Document:

ex4_16.htm

     

    Exhibit
      4.16

    
 

    
      	
               

            	
              Summary
                of the Agreements entered by
                Axtel

            

    

    
      	
               

            	
              In
                connection with the acquisition of the Avantel
                Companies.

            

    

    

    

    
      	
              1.

            	
              Master
                Agreement.

            

    

    

    Axtel,
      S.A.B. de C.V. (“Axtel”) and Banco Nacional de México, S.A.,
Integrante del Grupo Financiero Banamex (“Banamex”)
      entered into a Mater Agreement dated November 27, 2006, which established the
      terms and conditions for the sale of substantially all of the assets of Avantel
      Infraestructura, S. de R.L. de C.V. and the sale of the 100% of the partnership
      interest in Avantel Infraestructura, S. de R.L. de C.V. and Avantel, S. de
      R.L.
      de C.V. (the “Transaction”).  Such Master Agreement
      was subject to the following terms and conditions:

    

    
      	
              Purpose:

            	
              Establish
                the terms and conditions for the sale of substantially all of the
                assets
                of Avantel Infraestructura, S. de R.L. de C.V. and the sale of the
                100% of
                the Partnership Interest in Avantel Infraestructura, S. de R.L. de
                C.V.
                and Avantel, S. de R.L. de C.V. (the
                “Transaction”), including the following terms
                applicable to this Transaction:

            

    

    

    
      	
              (i)  

            	
              Affirmative
                and Negative Covenants;

            

    

    
      	
              (ii)  

            	
              Representations,
                Warranties and Indemnification;

            

    

    
      	
              (iii)  

            	
              Special
                Due Diligence & Price Adjustment
                Mechanism;

            

    

    

     

    
      Affirmative
        and

    

    Negative
      Covenants:         
Banamex
      agreed and covenanted to:

    

    
      	
              -  

            	
              Provide
                to Axtel all the information required to carry on the
                Transaction;

            

    

    

    
      	
              -  

            	
              Make
                its best efforts to (i) continue operating the Avantel companies
                in a
                manner consistent with past practice, (ii) maintain its employees,
                directors, suppliers, sellers, outsourcers, advisors, (iii) maintain
                its
                corporate and accounting books in compliance with the Mexican Laws;
                (iv)
                maintain its assets at least in the current operational conditions;
                (v) to
                maintain its current insurance
                policies;

            

    

    

    
      	
              -  

            	
              Not
                sell, lease, transfer, assign, encumber or grant the use of the Assets
                of
                Avantel companies outside of the ordinary course of
                business;

            

    

    

    
      	
              -  

            	
              Not
                enter into transactions with its affiliates outside of the ordinary
                course
                of business;

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    
      	
              -  

            	
              Not
                amend the by-laws of the Avantel
                Companies;

            

    

    

    
      	
              -  

            	
              Not
                authorize reductions of capital stock of the Avantel
                Companies;

            

    

    

    Representations
      and

    Warranties:

    
      	
              -  

            	
              Banamex
                provided the following representations and
                warranties:

            

    

    

    
      	
              o  

            	
              Corporate
                power and authority to enter the Transaction
                Agreements;

            

    

    
      	
              o  

            	
              Corporate
                existence and good standing of the Avantel
                Companies;

            

    

    
      	
              o  

            	
              Compliance
                with the Corporate Books;

            

    

    
      	
              o  

            	
              Valid
                capital stocks for each Avantel
                Companies;

            

    

    
      	
              o  

            	
              No
                encumbrance over the shares and partnership interests of the Avantel
                Companies;

            

    

    
      	
              o  

            	
              No
                third party rights over the shares and partnership interests of the
                Avantel Companies;

            

    

    
      	
              o  

            	
              Compliance
                with governmental authorizations and
                concessions;

            

    

    
      	
              o  

            	
              Compliance
                of the financial statements and the accountable
                books;

            

    

    
      	
              o  

            	
              Compliance
                with tax obligations;

            

    

    
      	
              o  

            	
              Compliance
                with labor obligations;

            

    

    
      	
              o  

            	
              No
                material litigations and administrative
                proceedings;

            

    

    
      	
              o  

            	
              Relations
                with partners and shareholders;

            

    

    
      	
              o  

            	
              Ownership
                of properties and absence of liens;

            

    

    
      	
              o  

            	
              Compliance
                with intellectual property;

            

    

    
      	
              o  

            	
              Compliance
                with environmental laws;

            

    

    
      	
              o  

            	
              Corporate
                Approvals;

            

    

    
      	
              o  

            	
              Powers
                of Attorney;

            

    

    
      	
              o  

            	
              Ownership
                of Subsidiaries;

            

    

    

    

    
      	
               

            	
              Indemnification:

            

    

    
      	
               

            	
              -

            	
              The
                indemnity amount that Banamex is required to pay Axtel for any breach
                of
                such representations and warranties is capped at US$62,000,000.00,
                this
                cap shall not apply for third party claims regarding the ownership
                of the
                partnership interest sold to
                Axtel.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
              Special
                Due Diligence &

            

    

    
      	
               

            	
              Price
                Adjustment Mechanism:

            

    

    

    
      	
              -  

            	
              Axtel
                has the right to perform a special Due Diligence six months following
                the
                execution of the Master Agreement in order to validate the price
                paid by
                Axtel for the Transaction.

            

    

    
      	
              -  

            	
              If
                Axtel finds an element that affects the price paid for the Transaction,
                the Contract establishes a procedure for price
                adjustment.

            

    

    

     

    
      	
              
                Conditions

              

              Precedent:

            	
              The
                sale of assets was subject to the fulfillment of the following conditions
                precedent on or before December 29,
                2006:

            

    

    

    
      	
              -  

            	
              Acquisition
                approval by Axtel’s Shareholders.

            

    

    

    
      	
              -  

            	
              Authorization
                by the Transport and Communications Ministry of
                Mexico.

            

    

    

    
      	
              -  

            	
              Axtel
                obtaining the necessary funding
                commitments.

            

    

    

     

    
      	
            	
              
                Governing
                  Law

              

              and
                Jurisdiction:

            	
              The
                Contract shall be governed by, construed and interpreted in accordance
                with the laws of Mexico, and all disputes or controversies shall
                be
                settled solely in the courts of, the City of Monterrey, Nuevo
                Leon.

            

    

    

     

    
      	
              
                General
                  Terms and
Conditions:

            	
              In
                addition to the foregoing, the Contract included the following clauses:
                (i) Force Majuere, (ii) Notices and Communications (iii) Waivers,
                (iv)
                Amendments and Modifications, (v) Headings, (vi) Partial Invalidity
                and
                Severability, (vii) Confidentiality and (viii)
                Assignment.

            

    

    

    

    
      	
              2.-

            	
              Asset
                Purchase Agreement.

            

    

    

    Axtel,
      S.A.B. de C.V. (“Axtel”) as buyer and Avantel
      Infraestructura, S. de R.L. de C.V. (“Avantel
      Infraestructura”) as seller, entered into an Asset Purchase
      Agreement dated November 27, 2006 for the sale of the assets of Avantel
      Infraestructura. Such Asset Purchase Agreement was subject to the following
      terms and conditions:

    

    
      	
              Price:

            	
              US$475,000,000.00
                plus the respective Valued Added Tax for an amount of
                US$69,409,149.00;

            

    

    

    
      	
              Payment
                Terms:

            	
               

            

    

    
      	-
               	100%
              on Closing Date 

      	
              -  

            	
              the
                payment shall be made by wire
                transfer.

            

    

    
      	
              -  

            	
              the
                payment shall be made in US
                Dollars.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              -  

            	
              Avantel
                Infraestructura shall deliver the relevant invoices within three
                (3)
                business days after Closing Date, which shall comply with Mexican
                tax
                requirements.

            

    

    

    
      	
              Taxes:

            	
              Each
                Party shall be solely responsible for and pay all taxes, duties,
                levies
                and other charges imposed on them by applicable
                law.

            

    

    

    
      	
              Closing
                Date:

            	
              The
                Closing Date will be the date when all the conditions precedent will
                be
                fulfilled.

            

    

    

    
      	
               

            	
              The
                Conditions Precedent were fulfilled on December 4,
                2006.

            

    

    

     

    
      	
              
                Title
                  and Risk of
Loss:

            	
              The
                title and risk of loss of the Assets will pass to Axtel upon
                payment.

            

    

    

    Assets
      Delivery:             
Avantel
      Infraestructura will transfer (virtually) the possession of the assets upon
      Closing Date.

    

     

    
      	
              
                Conditions
Precedents:

            	
              The
                asset sale was subject to the fulfillment of the following conditions
                precedent on or before December 29,
                2006:

            

    

    

    
      	
              -  

            	
              Approval
                by Axtel’s Shareholders to acquire assets and capital stock of
                Avantel.

            

    

    

    
      	
              -  

            	
              Authorization
                by the Transport and Communications Ministry of
                Mexico.

            

    

    

    
      	
              -  

            	
              Axtel
                obtaining the necessary funding
                commitments.

            

    

    

    

    Representations
      and

    
      	
              Warranties:

            	
              The
                same as set forth in the Master
                Agreement.

            

    

    

    
      	
              Seller’s
                Liability:

            	
              Avantel
                Infraestructura’s partners assumed the liabilities of Avantel
                Infraestructura for the sale of the
                Assets.

            

    

    

     

    
      	
              
                Governing
                  Law
And Jurisdiction:

            	
              The
                Contract shall be governed by, construed and interpreted in accordance
                with the laws of Mexico, and all disputes or controversies shall
                be
                settled solely in the courts of, the City of Monterrey, Nuevo
                Leon.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

     

    
      	
              
                General
                  Terms and
Conditions:

            	
              In
                addition to the foregoing, the Contract included the following clauses:
                (i) Force Majuere, (ii) Notices and Communications (iii) Waivers,
                (iv)
                Amendments and Modifications, (v) Headings, (vi) Partial Invalidity
                and
                Severability, (vii) Confidentiality and (viii)
                Assignment.

            

    

    

    

    
      	
              3.-

            	
              Partnership
                Interest Purchase
                Agreement.

            

    

    

    Axtel,
      S.A.B. de C.V. (“Axtel”) and its subsidiary Impulsora e
      Inmobiliaria Regional, S.A. de C.V. (“Impulsora”) as buyers,
      and Banco Nacional de México, S.A. (“Banamex”) represented by
      Banco J.P. Morgan, S.A. as a trustee of Banamex, Nueva Promotora de Sistemas
      de
      Teleinformática, S.A. de C.V. (“Nueva Promotora”), and
      Telecomunicaciones Holding MX, S. de R.L. de C.V. (“Tel
      Holding”) as sellers, entered into a Partnership Interest Purchase
      Agreement dated November 27, 2006 regarding the sale of the 100% of their equity
      participation in Avantel Infraestructura, S. de R.L. de C.V. (“Avantel
      Infraestructura”) and Avantel, S. de R.L. de C.V. (“Avantel
      Concesionaria”) Such Partnership Interest Purchase Agreement was
      subject to the following terms and conditions:

    

    
      	
               

            	
              Partnership
                Interest

            

    

    
      	
               

            	
              Sold:

            

    

    

    (i)
      Banamex, Nueva Promotora and Tel Holding will sell to Axtel the following equity
      participation in Avantel Concesionaria:

    

    

    
      
        
          	
                  Partner

                	
                  Partnership
                    Interest Description

                	
                  Price
                    to be Paid by Axtel,

                  (In
                    Dollars)

                
	
                  Nueva
                    Promotora.

                	
                  1
                    Serie A

                	
                  $7,950,000.00

                
	
                  Nueva
                    Promotora

                	
                  1
                    Serie B

                	
                  $375,000.05

                
	
                  Tel
                    Holding

                	
                  1
                    Serie B

                	
                  1,500,000.00

                
	
                  Banamex

                	
                  1
                    Serie A

                	
                  $5,173,987.22

                
	 	
                  $14,998,987.27

                	 

        

      

    

     

    (ii)
      Banamex will sell to Impulsora the following equity participation in Avantel
      Concesionaria:

     

    

    

    
      
        	
                Partner

              	
                Partnership
                  Interest Description

              	
                Price
                  to be Paid by Impulsora,

                (In
                  Dollars)

              
	
                Banamex

              	
                1
                  Serie B

              	
                $1,012.73

              

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (iii)
      Banamex and Tel Holding will sell to Axtel the following equity participation
      in
      Avantel Infraestructura:

    

     

    

    
      
        	
                Partner

              	
                Partnership
                  Interest Description

              	
                Price
                  to be Paid by Axtel,

                (In
                  Dollars)

              
	
                Tel
                  Holding

              	
                1
                  Serie B

              	
                $202,310.19

              
	
                Tel
                  Holding

              	
                1
                  Serie A

              	
                $4,138,522.86

              
	
                Banamex

              	
                1
                  Serie B

              	
                $1,800,760.99

              
	
                Banamex,

              	
                1
                  Serie B

              	
                $9,798,205.66

              
	
                $15,939,799.69

              	 

      

    

     

    

     

    

     

    (iv)
      Banamex will sell to Impulsora the following equity participation in Avantel
      Infraestructura:

     

    

    
      
        	
                Partner

              	
                Partnership
                  Interest Description

              	
                Price
                  to be Paid 
by Impulsora,

                (In
                  Dollars)

              

      

    

     

    
      
        	
                Banamex

              	
                1
                  Serie

              	
                $200.31

              

      

    

     

    

     

    
      	
              Payment
                Terms:

            	
               

            

    

    
      	-
               	100%
              on the Closing Date 

      	
              -  

            	
              the
                payment shall be made by wire
                transfer.

            

    

    
      	
              -  

            	
              the
                payment shall be made in US
                Dollars.

            

    

    

    

    
      	
              Taxes:

            	
              Each
                Party shall be solely responsible for and pay all taxes, duties,
                levies
                and other charges imposed on them by applicable
                law.

            

    

    

    
      	
              Closing
                Date:

            	
              The
                Closing Date will be the date when all the conditions precedent will
                be
                fulfilled.

            

    

    

    
      	
               

            	
              The
                Conditions Precedent were fulfilled on December 4,
                2006.

            

    

    

     

    
      	
              
                Conditions
Precedent:

            	
              The
                sale of the partnership interest was subject to the fulfillment of
                the
                following conditions precedent on or before December 29,
                2006:

            

    

    

    
      	
              -  

            	
              Approval
                by Axtel’s Shareholders to acquire assets and capital stock of
                Avantel.

            

    

    

    
      	
              -  

            	
              Authorization
                by the Transport and Communications Ministry of
                Mexico.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              -  

            	
              Axtel
                obtaining the necessary funding
                commitments.

            

    

    

    
      	
              -  

            	
              Payment
                by Axtel to Avantel Infraestructura of the assets’ purchase price under
                the Assets Purchase Agreement.

            

    

    

    

     

    
      	
              
                Representations
                  &
Warranties:

            	
              The
                sellers represented to the buyers that they were the only holders
                of legal
                title of the Partnership Interest
                sold.

            

    

     

    
      Seller's

      Liability:               
        The
        seller’s liability is set forth in the Master Agreement.

    

     

    Governing
      Law

    And
      Jurisdiction: The
      Contract shall be governed by, construed and interpreted in accordance with
      the
      laws of Mexico, and all disputes or controversies shall be settled solely in
      the
      courts of, the City of Monterrey, Nuevo Leon.

    

    

     

    
      	
              
                General Terms
                  and
Conditions:

            	
              In
                addition to the foregoing, the Contract included the following clauses:
                (i) Force Majuere, (ii) Notices and Communications (iii) Waivers,
                (iv)
                Amendments and Modifications, (v) Headings, (vi) Partial Invalidity
                and
                Severability, (vii) Confidentiality and (viii)
                Assignment.

            

    

    

    
      	
              4.

            	
              Asset
                Purchase Agreement.

            

    

    

    Axtel,
      S.A.B. de C.V. (“Axtel”) as buyer and Avantel
      Infraestructura, S. de R.L. de C.V. (“Avantel
      Infraestructura”) as seller, entered into an Asset Purchase
      Agreement dated November 27, 2006 regarding the sale of the assets of Avantel
      Infraestructura. Such Asset Purchase Agreement was subject to the following
      terms and conditions:

    

    
      	
              Purchase
                Price:

            	
              US$9,618,795.00
                plus the respective Value Added Tax in an amount of
                US$1,442,819.00

            

    

    

    
      	
              Payment
                Terms:

            	
            

    

    
      	-
               	
              100%
                on Closing Date 

            

      	
              -  

            	
              the
                payment shall be made by wire
                transfer.

            

    

    
      	
              -  

            	
              the
                payment shall be made in US
                Dollars.

            

    

    
      	
              -  

            	
              The
                Seller shall deliver the relevant invoices within three (3) business
                days
                after Closing Date, which shall comply with Mexican tax
                requirements.

            

    

    

    
      	
              Taxes:

            	
                     
                Each Party shall be solely responsible for and pay all taxes, duties,
                levies and other charges imposed on them by applicable
                law.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Closing
                Date:

            	
              The
                closing date will be the date when all the conditions precedent will
                be
                fulfilled.

            

    

    

    
      	
               

            	
              The
                Conditions Precedent were fulfilled on December 4,
                2006.

            

    

    

     

    
      	
              
                Title
                  and Risk of
Loss:

            	
              The
                legal title and risk of loss of the Assets will pass to Axtel upon
                payment.

            

    

    

    Assets
      Delivery:             
The
      seller will transfer (virtually) to Axtel the possession of the assets upon
      Closing Date.

    

     

    
      	
              
                Conditions
                  Precents:

              

            	
              The
                asset sale was subject to the fulfillment of the following conditions
                precedent on or before December 29,
                2006:

            

    

    

    

    
      	
              -  

            	
              Approval
                by Axtel’s Shareholders to acquire assets and capital stock of
                Avantel.

            

    

    

    
      	
              -  

            	
              Authorization
                by the Transport and Communications Ministry of
                Mexico.

            

    

    

    
      	
              -  

            	
              Axtel
                obtaining the necessary funding
                commitments.

            

    

    

    

    Warranties:                                           The
      warranties of the Assets are set forth in the Master Agreement.

    

    
      	
              Seller’s
                Liability:

            	
              The
                partners of the seller in the Master Agreement assumed the liabilities
                of
                the Seller for the sale of the
                Assets.

            

    

    

     

    
      	
              
                Governing Law
And
                Jurisdiction:

            	
              The
                Contract shall be governed by, construed and interpreted in accordance
                with the laws of Mexico, and all disputes or controversies shall
                be
                settled solely in the courts of, the City of Monterrey, Nuevo
                Leon.

            

    

    

    

     

    
      	
              
                General
                  Terms and
Conditions:

            	
              In
                addition to the foregoing, the Contract included the following clauses:
                (i) Force Majuere, (ii) Notices and Communications (iii) Waivers,
                (iv)
                Amendments and Modifications, (v) Headings, (vi) Partial Invalidity
                and
                Severability, (vii) Confidentiality and (viii)
                Assignment.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              5.

            	
              Bridge
                Credit Agreement

            

    

    

    Axtel,
      S.A.B. de C.V. as Borrower, Avantel, S. De R.L. de C.V. and other subsidiaries
      of the Borrower as Guarantors, various Financial Institutions, as Lenders and
      Credit Suisse, Acting through its Cayman Islands Branch as the Administrative
      Agent, entered in the Bridge Credit Agreement dated as of November 30, 2006.
      By
      virtue of this Bridge Credit Agreement, Axtel financed part of the acquisition
      of all of the Capital Stock in Avantel, S. de R.L. de C.V. and substantially
      all
      of the assets and all of the Capital Stock of Avantel Infraestructura, S. de
      R.L. de C.V. The Bridge Credit Agreement is attached in the Exhibit
      4.18.

    

    6.      
               Term Loan Credit
      Agreement.

    

    Axtel,
      S.A.B. de C.V. as Borrower, Avantel, S. De R.L. de C.V. and other subsidiaries
      of the Borrower as Guarantors, various Financial Institutions, as
      Lenders,  Citibank, N.A. as the Administrative Agent and Banco
      Nacional de México, S.A. Integrante del Grupo Financiero Banamex, as the Peso
      Agent, entered in the Credit Agreement dated as of November 30, 2006. By virtue
      of this Credit Agreement, Axtel financed part of the acquisition of all of
      the
      Capital Stock in Avantel, S. de R.L. de C.V and substantially all of the assets
      and all of the Capital Stock of Avantel Infraestructura, S. de R.L. de C.V.
      The
      Credit Agreement is attached in the Exhibit 4.19.ex4_17.htm

     

    Exhibit
      4.17

    
 

    Summary
      of Telmex Agreements

     

    

    Below
      are
      summaries of the material agreements that Avantel has entered into with Telmex
      and Telnor:

    

    1. Long
      Distance Interconnection Agreements

     

    Avantel,
      S. de R.L. de C.V. (“Avantel”) entered into long distance
      interconnection agreements with Teléfónos de México, S.A. de C.V. (currently
      known as Teléfonos de México, S.A.B. de .C.V.) (“Telmex”) and
      Teléfonos del Noroeste, S.A. de C.V. (“Telnor”) as of October
      3, 1996. Currently, the interconnection fee paid by Avantel is US$ 0.00975
      per
      minute. These agreements provide for interconnection of the Telmex’ and Telnor’s
      local network with Avantel’s long distance network. Under this agreement both
      parties provide services for the interconnection of their end
      users.

    

    2.
      Agreement for 800 numbers access toll free service

    

    On
      May
      20, 1999, Avantel entered into an 800 number access services agreement with
      Telmex. Under this agreement Telmex provides access to Avantel’s 800 numbers in
      Telmex’s public phones providing Avantel’s end users access to this toll free
      service.

    

    3.
      Local Interconnection Agreement

     

    Avantel
      entered into an interconnection agreement with Telmex on December 20, 2000.
      This
      agreement includes provisions concerning local switched interconnection, local
      non-switched interconnection, signaling and local transiting, and provided
      for
      an interconnection rate of US$0.00975 per minute of origination and
      termination.  This interconnection agreement expired on September 15,
      2002, however, its terms and conditions (including the interconnection rate)
      was
      automatically extended after the expiration date until the parties mutually
      agree to execute a new interconnection agreement.  Certain commercial
      terms of this agreement are renegotiated on a yearly basis.

     

    Pursuant
      to such local interconnection agreement, we have established ‘‘bill and
      keep’’ agreements.  Under the ‘‘bill and keep’’
      agreements, if the imbalance between calls originated by Telmex and Telnor,
      and
      terminated by Avantel and calls originated by Avantel and terminated by such
      local carriers during a given month does not exceed a predetermined percentage,
      then no interconnection fees are payable by the net user of interconnection
      services. If the imbalances are in excess of the predetermined percentage,
      which
      currently is 5%, then the net user must pay all interconnection fees related
      to
      calls originated by it in that period.  The bill and keep agreements
      contain exceptions regarding internet traffic, long duration calls, traffic
      generated by call centers and traffic generated by new customers (for a six
      month period) so that these exceptions will not affect the calculation of the
      permitted imbalance percentage.  The prices and tariffs charged under
      this local interconnection agreement are denominated in U.S. dollars and then
      converted into Mexican pesos based on the monthly exchange rate published in
      the
      official Gazette by Banco de Mexico.

    

    4.
      Settlement Agreement.

    

    On
      December 26, 2000, Avantel entered into a settlement agreement with Telmex
      and
      Telnor in order to settle certain claims and agree on some pricing terms and
      conditions in connection the abovementioned agreements, as amended and restated
      by a First Amendment dated December, 19, 2001, as further amended by the Second
      Amendment, dated February 28, 2003, as further amended by the Third Amendment
      dated July 1, 2004, as further amended by the Fourth Amendment dated June 1,
      2005, and as further amended by the Fifth Amendment, dated October 1, 2006,
      which is currently in effect and provides the commercial and pricing conditions
      applicable for 2007 and 2008 with respect to the services described above and
      also includes the resale services:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Resale
      services

    

    Resale
      services in which Telmex terminates long distance calls in cities in which
      long
      distance carriers such as Avantel do not have sufficient facilities or
      infrastructure to interconnect and transport long distance traffic to local
      area
      locations known as “non-equal-access cities”. The resale services
      agreements provide that Telmex shall offer to all carriers the
      terms,  conditions and pricing for these services on a non-
      discriminatory basis.

    

    

    The
      Resale or Interurban Transport Service is also considered by the Cofetel as
      an
      interconnection service. Currently, the resale tariff charged by Telmex to
      Avantel is 0.75 cents of a Peso. Such rate applies to all other carriers that
      solicit resale services to Telmex.

    

    

    5.
      Capacity Lease Agreement

    

    On
      January 2, 2006, Avantel entered
      into a High Capacity Lease Agreement with Telmex and Telnor amended by a First
      Amendment dated October 1, 2006. Under this lease agreement, Telmex leases
      to
      Avantel on an exclusive basis certain high capacity bandwidths. This agreement
      has a term of five years following October 1, 2006 and Avantel is obliged to
      maintain such capacity without any downgrade during the five year
      period.

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