an opinion of Ernst & Young LLP, its
independent public accountants, copies of which have been furnished to each
Lender, fairly and accurately represent the Consolidated financial condition of
the Borrower and its Subsidiaries as at such date and the Consolidated results
of the operations of the Borrower and its Subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting principles
consistently applied.

                        (f) There is no pending or (to the knowledge of any Loan
Party)

<PAGE>

threatened action or proceeding, including, without limitation, any
Environmental Action, affecting any Loan Party or any of its Subsidiaries before
any court, governmental agency or arbitrator that is initiated by any Person
other than a Lender in its capacity as a Lender that purports to affect the
legality, validity or enforceability of this Agreement or any Note.

                  (g) Neither the Borrower nor any of its Subsidiaries is an
Investment Company, as such term is defined in the Investment Company Act of
1940, as amended.

                  (h) No Loan Party is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.

                  (i) As of the date hereof, the Borrower has no direct or
      indirect Significant Subsidiaries, except as set forth in Schedule
      4.01(i).

                  (j) The Borrower and the Guarantor are Solvent.

                  (k) Each Loan Party and each of its respective Subsidiaries
have filed all federal, state, commonwealth and local tax returns required to be
filed and have paid all taxes shown thereon to be due, including interest and
penalties, or have provided adequate reserves therefor; no unpaid or uncontested
assessments have been made against any Loan Party or any Subsidiary of any Loan
Party by any taxing authority, nor has any unpaid or uncontested penalty or
deficiency been assessed by any such authority, and all contested assessments
have been disclosed to the Administrative Agent and adequate reserves have been
made therefor. Such tax returns properly reflect the income and taxes of each
respective Loan Party and its Subsidiaries for the periods covered thereby,
subject only to reasonable adjustments required by the corresponding taxing
authorities upon audit or other adjustments not reasonably likely to have a
Material Adverse Effect.

                  (l) Schedules 3.01(b), 4.01(i), 5.02(a) and 5.02(d) to this
Term Credit Agreement furnished by the Loan Parties do not contain any material
misstatement of fact or omit to state a material fact necessary to make the
statements contained therein not misleading.

                  (m) The operations and properties of each Loan Party comply in
all material respects with all applicable Environmental Laws; all necessary
Environmental Permits have been obtained and are in effect for the operations
and properties of each Loan Party, and each Loan Party is in compliance in all
material respects with all such Environmental Permits; none of the operations or
properties of any Loan Party is subject to any Environmental Action alleging the
violation of any Environmental Law; none of the operations of any Loan Party are
the subject of a federal, state, commonwealth or local investigation evaluating
whether any remedial action is needed to respond to a release of any hazardous
or toxic waste, substance or constituent, or any other substance into the
environment, which Environmental Action or remedial action is reasonably likely
to have a Material Adverse Effect.

<PAGE>

                  (n) The obligations of the Borrower under this Agreement, and
the obligations of the Guarantor under the Guaranty rank pari passu in right of
payment with all other senior unsecured Debt of such Person.

                                   ARTICLE V

                          COVENANTS OF THE LOAN PARTIES

      SECTION 5.01 Affirmative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, each Loan Party will:

            (a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with ERISA and Environmental Laws, except where the failure to so
comply would not have a Material Adverse Effect.

            (b) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
as such Loan Party and such Subsidiaries in the same general areas in which such
Loan Party or such Subsidiary operates; provided, however, that such Loan Party
and its Subsidiaries may self insure to the extent consistent with prudent
business practice.

            (c) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that each Loan Party and its Subsidiaries may consummate any transaction
permitted under Section 5.02(b) and provided further that neither any Loan Party
nor any of its Subsidiaries shall be required to preserve any right or franchise
if the senior management of such Loan Party or of such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of such Loan Party or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to such Loan
Party or such Subsidiary.

            (d) Visitation Rights. During normal business hours and upon
reasonable notice from time to time, permit the Administrative Agent or any of
the Lenders or any agents or representatives thereof, to examine and make copies
of and abstracts from the records and books of account of (excluding any
confidential information), and visit the properties of, such Loan Party and any
of its Subsidiaries, and to discuss the affairs, finances and accounts of such
Loan Party and any of its Subsidiaries with the appropriate representatives of
such Loan Party and together with the appropriate representatives of such Loan
Party's independent certified public accountants.

            (e) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of such
Loan Party and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time and consistently applied.

            (f) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, its material properties that
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

<PAGE>

            (g) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of their Affiliates, other than another Loan Party, (i) on
terms that are fair and reasonable and no less favorable to such Loan Party or
such Subsidiary than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate except where the failure to do so, in the
aggregate, would not have a Material Adverse Effect, (ii) as required by the
Federal Communications Commission's rules and regulations for transactions among
affiliates or (iii) as contemplated by the Services Agreement.

            (h) Reporting Requirements. Furnish to the Administrative Agent with
sufficient copies for distribution to the Lenders:

                  (i) as soon as available and in any event within 60 days after
            the end of each of the first three quarters of each fiscal year of
            the Borrower, the Consolidated balance sheet of the Borrower and its
            Subsidiaries as of the end of such quarter and the Consolidated
            statements of income and cash flows of the Borrower and its
            Subsidiaries for the period commencing at the end of the previous
            fiscal year and ending with the end of such quarter, duly certified
            (subject to year-end audit adjustments) by the chief financial
            officer, treasurer or controller of the Borrower as having been
            prepared in accordance with generally accepted accounting principles
            and certificates of the chief financial officer, treasurer or
            controller of the Borrower as to compliance with the terms of this
            Agreement and setting forth in reasonable detail the calculations
            necessary to demonstrate compliance with Section 5.03, provided that
            in the event of any change in GAAP used in the preparation of such
            financial statements, the Borrower shall also provide, if necessary
            for the determination of compliance with Section 5.03, a statement
            of reconciliation showing the calculations used for purposes of
            Section 5.03;

                  (ii) as soon as available and in any event within 120 days
      after the end of each fiscal year of the Borrower, a copy of the annual
      audited report for such year for the Borrower and its Subsidiaries,
      containing the Consolidated balance sheet of the Borrower and its
      Subsidiaries as of the end of such fiscal year and the Consolidated
      statements of income and cash flows of the Borrower and its Subsidiaries
      for such fiscal year, in each case accompanied by an opinion acceptable to
      the Majority Lenders by Ernst & Young LLP or other independent public
      accountants of nationally recognized standing, provided that in the event
      of any change in GAAP used in the preparation of such financial
      statements, the Borrower shall also provide, if necessary for the
      determination of compliance with Section 5.03, a statement of
      reconciliation showing the calculations used for purposes of Section 5.03;

                  (iii) as soon as possible and in any event within five
      Business Days after the occurrence of each Default continuing on the date
      of such statement, a statement of the chief financial officer, treasurer
      or controller of the Borrower setting forth details of such Default and
      the action that the Borrower has taken and proposes to take with respect
      thereto;

                  (iv) promptly after the sending or filing thereof, copies of
      any quarterly and annual reports and proxy solicitations that any Loan
      Party sends to any of its security holders, and copies of any reports on
      Form 8-K that such Loan Party files with the Securities and Exchange
      Commission (other than reports on Form 8-K filed solely for the purpose of
      incorporating exhibits into a registration statement previously filed with
      the Securities and Exchange Commission);

                  (v) prompt notice of all actions and proceedings before any
      court, governmental agency or arbitrator affecting any Loan Party or any
      of its Subsidiaries of the type described in Section 3.01(b); and

<PAGE>

                  (vi) such other information respecting any Loan Party or any
      of its Subsidiaries as any Lender through the Administrative Agent may
      from time to time reasonably request.

            (i) Payment of Taxes, Etc. File, and cause its Subsidiaries to file,
all federal, state, commonwealth and local tax returns and other reports
required by law to be filed; maintain, and cause its Subsidiaries to maintain,
adequate reserves for the payment of all taxes, assessments, governmental
charges and levies imposed upon such Loan Party and its Subsidiaries, their
income or their profits; pay and discharge, and cause its Subsidiaries to pay
and discharge, all such taxes, assessments, governmental charges and levies
imposed upon such Loan Party and any of its Subsidiaries or against their
respective properties prior to the date on which penalties accrue, except to the
extent that the same may be contested by such Loan Party or such Subsidiary, as
the case may be, in good faith by appropriate proceedings and adequate reserves
have been made therefor, unless and until a Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors.

            (j) Certain Obligations Respecting Subsidiaries. The Borrower will
take such action, and will cause each of its Significant Subsidiaries and any
Significant Subsidiary formed with the intent of merging with or into a Person
that will be a Significant Subsidiary subject to this provision to take such
action, from time to time as shall be necessary to ensure that all Significant
Subsidiaries of the Borrower are party to, as Loan Parties, the Guaranty
provided in Article VII hereof. Without limiting the generality of the
foregoing, in the event that the Borrower or any of its Significant Subsidiaries
shall form or acquire any new Significant Subsidiary, the Borrower or the
respective Significant Subsidiary will cause such new Significant Subsidiary to
(A) become a party hereto and to the Guaranty pursuant to a written instrument
in form and substance satisfactory to the Administrative Agent, and (B) deliver
such proof of corporate action, incumbency of officers, opinions of counsel and
other documents relating to the foregoing as is consistent with those delivered
by each Loan Party pursuant to Article III hereof, or as any Lender or the
Administrative Agent shall have reasonably requested.

      SECTION 5.02 Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

            (a) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to any of
its properties, whether now owned or hereafter acquired, or assign for security
purposes (but not in connection with a bona fide sale thereof), or permit any of
its Subsidiaries to assign for security purposes (but not in connection with a
bona fide sale thereof), any right to receive income; provided that nothing in
this Section 5.02 shall be construed to prevent or restrict the following:

                  (i) Permitted Liens,

                  (ii) purchase money Liens upon or in any real property or
            equipment acquired or held by the Borrower or any of its
            Subsidiaries in the ordinary course of business to secure the
            purchase price of such property or equipment or to secure Debt
            incurred solely for the purpose of financing the acquisition of such
            property or equipment, or Liens existing on such property or
            equipment at the time of its acquisition or conditional sales or
            other similar title retention agreements with respect to property
            hereafter acquired or extensions, renewals or replacements of any of
            the foregoing for the same or a lesser amount, provided, however,
            that no such Lien shall extend to or cover any properties of any
            character other than the real property or equipment being acquired,

<PAGE>

            and no such extension, renewal or replacement shall extend to or
            cover any properties not theretofore subject to the Lien being
            extended, renewed or replaced,

                  (iii) the Liens existing on the Effective Date and described
            on Schedule 5.02(a) hereto, and other undisclosed Liens existing on
            the Effective Date securing obligations in the aggregate amount not
            to exceed $10,000,000.

                  (iv) Liens on property of a Person existing at the time such
            Person is merged into or consolidated with the Borrower or any of
            its Subsidiaries; provided that any such Liens that were created
            during the period immediately prior to such merger, consolidation or
            acquisition were created in the ordinary course of business of such
            Person and the Debt secured by such Liens does not exceed the fair
            market value of the assets (including intangible assets) of such
            Person so merged into or consolidated with the Borrower or any of
            its Subsidiaries,

                  (v) the replacement, extension or renewal of any Lien
            permitted by clauses (iii) and (iv) above upon or in the same
            property theretofore subject thereto or the replacement, extension
            or renewal (without increase in the amount or extension of the final
            maturity date) of the Debt secured thereby,

                  (vi) Liens not otherwise permitted pursuant to clauses (i)
            through (v) above securing obligations not to exceed at any one time
            the amount of $10,000,000; and

                  (vii) Liens on property of a Receivables Subsidiary created in
            connection with a Permitted Receivables Financing.

            (b) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries
to do so, except that (i) any Subsidiary of the Borrower may merge or
consolidate with or into, or dispose of assets to, any other Subsidiary of the
Borrower, (ii) any Subsidiary of the Borrower may merge into or dispose of
assets to the Borrower, and (iii) the Borrower may merge with any Subsidiary of
Verizon so long as the surviving corporation assumes all obligations of the
Borrower hereunder and under the Notes, and provided, in each case, that no
Default shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom.

            (c) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except (i) as required or permitted by generally accepted accounting
principles or (ii) where the effect of such change, together with all other
changes in accounting policies or reporting practices made pursuant to this
clause (ii) since the Effective Date, is immaterial to the Borrower and its
Subsidiaries taken as a whole.

            (d) Subsidiary Debt. Permit any of its Subsidiaries to create or
suffer to exist, any Debt other than:

                  (i) Debt owed to the Borrower or to a wholly owned Subsidiary
            of the Borrower,

                  (ii) Debt which may be incurred in connection with the
            Subsidiaries' guarantee of the Bonds or any refunding or
            refinancing, in whole or in part, of the Bonds,

<PAGE>

                  (iii) Debt which may be borrowed and outstanding from time to
            time under the credit agreements existing or contemplated on and as
            of the Effective Date and described on Schedule 5.02(d) hereto (the
            "Subsidiary Existing Debt"), and any Debt extending the maturity of,
            or refunding or refinancing, in whole or in part, the Subsidiary
            Existing Debt, provided that the principal amount of such Subsidiary
            Existing Debt shall not be increased above the principal amount
            thereof outstanding immediately prior to such extension, refunding
            or refinancing, and the direct and contingent obligors therefor
            shall not be changed, as a result of or in connection with such
            extension, refunding or refinancing,

                  (iv) unsecured Debt incurred in the ordinary course of
            business aggregating not more than $150,000,000 for PRTC and not
            more than $75,000,000 in the aggregate at any one time outstanding
            for all other Significant Subsidiaries that shall become Guarantors
            hereunder in accordance with Section 5.01(j),

                  (v) Debt in respect of operating leases,

                  (vi) endorsement of negotiable instruments for deposit or
            collection or similar transactions in the ordinary course of
            business, and

                  (vii) Debt incurred by a Receivables Subsidiary created in
            connection with a Permitted Receivables Financing.

      SECTION 5.03 Financial Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

            (a) Debt to EBITDA Ratio. Maintain a Debt to EBITDA Ratio, as at the
end of each fiscal quarter of the Borrower, of not more than 3.0:1.0.

            (b) EBITDA to Interest Ratio. Maintain an EBITDA to Interest Ratio,
as at the end of each fiscal quarter of the Borrower, of not less than 3.5:1.0.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

      SECTION 6.01 Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

            (a) The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable; or the Borrower shall fail to pay any interest
on any Advance within five Business Days after the same becomes due and payable;
or any fees or other amounts payable under this Agreement or any Note are not
paid within five Business Days after the same becomes due and payable; or

<PAGE>

            (b) Any representation or warranty made or deemed made by any Loan
Party herein or by any Loan Party (or any of its officers) in connection with
this Agreement shall prove to have been incorrect in any material respect when
made or deemed made; or

            (c) (i) Any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(c), (d), (g),(h)(iii) or (h)(v),
or (j), (k), (l), 5.02 or 5.03; (ii) any Loan Party shall fail to perform or
observe any term, covenant or agreement contained in Section 5.01(h) (other than
clauses (iii) and (v) thereof) if such failure shall remain unremedied for five
Business Days after written notice thereof shall have been given to such Loan
Party by the Administrative Agent or any Lender; or (iii) any Loan Party shall
fail to perform or observe any other term, covenant or agreement contained in
this Agreement on its part to be performed or observed if such failure shall
remain unremedied for 30 days after written notice thereof shall have been given
to such Loan Party by the Administrative Agent or any Lender; or

            (d) Article VII is breached by the Guarantor or shall cease to be in
full force and effect or the Guarantor shall so state in writing; or

            (e) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt that is outstanding in a
principal or, in the case of Hedge Agreements net amount of at least $20,000,000
in the aggregate (but excluding Debt outstanding hereunder) of the Borrower or
such Subsidiary (as the case may be) (the "Requisite Amount"), when the same
becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
later of five Business Days and the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any such Debt
aggregating the Requisite Amount shall be declared due and payable in accordance
with its terms or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt aggregating the Requisite
Amount and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to
accelerate the maturity of such Debt; or any such Debt aggregating the Requisite
Amount shall be required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased in
accordance with its terms, or any offer to prepay, redeem, purchase or defease
such Debt shall be required to be made in accordance with its terms, in each
case prior to the stated maturity thereof where the cause of such prepayment,
redemption, purchase or defeasance or offer therefor is the occurrence of an
event or condition that is premised on a material adverse deterioration of the
financial condition, results of operation or properties of the Borrower or any
of its Subsidiaries, provided that with respect to Debt aggregating the
Requisite Amount of the types described in clauses (h) or (i) of the definition
of "Debt" and to the extent such Debt relates to the obligations of any Person
other than the Borrower or any of its Subsidiaries, no Event of Default shall
occur so long as the payment of such Debt is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being maintained;
or any event shall occur or condition shall exist under any agreement or
instrument relating to any Debt that is outstanding in a principal or in the
case of Hedge Agreements net amount of at least $40,000,000 and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or permit
the acceleration of, the maturity of such Debt; or

            (f) Any Loan Party or any of its Subsidiaries shall generally not
pay their respective debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
any Loan Party or its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for

<PAGE>

any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or any Loan Party or its Subsidiaries shall take any corporate
action to authorize any of the actions set forth in this subsection (f) under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors; or

            (g) Any judgment or order for the payment of money in excess of
$30,000,000 shall be rendered against any Loan Party or its Subsidiaries and
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order for which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment or order shall not be an Event of Default under
this Section 6.01(g) if and for so long as (i) (A) the amount of such judgment
or order is covered by a valid and binding policy of insurance between the
defendant and the insurer or insurers covering payment thereof, (B) such insurer
shall be rated, or, if more than one insurer, at least 90% of such insurers as
measured by the amount of risk insured, shall be rated, at least "A-" by A.M.
Best Company or its successor or its successors and (C) such insurer(s) has been
notified of, and has not disputed the claim made for payment of, the amount of
such judgment or order or (ii) (A) the amount of such judgment or order is
covered by a valid and binding indemnification agreement between the defendant
and an indemnitor, (B) such indemnitor shall have a rating for any class of its
non-credit enhanced long-term senior unsecured debt of not lower than BBB+ by
S&P or Baa3 by Moody's and (C) such indemnitor has been notified of, and has not
disputed the claim made for payment of, the amount of such judgment or order; or

            (h) (i) Verizon shall cease for any reason to maintain, directly or
indirectly, the Controlling Interest, or (ii) the Borrower shall for any reason
cease to own 100% of the Voting Stock of the Guarantor; or

            (i) Any Loan Party or its ERISA Affiliates shall incur, or shall be
reasonably likely to incur, liability that would have a Material Adverse Effect
as a result of one or more of the following: (i) the occurrence of any ERISA
Event; (ii) the partial or complete withdrawal of such Loan Party or its ERISA
Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination
of a Multiemployer Plan.

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to any
Loan Party under the Federal Bankruptcy Code, (A) the obligation of each Lender
to make Advances shall automatically be terminated and (B) the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

<PAGE>

                                   ARTICLE VII

                                    GUARANTY

      SECTION 7.01 Guaranty; Limitation of Liability.

            (a) In order to induce the Lenders to extend credit to the Borrower
hereunder, the Guarantor hereby unconditionally and irrevocably guarantees, as a
primary obligor and not merely as a surety, the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
each other Loan Party now or hereafter existing under this Agreement or any
Note, whether for principal, interest, fees, expenses or otherwise (such
obligations, to the extent not paid by such Loan Party or specifically waived in
accordance with Section 9.01, being the "Guaranteed Obligations"), and agrees to
pay any and all expenses (including reasonable counsel fees and expenses)
incurred by the Administrative Agent or the Lenders in enforcing any rights
under this Article VII ("this Guaranty"). Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any Loan Party to the
Administrative Agent or any Lender under this Agreement or any Note but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Loan Party.

            (b) The Guarantor and, by its acceptance of this Guaranty, the
Administrative Agent and each other Lender, hereby confirms that it is the
intention of all such parties that this Guaranty not constitute a fraudulent
transfer or fraudulent conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal, state or Commonwealth of Puerto Rico law to the extent applicable to
this Guaranty. To effectuate the foregoing intention, the Administrative Agent,
each other Lender and the Guarantor hereby irrevocably agrees that the
obligations of the Guarantor under this Guaranty shall not exceed the greater of
(A) the benefit realized by the Guarantor from the proceeds of the Advances made
from time to time by the Borrower to the Guarantor and (B) the maximum amount
that will, after giving effect to such maximum amount and all other probable
contingent and fixed liabilities of the Guarantor that are relevant under
applicable law, and after giving effect to any collections from, rights to
receive contribution from, or payments made by or on behalf of the Guarantor in
respect of the obligations of the Guarantor under this Guaranty, result in the
obligations of the Guarantor under this Guaranty not constituting a fraudulent
transfer or fraudulent conveyance. For purposes hereof, "Bankruptcy Law" means
Title 11, United States Code, or any similar Federal, state or Commonwealth of
Puerto Rico law for the relief of debtors.

            (c) The Guarantor agrees that in the event any payment shall be
required to be made to the Lenders under this Guaranty, the Guarantor will
contribute, to the maximum extent such that the contribution will not result in
a fraudulent transfer or fraudulent conveyance, such amounts to the Guarantor so
as to maximize the aggregate amount paid to the Lenders under this Agreement and
the Notes.

      SECTION 7.02 Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Administrative Agent or the Lenders with respect thereto. The
obligations of the Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or the Guarantor or whether
the Borrower or the Guarantor is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and, to the maximum extent permitted by law,
the Guarantor hereby

<PAGE>

irrevocably waives, any defenses it may now or hereafter have in any way
relating to, any or all of the following:

            (a) any lack of validity or enforceability of this Agreement or any
agreement or instrument relating hereto;

            (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from this Agreement, any Note or any
other Loan Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to the
Borrower or otherwise;

            (c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;

            (d) any change, restructuring or termination of the corporate
structure or existence of the Borrower; or

            (e) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any Lender that might otherwise constitute a defense
available to, or a discharge of, the Guarantor, the Borrower or any other
guarantor or surety other than payment when due.

      This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Administrative Agent or any
Lender upon the insolvency, bankruptcy or reorganization of the Borrower or the
Guarantor or otherwise, all as though such payment had not been made.

      SECTION 7.03 Waiver. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Administrative Agent
or any Lender exhaust any right or take any action against the Borrower or any
other Person or any collateral. The Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 7.03 is knowingly made in
contemplation of such benefits. The Guarantor hereby waives any right to revoke
this Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.

      SECTION 7.04 Continuing Guaranty; Assignments. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Guaranteed Obligations and all other
amounts payable under this Guaranty and the Termination Date, (b) be binding
upon the Guarantor, its successors and assigns and (c) inure to the benefit of
and be enforceable by the

<PAGE>

Lenders, the Administrative Agent and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
hereunder (including, without limitation, all or any portion of its Commitment,
the Advances owing to it and the Note or Notes held by it) to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise, in each case as
provided in Section 9.07.

      SECTION 7.05 Subrogation. The Guarantor will not exercise any rights that
it may now or hereafter acquire against the Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor's obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Administrative Agent or any Lender against the Borrower, the Guarantor or any
other insider guarantor or any collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Borrower, the
Guarantor or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security solely
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash and the Termination Date shall have occurred. If
any amount shall be paid to the Guarantor in violation of the preceding sentence
at any time prior to the later of the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and the
Termination Date, such amount shall be held in trust for the benefit of the
Administrative Agent and the Lenders and shall forthwith be paid to the
Administrative Agent to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether matured or unmatured,
in accordance with the terms of this Guaranty, or to be held as collateral for
any Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) the Guarantor shall make payment to the
Administrative Agent or any Lender of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall be paid in full in cash and (iii) the
Termination Date shall have occurred, the Administrative Agent and the Lenders
will, at the Guarantor's request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor of
an interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.

                                  ARTICLE VIII

                            THE ADMINISTRATIVE AGENT

      SECTION 8.01 Authorization and Action. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as Administrative Agent
on its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Administrative Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders
and such instructions shall be binding upon all Lenders and all holders of
Notes; provided, however, that the Administrative Agent shall not be required to
take any action that exposes the Administrative Agent to personal liability or
that is contrary to this Agreement or applicable law. The Administrative Agent
agrees to give to each Lender prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.

      SECTION 8.02 Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken

<PAGE>

by it or them under or in connection with this Agreement, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Administrative Agent: (i) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iii) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower except as
specifically set forth in this Agreement; (iv) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (v) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram or telex) believed
by it to be genuine and signed or sent by the proper party or parties.

      SECTION 8.03 BBVAPR and Affiliates. With respect to its Commitment, the
Advances made by it and the Note or Notes issued to it, BBVAPR shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Administrative Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include BBVAPR in its
individual capacity. BBVAPR and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any of its Subsidiaries, all as if BBVAPR were
not the Administrative Agent and without any duty to account therefor to the
Lenders.

      SECTION 8.04 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements referred to in Section 4.01(e) and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

      SECTION 8.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of the Term Credit Advances owed
each of them (or if no Term Credit Advances are at the time outstanding, ratably
according to their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Administrative Agent under this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower.

      SECTION 8.06 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower and may be removed at any time

<PAGE>

with or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right to appoint a successor
Administrative Agent which, so long as no Default shall have occurred and be
continuing, shall be subject to the Borrower's approval, which approval shall
not be unreasonably withheld. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof or the Commonwealth of Puerto Rico and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent, upon
appointment of such successor Administrative Agent, shall be discharged from its
duties and obligations under this Agreement. After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Article VIII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.

                                   ARTICLE IX

                                  MISCELLANEOUS

      SECTION 9.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement, the Notes or any other Loan Documents, nor consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Lenders, do any of the
following at any time: (i) waive any of the conditions specified in Article III,
(ii) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes or the Advances or the number of Lenders that
shall be required for the Lenders or any of them to take any action hereunder,
(iii) amend this Section 9.01, (iv) increase the Commitments of the Lenders or
subject the Lenders to any additional obligations, (v) reduce the principal of,
or interest on, the Notes, or any fees or other amounts payable hereunder, (vi)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, (vii) limit the liability
of any party under any Loan Document or (viii) modify the definition of the term
"Majority Lenders"; and provided, further, that no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Lenders required above to take such action, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document.

      SECTION 9.02 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication) and
mailed, telecopied or delivered by hand or by courier,

                  if to the Borrower, at

                  Telecomunicaciones de Puerto Rico, Inc.
                  1515 Roosevelt Avenue
                  12th Floor,
                  Guaynabo, Puerto Rico 00968

                  or

<PAGE>

                  P.O. Box 360998
                  San Juan, Puerto Rico 00936-0998,
                  Attention:  Adail Ortiz, Chief Financial Officer

                  Facsimile No: (787) 282-0958

                  with a copy to

                  Maria Elena de la Cruz
                  Treasurer
                  Telecomunicaciones de Puerto Rico, Inc.
                  1513 Roosevelt Avenue , 10th Floor
                  Guaynabo, Puerto Rico 00968
                  Facsimile No: (787) 783-2919

                  if to PRTC, at

                  Puerto Rico Telephone Company, Inc.
                  1515 Roosevelt Avenue, 12th Floor
                  Guaynabo, Puerto Rico 00968
                  or

                  P.O. Box 360998
                  San Juan, Puerto Rico 00936-0998,
                  Attention: Adail Ortiz, Chief Financial Officer
                  Facsimile No: (787) 282-0958

                  with a copy to

                  Maria Elena de la Cruz
                  Treasurer
                  Telecomunicaciones de Puerto Rico, Inc.
                  1513 Roosevelt Avenue, 10th Floor
                  Guaynabo, Puerto Rico 00968
                  Facsimile No: (787) 783-2919

if to any Lender, at its Applicable Lending Office specified opposite its name
on Schedule I hereto; and if to the Administrative Agent, at its address at PO
Box 364745, San Juan, Puerto Rico 00936-4745, Attention: Executive Vice
President, Corporate Banking Division, (Fax No. (787) 777-2217) or, as to any
Loan Party or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed or telecopied, be effective when deposited
in the first class mails or, in the case of international delivery, when
deposited with mails or couriers that deliver within two Business Days or
telecopied, provided that notices and communications to the Administrative Agent
pursuant to Article II, III or VIII shall not be effective until received by the
Administrative Agent, and provided, further, that notices and communications to
any Person required to be provided hereunder within five Business Days shall
only be made by hand or via telecopy or courier. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.

<PAGE>

      SECTION 9.03 No Waiver; Remedies. No failure on the part of any Lender or
the Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

      SECTION 9.04 Costs and Expenses. (a) The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent and
the Lenders in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, the Notes and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Administrative Agent; provided
that such costs and expenses shall not in the aggregate be in excess of $15,000.
The Borrower further agrees to pay on demand all costs and expenses of the
Administrative Agent and the Lenders, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, reasonable fees and expenses of counsel for the
Administrative Agent and each Lender in connection with the enforcement of
rights under this Section 9.04(a).

      The Borrower agrees to indemnify and hold harmless the Administrative
Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of, or in connection with
the preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or (ii) the actual or alleged presence of Hazardous
Materials on any property of the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any other Person or any Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense (A) is found by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct, (B) arises
from disputes among two or more Lenders (but not including any such dispute that
involves a Lender to the extent such Lender is acting in any different capacity
(i.e., Administrative Agent or Arranger) under the Credit Agreement or the Notes
or to the extent that it involves the Administrative Agent's syndication
activities) or (C) arises from or relates to a breach by such Indemnified Party
of its obligations under this Agreement. The Borrower also agrees not to assert
any claim against the Administrative Agent, any Lender, any of their Affiliates,
or any of their respective directors, officers, employees, attorneys and agents,
on any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Notes, this Agreement, any
of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances.

            (b) If any payment of principal of, or Conversion of, any LIBOR Rate
Advance is made by the Borrower to or for the account of a Lender other than on
the last day of the Interest Period for such Advance, as a result of a payment,
prepayment or Conversion pursuant to this Agreement or acceleration of the
maturity of the Notes pursuant to Section 6.01, the Borrower shall, upon demand
by such Lender (with a copy of such demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.

<PAGE>

            (c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.12 and 9.04 shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the Notes.

      SECTION 9.05 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the credit or the
account of any Loan Party against any and all of the obligations of such Loan
Party now or hereafter existing under this Agreement and the Note held by such
Lender, whether or not such Lender shall have made any demand under this
Agreement or such Note and although such obligations may be unmatured. Each
Lender agrees promptly to notify the applicable Loan Party after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
and its Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender and its Affiliates may have.

      SECTION 9.06 Binding Effect. This Agreement shall become effective (other
than Section 2.01, which shall only become effective upon satisfaction of the
conditions precedent set forth in Section 3.01) when it shall have been executed
by each Loan Party, the Administrative Agent and by each initial Lender and
thereafter shall be binding upon and inure to the benefit of each Loan Party,
the Administrative Agent and each Lender and their respective successors and
assigns, except that no Loan Party shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Majority Lenders.

      SECTION 9.07 Assignments and Participations. (a) Each Lender may, with the
consent of the Administrative Agent (except as provided in (f) below) and, so
long as no Default has occurred and is continuing, the Borrower (such consent,
in the case of the Administrative Agent or the Borrower, not to be unreasonably
withheld) or if demanded by the Borrower (i) following a request for a payment
to or on behalf of such Lender under Section 2.10 or Section 2.13 or a notice
given by such Lender pursuant to Section 2.11 or (ii) following a Withholding
Tax Change affecting payments to such Lender, upon at least ten Business Day's
notice to such Lender and the Administrative Agent, will, assign to one or more
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances, the Note or Notes held by it and the remaining Loan Documents);
provided, however, that (i) the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance (as hereinafter defined) with respect to such
assignment) shall in no event be less than $1,000,000 (unless such lesser amount
is the entire amount of such assigning Lender's Commitment or outstanding
Advances) and shall be an integral multiple of $100,000, (ii) each such
assignment shall be to an Eligible Assignee or to an Affiliate of the assignor,
and (iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, an Assignment and Acceptance, together with any Note or
Notes subject to such assignment and a processing fee of $2,500.00. Upon such
execution, delivery and acceptance, from and after the effective date specified
in each Assignment and Acceptance, the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and the Lender assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

<PAGE>

            (b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any Loan
Party or the performance or observance by any Loan Party of any of their
respective obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01(e) and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.

            (c) Upon its receipt of an Assignment and Acceptance in
substantially the form of Exhibit E hereto (the "Assignment and Acceptance")
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with any Note or Notes subject to such assignment,
the Administrative Agent shall, if such Assignment and Acceptance has been duly
completed, (i) accept such Assignment and Acceptance and (ii) give prompt notice
thereof to the Borrower. Within five (5) Business Days after its receipt of such
notice, the Borrower, at their own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note or Notes, a new Note
or new Notes to the order of such Eligible Assignee in an amount equal to the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, a new Note or new Notes to
the order of the assigning Lender in an amount equal to the Commitment(s)
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and shall
otherwise be in substantially the form of Exhibit A.

            (d) Each Lender may sell participations to one or more banks or
other entities (other than the Borrower or any of its Affiliates) in or to all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing to it
and the Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement and (iv) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (v)
no participant under any such participation shall have any right to approve any
amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except that a Lender may
agree with a participant as to the manner in which the Lender shall exercise the
Lender's rights to approve any amendment, waiver or consent to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or postpone any date fixed for any

<PAGE>

payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.

            (e) Any Lender may at any time, without the consent of the
Administrative Agent or the Borrower, create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System, provided, however, that no such assignment shall have
the effect of increasing the costs payable by the Borrower.

            (f) Any Lender may at any time, without the consent of, but with
notice to the Administrative Agent, assign all or part of its rights on
obligations under this Agreement to any Affiliate of such Lender, provided,
however, that no such assignment shall have the effect of increasing the costs
payable by the Borrower.

      SECTION 9.08 Nondisclosure. None of the Administrative Agent, any Lender
or any Affiliate thereof shall disclose without the prior consent of the
Borrower (other than to the Administrative Agent, the other Lender or any such
Affiliate, their respective directors, employees, auditors, affiliates or
counsel who shall agree to be bound by the terms of this provision) any
information with respect to the Loan Parties or any Subsidiary thereof contained
in financial statements, projections or reports provided to the Administrative
Agent, any Lender or any Affiliate thereof by, or on behalf of, the Loan Parties
or any Subsidiary, provided that the Administrative Agent, any Lender or any
Affiliate thereof may disclose any such information (a) as has become generally
available to the public in a manner, or through actions, which do not violate
the terms of this Section 9.08, (b) to, or as may be required or appropriate in
any report, statement or testimony submitted to, any municipal, state or federal
regulatory body having or claiming to have jurisdiction over the Administrative
Agent, any Lender or any Affiliate thereof or to the Federal Reserve Board or
the Federal Deposit Insurance Corporation or similar organizations (whether in
the United States or elsewhere) or their successors, (c) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to the Administrative Agent, any Lender or any Affiliate thereof and
(e) to a prospective assignee and/or participant in the amounts outstanding
hereunder or under the Advances, provided, however, that such prospective
assignee and/or participant executes an agreement containing provisions
substantially identical to those contained in this Section 9.08 and which shall
by its terms inure to the benefit of the Borrower and provided, further, that to
the extent practicable, the Administrative Agent, each Lender and their
respective Affiliates shall use reasonable best efforts to provide prior written
notice of such disclosure to the Borrower.

      SECTION 9.09 Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the Commonwealth of Puerto
Rico.

      SECTION 9.10 Jurisdiction, Etc. Each of the Loan Parties hereby agrees
that any suit, action or proceeding with respect to this Agreement or the Notes,
the other Loan Documents or any other document executed hereunder to which it is
a party or any judgment entered by any court in respect thereof may be brought
in the United States District Court for the District of Puerto Rico or in the
Court of First Instance of Puerto Rico sitting in San Juan, as the party
commencing such suit, action or proceeding may elect in its sole discretion; and
each party hereto hereby irrevocably submits to the non-exclusive jurisdiction
of such court for the purpose of any such suit, action, proceeding or judgment.
Each party hereto further submits, for the purpose of any such suit, action,
proceeding or judgment brought or rendered against it, to the appropriate courts
of the jurisdiction of its domicile.

            (a) Each of the Loan Parties hereby irrevocably consents to the
service of process in any suit, action or proceeding in such courts by the
mailing thereof by the Administrative Agent or any

<PAGE>

Lender by registered or certified mail, postage prepaid, at its address set
forth beneath its signature hereto. Nothing herein shall in any way be deemed to
limit the ability of the Administrative Agent or any Lender to serve any such
writs, process or summonses in any other manner permitted by applicable law or
to obtain jurisdiction over the Loan Parties in such other jurisdictions, and in
such manner, as may be permitted by applicable law.

            (b) Each of the Loan Parties hereby irrevocably waives any objection
that it may now or hereafter have to the laying of the venue of any suit, action
or proceeding arising out of or relating to this Agreement, the Notes or any
document executed hereunder brought in any such court and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

      SECTION 9.11 Waiver of Jury Trial. Each of the Borrower, the Guarantor,
the Administrative Agent and the Lenders hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement, the
Notes or the other Loan Documents or the actions of the Administrative Agent or
any Lender in the negotiation, administration, performance or enforcement
thereof.

      SECTION 9.12 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

      IN WITNESS WHEREOF, the parties hereto have caused this Term Credit
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

<PAGE>

PUERTO RICO TELEPHONE             TELECOMUNICACIONES DE PUERTO

COMPANY, INC., as Guarantor       RICO, INC., as Borrower

By: _______________________       By: ____________________________
Name:  Cristina Lambert           Name:  Cristina Lambert
Title: President and Chief        Title: President and Chief
       Executive Officer                   Executive Officer

                                         BANCO BILBAO VIZCAYA
                                         ARGENTARIA PUERTO RICO, as Lender

                                         By: ____________________________
                                         Name:  Alberto Nido Colon
                                         Title: Senior Executive Vice President

                                         By: ____________________________
                                         Name:  Helen Pardo
                                         Title: Senior Vice  President

                                         BANCO BILBAO VIZCAYA

                                         ARGENTARIA  PUERTO RICO,
                                         as Administrative Agent

                                         By: ____________________________
                                         Name:  Alberto Nido Colon
                                         Title: Senior Executive Vice President

                                         By: ____________________________
                                         Name:  Helen Pardo
                                         Title: Senior Vice President

<PAGE>

<TABLE>
<CAPTION>
      COMMITMENT                                 LENDER
-----------------------                  ----------------------
<S>                                      <C>
        $30,000,000.00                   Banco Bilbao Vizcaya

TOTAL:  $30,000,000.00                   Argentaria Puerto Rico
</TABLE>

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