SECOND AMENDMENT
TO THE
COOPERATION AND SUPPORT AGREEMENT
BETWEEN
TELECOM ITALIA S.p.A.
AND
TIM CELULAR S.A.,
TIM NORDESTE S.A.
AND
TIM PARTICIPAÇÕES S.A.
SECOND AMENDMENT
TO THE COOPERATION AND SUPPORT AGREEMENT
This second amendment to the Cooperation and Support Agreement (the “Second Amendment”) is made this 22nd day of April 2009 by and between:
Telecom Italia S.p.A., an Italian corporation, with its head office located in the City of Milan, at Piazza Affari 2, 20123, registered with the Italian Register of Companies under number 00488410010 (hereinafter referred to as “TI”),
and
Tim Celular S.A., a corporation organized under the laws of the Federative Republic of Brazil, with its head office located in the City of São Paulo, State of São Paulo, at Avenida Giovanni Gronchi, n° 7143, Brazil, registered with the National Register of Legal Entities (C.N.P.J.) under number 04.206.050/0001-80, (hereinafter referred to as “Tim Celular”); and Tim Nordeste S.A., a corporation organized under the laws of the Federative Republic of Brazil, with its head office located the City of Jaboatão dos Guararapes, State of Pernambuco, at Av. Ayrton Senna da Silva, n° 1.633, Brazil, registered with the National Register of Legal Entities (C.N.P.J.) under number 01.009.686/0001-44, (hereinafter referred to as “Tim Nordeste”, and together with Tim Celular sometimes individually referred to as “Company” and jointly referred to as the “Companies”),
and, as intervening party,
Tim Participações S.A., a corporation organized under the laws of the Federative Republic of Brazil with its head office located in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Americas, n° 3434, 7th floor, Brazil, registered with the National Register of Legal Entities – C.N.P.J. under number .558.115/0001-21, (“Tim Part”);
TI, TIM Celular and TIM Nordeste shall each individually be referred to as a “Party” and collectively be referred to as the “Parties”.
WHEREAS the Parties, as of the 30th of May 2007 executed the Cooperation and Support Agreement (the “Agreement”) for the provision of different kind of services and/or the granting of software licenses by TI to TIM Celular and TIM Nordeste, in the areas of Network, Information Technology and Marketing and Sales;
WHEREAS on 8th April 2008 the Parties entered into First Amendment to the Cooperation and Support Agreement (“First Amendment”) whereby they agreed upon to extend the Initial Term of the Agreement from 3rd January 2008
to 2nd January 2009 and determined a Road Map for year 2008 along with a Project Price Cap for 2008;
WHEREAS according to the First Amendment, the Term of the Agreement expired on the 2nd of January 2009 and the Companies are now willing to avail of TI’s support and expertise also for year 2009 continuing in being provided by TI with services support and license in some core areas of the telecommunication business also beyond the above mentioned expiration date, by further extending the term of the Agreement for an additional twelve months period;
WHEREAS the further extension of the Term of the Agreement contemplated herein has been duly authorised by each Party’s corporate bodies and competent officers, in compliance with the best corporate governance rules and practice to them applicable
NOW, THEREFORE, the Parties hereto, in consideration of the foregoing premises which form an integral and substantial part of this instrument, agreed to execute this Second Amendment to the Cooperation and Support Agreement under the following terms and conditions.
1. Definitions and Interpretation.
| 1.1 | The definitions contained in the Agreement and its Annexes shall apply to this Second Amendment (except where any term is specifically defined herein or the context otherwise requires). |
| 1.2 | This Second Amendment modifies the Agreement according to the terms and conditions set forth below. Except as expressly provided in this Second Amendment, no other term or condition set forth in the Agreement and its Annexes is modified by this Second Amendment, and nothing contained herein unless expressly provided to the contrary shall be deemed to be or constitute an amendment, modification, extension, supplement or novation of the Agreement and its Annexes. |
| 1.3. | Each reference in the Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Agreement, shall mean and be a reference to the Agreement as amended pursuant to this Second Amendment. |
2. Amendment to the Agreement.
| 2.1 | Extension of the Initial Term of the Agreement. The Parties hereby agree to extend the Term of the Agreement, which expired upon the 2nd of January 2009, by establishing that the Agreement shall continue in full force and effect from the 3rd of January 2009 until the 2nd of January 2010 (“the Extended Term”). |
| 2.2 | Project Price Cap for 2009. The Parties agree to amend sub-section 5.1 of the Agreement setting forth that, during the Extended Term as provided herein the Projects to be agreed upon between the Parties in connection with the Agreement shall not exceed the total amount of €9.500.000,00 (nine million five hundred thousand Euros) (“Projects’ Price Cap for 2009”). |
| 2.3 | Road Map 2009. Prior to the execution of this Second Amendment, the Companies and TIM Part have been provided by TI with a new Road Map which relates to year 2009, aiming at allowing the identification and evaluation of the possible Projects that the Companies may elect to pursue during the Extended Term provided herein. Such new Road Map for year 2009, has been further implemented in consultation between TI and the |
| | Companies and by the execution of this Second Amendment it is finally agreed between the Parties in the version which is enclosed hereto as Annex I (“Road Map 2009”). The Road Map 2009 will be used for the purposes set out in Section 3.1.1 of the Agreement. |
| 2.4 | For the Extended Term agreed herein, each reference in the Agreement to the terms “Project Price Cap”, “Road Map”, “Term” and “Annex VII”, shall be intended as a reference made to “Project Price Cap 2009”, “Road Map 2009”, “Extended Term” and “Annex I” respectively, as defined in this Second Amendment |
| 2.5 | The Parties acknowledge and agree that, for all that is not expressly provided in this Second Amendment to the contrary, the provisions contained in the Agreement shall apply. |
This Second Amendment shall be governed by the laws of Italy. The provisions of Section 10 of the Agreement shall apply to this Amendment and are incorporated herein by reference, mutatis mutandis.
| /s/ Franco Bernabè | | |
Telecom Italia S.p.A. By: Franco Bernabè Title: Chief Executive Officer | | |
| /s/ Beniamino Bimonte | | /s/ Claudio Zezza |
TIM Celular S.A. By: Beniamino Bimonte Title: Diretor | | Claudio Zezza Diretor de Administraçăo Finanças e Controle |
| /s/ Beniamino Bimonte | | /s/ Claudio Zezza |
TIM Nordeste S.A. By: Beniamino Bimonte Title: Diretor | | Claudio Zezza Diretor de Administraçăo Finanças e Controle |
| /s/ Beniamino Bimonte | | /s/ Claudio Zezza |
Tim Participações S.A. . By: Beniamino Bimonte Title: Diretor | | Claudio Zezza Diretor de Administraçăo Finanças e Controle |
I undersigned Dr. Maria Bellezza, a Notary Public in Milan, Italy, do hereby certify that this document was signed by Mr. Franco Bernabè, born in Vipiteno (BZ), on September 18th 1948, resident in Milan, Piazza degli Affari n. 2, to act in his capacity of Managing Director on behalf of the Company TELECOM ITALIA s.p.a. with head office in Milan, Piazza degli Affari n.2, registered at the Register of Enterprises of Milan under n. 00488410010.
Milan, Italy, April, 22, 2009
SECOND AMENDMENT
TO THE COOPERATION AND SUPPORT AGREEMENT
ANNEX I
ROADMAP 2009
Cooperation and Support Agreement Telecom Italia – Brazilian Companies:
Roadmap of Marketing, Sales, International
Applications, and Global Network Projects in 2009
February 2009
final version
Breakdown of Cooperation and Support Agreement 2009
| AREA | PRICE (euro) |
| MARKETING | 350.035 |
| SALES | 350.070 |
| INFORMATION TECHNOLOGY | 5.012.000 |
| NETWORK | 4.800.115 |
| TOTAL PRICE OF PROJECTS | 10.512.220 |
| AVERAGE DISCOUNT % | 10% |
| PRICE CAP IN COOPERATION & SUPPORT AGREEMENT 2009 | 9.500.000 |
Marketing – Projects 2009 Brazil (1/2)
| Project | | Benefit | Timing | Price (euro) |
| New Consumer Postpaid Portfolio and Prepaid Approach | Support TIM Brasil in the development of a new postpaid offer portfolio aimed at regaining competitive advantage and leadership. Support TIM Brasil in redefining the portfolio approach, the portfolio and plan/promo mix with the aim of maximizing margins reducing dependence on promotion for the post paid. | > Increase postpaid MKT share > New positioning on segments: - High Value - Young > Increase revenues > Increase Prepaid MARPU | January-December 2009 | 100.065 |
| Reassessment of CRM Model and New Loyalty Strategy | Support TIM Brasil in renewing the CRM Model and defining a new Loyalty strategy with the aim of reducing the current churn rate: (i) New cross/upselling policies and strategies (ii) Assement and enhancement of customer profiling | > Churn reduction on high value segments > Increase ARPU | January-December 2009 | 49.945 |
| Number Portability | Support TIM Brasil with benchmarking and case studies to help TIM in developing attractive win-back and retention approach for NP strategy. | > Accelerate TIM Brasil’s learning on effectiveness of new initiatives. > Churn reduction on high value segments | January-December 2009 | 50.050 |
Telecom Italia – Confidential
Marketing – Projects 2009 Brazil (2/2)
| Project | | Benefit | Timing | Price (euro) |
| VAS Development | Support TIM Brasil in the analysis and repositioning of SMS pricing and promo versus voice services and other email and messaging services (MMS, IM) with the aim of increasing SMS attractiveness Support TIM Brasil in the ongoing enhancement of Data offer portfolio Share TI’s best practices and know-how on Mobile Portal evolution and Third Parties management | > Increase SMS usage and penetration > Optimize cannibalization between msg services > Speed up mobile BB usage and penetration > Develop Content market > Increase revenues | January-December 2009 | 50.330 |
| VAS Positioning & Innovation | Share TI’s know-how and facilitate innovation in TIM Brasil with a particular focus on: (i) Shared Partners Agreements (ii) Handset & SIM best practice (iii) Service trials (iv) Platform and Process Requirements | > Increase TIM Brasil positioning as Innovator > Help TIM Brasil to develop business partnership | January-December 2009 | 49.665 |
| New Business Portfolio | Support TIM Brasil in identifying a new competitive offer portfolio with a market segmentation approach and help reduce negative and low margin customer base | > Increase Market Share > Increase Revenues | January-December 2009 | 49.980 |
Telecom Italia – Confidential
Sales – Projects 2009 Brazil (1/2)
| Project | | Benefit | Timing | Price (euro) |
| Business Channel | Support TIM Brasil in the management of the business sales channel, in terms of definition of commercial policies and channel development: (i) SME segmentation and commissioning methods (ii) Soho segment sales channel strategy (iii) Portfolio Management (iv) Reduce agent channel turn over (v) Top client (macro-conta) (VI) Multichannel approach | > Boost TBP performance through a performance based commissioning model and a segmentation model. > Implement specific sales strategy for the SOHO segment in order to increase the market share in the addressed segment > Support the implementation of the portfolio management through the indirect sales channel in order to increase the satisfaction of valuable customer and reduce the churn rate. > Reduce current agent turnover in order to approach the SME valuable customers with more motivated and efficient sales force. | January-December 2009 | 70.630 |
| Consumer Commissioning and Segmentation | Support TIM Brasil in the implementation and update of the segmentation and commissioning systems within the consumer sales channels. | > Increase channel productivity > Boost dealer performances in terms of overall sales, top of the range handsets and VAS sales and specifically enhance results on high end customer acquisition | January-December 2009 | 71.540 |
| Sales Development | Support TIM Brasil in the management of the 2009 events and in the development of the sales channel for the new organization and the commercialization of new products and services: (i) Full deployment of 3G development & Number Portability (ii) New convergent and Broadband products (iii) Management of multi-channel impact: balancing the different activities (selling, upselling, caring and post-sales among different channels | > Accelerate TIM Brasil’s learning curve on new market challenges hence improving time-to-market and effectiveness of new initiatives | January-December 2009 | 54.705 |
Telecom Italia – Confidential
Sales – Projects 2009 Brazil (2/2)
| Project | | Benefit | Timing | Price (euro) |
| Trade Marketing | Support TIM Brasil in the ongoing enhancement of the Points of Sales through Trade Marketing activities: Launch and development of the sales force community (mundo tim): training and promotion (i) Evolution of the channel image (below the line) (ii) Increase of the effectiveness of in-store animation | > Increase shop performance > Improve channel image | January-December 2009 | 69.790 |
| Handsets Management | Share Tl’s best practices and know-how on the ongoing development of the handset boost: (i) Consumer and Business portfolio segmentation (ii) Vendor management | > Increase handsets revenues > Increase attractiveness of TIM Brazil’s offer using handsets as a push for innovation. > Improve offer with effective portfolio segmentation | January-December 2009 | 83.405 |
Information Technology – Projects 2009 Brazil (1/3)
| | Project | Benefit | Timing | Price (euro) |
| > Interconnection Billing | > “SCTR”, is the TI software dedicated to interconnection billing. It performs sizing, pricing, discounting and accounting of the traffic exchanged between interconnected telecommunication companies, both for fixed and mobile networks. It has been in house developed and conceived to offer flexible solutions by using a technological platform aligned to the current market standards, in order to meet the growing interconnection needs. > New and/or improved functions shall be developed and implemented by TI (evolution); > TI will provide a Remote Support Group which will provide second level assistance to TIM Brasil and will be activated in case of s/w bugs, system crash, critical system performance problems, need of urgent changes in processing flow. | Corporate centralized solution to manage the Interconnection Billing business. Support the traffic size growth and the assurance of Interconnection revenue. Align SCTR Platform to improve the performances and to manage the basic configuration in a user-friendly environment. | Jan. - Dec. 2009 | 570.000 |
| > TDWH | > TDWH is the first level datawarehouse aimed to the management of any kind of rated traffic produced by the billing systems (OPSC, BSCS and SCTR). The system classifies all the TIM Brasil customers calls and organizes them in Analitical data model. The system is the main feeding source of several upper layer Business Intelligence Systems belonging to Tim Brasil (Customer Profiling, DW Unico, EIS, etc). > TI shall provide new releases in the course of 2009, incorporating a number of new functionalities (evolution); > In addition, maintenance and application management as well as remote support to operations shall also be provided. > Creation of a dedicated support team (Help Desk) to assist and support operations and monitoring of the system also in overtime | Allows the Marketing, VAS, Revenue Assurance and Long Distance Groups within the Company to obtain traffic information for all GSM clients in Brazil. | Jan. - Dec. 2009 | 880.000 |
| > Customer Profiling | > CP Latam is the TI software tool that dramatically improves the ability to understand customer trends, thereby improving marketing strategies. CP Latam gathers information on every contact a customer may have with its telecommunication operator, including phone calls, contact, letters, etc., creating a common view. By processing personal and traffic data, CP Latam elaborates behavioral and economic indicators to conduct decisional analysis. > TI shall provide new releases for CP LATAM in the course of 2009, incorporating a number of new functionalities (evolution); In addition, maintenance and application management as well as remote support to operations shall also be provided. | Allows the Marketing area to create Segmented Direct Marketing Actions; Allows the Marketing area to create Segmented Offers / Products. | Jan. - Dec. 2009 | 604.000 |
| > SISO | > SISO is the system dedicated to the management of info related to the sales of handsets, SIM cards and related services. > TI shall provide a new release for SISO in the course of 2009, incorporating a number of new functionalities (evolution); in addition, maintenance and application management as well as remote support to operations shall also be provided. | Allows the Sales area to make the necessary analysis involving all the Sell-in and Sell-out processes. | Jan. - Dec. 2009 | 186.000 |
Information Technology – Projects 2009 Brazil (2/3)
| | Project | Benefit | Timing | Price (euro) |
| Revenue Assurance Package | > The RAP System is a Revenue Assurance enabling platform. It is designed with a “best of breed” approach in order to be efficient and robust and allow a “fast track” implementation of the monitoring requirements. > It supports both the “classical RA Approach” (balancing and reject monitoring) and a more “transaction oriented” Revenue Assurance approach. > TI shall provide 4 new releases of RAP in the course of 2009, incorporating a number of new functionalities (evolution) and will provide the enhancements of the platform to take into account the new version of the operating system, DB and reporting tool. > TI will provide a Remote Support Group which will provide second level assistance to TIM Brasil and will be activated in case of s/w bugs, system crash, critical system performance problems, need of urgent chances in processing flow. | To answer Revenue Assurance and Billing areas demands through controls improvements in CDR process from mediation platform thru mediation, pre paid, post paid, interconnection and co-billing systems. Better information accuracy and performance improvement in the KPI analysis, due to the development of detailed and user-friendly reports, with comprehensive statistics data from different periods. | Jan. - Dec. 2009 | 900.000 |
| Traffic Data Collection CDR Archiving | > Cdr Archiving collects from the mediation systems and the clearing house ( TAP Traffic) the traffic data to store it, fulfilling the magistracy brazilian rules. > TI shall provide maintenance and application management as well as remote support to operations. | to maintain the system fully operational | Jan. - Dec. 2009 | 192.000 |
| Security - PCS Project | > Security is one of the most important issues to be faced by any IT department in a telecommunications Company. > Tim Brasil and Telecom Italia, in order to comply the Sarbanes Oxley Act, shall deploy an Identity and Access Management system that can efficiently support a Company cross functional process. In the year 2008, a number of functionalities shall be implemented and deployed in the PCS System. TIM Brasil is responsible for overall design and for the implementation of the necessary infrastructure whereas TI shall leverage software reusability in order to speed-up deployment. > Specifically, in its role as support group, TI shall package and support installation of the s/w kit, produce integration test plans, support integration tests and User Acceptance Tests, provide training and all necessary documentation. | Provide Automatisation and Control: Manage user identities and entitlements, authentication, authorization and accounting of the user accessing the majority of Tim Brasil applications Trace the management activities of the user credentials (user id and password) and entitlements (SAP); Trace the user accesses to the applications ‘PCS connected’. | Jan. - Dec. 2009 | 900.000 |
Information Technology - Projects 2009 Brazil (3/3)
| | Project | Benefit | Timing | Price (euro) |
| > Mobile Advertising Platform Evolution: | > The application which supports Mobile Campaign Service, Opt-in (customer permission to receive advertising) and TimSpot service shall be improved and enhanced based on TIM Brasil requirements (evolutive maintenance) | Possibility to launch new VAS products with reduced time to market | Jan.-Dec. 2009 | 200.000 |
| > IT Network Technical support | The Technical Consulting is focused on: > ITnet Backbone evolution toward the MPLS technology > Upgrade of the Data Centre of Santo André > Internet POP in Santo André > Technology transfer about MPLS IT Networks > Interdata Center Links Upgrade > Network and traffic analysis | Technological update of network infrastructure; Guarantee the quality and efficiency of network architecture. | Jan.-Dec. 2009 | 160.000 |
| > IT Alarm audit and System mgt for PCS | Delivery of an alarm audit system for PCS > realtime monitoring of abnormal accesses > alarms with several levels of severity (Fatal, Critical, Minor, Warning, Harmless) > monitoring of administrators activity > alarms correlation and display | Ad hoc monitoring of different applications | Jan.-Dec. 2009 | 420.000 |
| TOTAL INFORMATION TECHNOLOGY | 5.012.000 |
Network – Projects 2009 Brazil (1/2)
| Project | Benefits | Timing | Price (euro) |
| Consulting | | | |
| CN CS 2G/3G evolution and optimization | To optimise Capex and Opex by applying a common TI group technology strategy evolution. | January - December 2009 | 42.347 |
| CN PS 2G/3G evolution | New service implementation and to optimise Capex and Opex by applying a common TI group technology strategy evolution. | January - December 2009 | 56.826 |
| IN Services evolution | Support Tim Brasil to develop a network solution to allow IN Trigger multiplatform | January - December 2009 | 41.958 |
| 2G/3G RAN (Radio Access Network) development and optimization support | 2G and 3G RAN parameter fine tuning local and remote support; RAN resources dimensioning and optimization; RAN designing and optimization process review support; RAN quality assessment and quality improvement processes review; Training courses on specific TIM Brasil needs and on TI proposals; Technical support for testing and trials. | January - December 2009 | 358.785 |
| Guitar Data Base Customization | to make TIM BRASIL radio data base compatible to GUITAR | January - December 2009 | 25.372 |
| WiMax technical scouting | know how transfer on WiMax technology; scenario analysis support for WiMax introduction; network solution selection and testing support | January - September 2009 | 37.678 |
| NETEP | Sharing TI own technological scouting process and dimensioning tools for network evolution analysis. | January - December 2009 | 327.635 |
| ESB/SOA | Definition of Flexible Service architecture and best practices. | January - June 2009 | 46.748 |
| Revenue e TTA | Revenue assurance. | January - June 2009 | 46.748 |
| Process Assessment & Review | Vas Quality Assurance - Change Management – Fault Management | January - December 2009 | 137.564 |
| ESM | OSS architecture optimization | January - June 2009 | 27.852 |
| Smart Platform based services | supporto Bella definizione e implementazione dei processi di OM relativi alla Smart Platform | January - December 2009 | 34.580 |
| PVV One backbone | Architecture review, OPEX Reduction | January - December 2009 | 230.230 |
| Supporto alla progettazione low-level design IpBB | Architecture optimization, OPEX Reduction | January - December 2009 | 89.688 |
| Supporto evoluzione architetturale Soft Switch Italtel | Architecture review, Service quality | January - December 2009 | 30.272 |
| PVV Metro Network | Transport network quality | January - December 2009 | 43.873 |
| Service Application Class 5 Based | New service implementation and to optimise Capex and Opex by applying a common TI group technology strategy evolution. | January - December 2009 | 29.033 |
| Integrated Device Management | IDM architecture evolution and best practices | January - June 2009 | 27.852 |
| Support to Metro Network new services integration | New service implementation and to optimise Capex and Opex by applying a common TI group technology strategy evolution. | January - December 2009 | 25.935 |
| Project | Benefits | Timing | Price (euro) |
| plug & play | | | |
| SG-VAS | Services and quality architecture improvement | February – December 2009 | 137.088 |
| Sistemi Sicurezza Rete | Network security improvement | February – December 2009 | 178.368 |
| TAS | Services and quality architectural improvement | February – December 2009 | 186.816 |
| [ILLEGIBLE] | [ILLEGIBLE] | February – December 2009 | 19.188 |
Network – Projects 2009 Brazil (2/2)
| Project | Benefits | Timing | Price (euro) |
| Outsourcing & Other Services | | | |
| Guitar 2G/3G - Licence Renewal | Exploiting TI own radio planning tool. | January - December 2009 | 120.000 |
| Erato-Licence Renewal | to optimize radio channels dimensioning process and increase efficiency. | January - December 2009 | 25.000 |
| I-box2009 license fee | Reducing Time to Market for VAS launch. | January - December 2009 | 105.000 |
| TGDS - 2009 license fee (Easy Config - 6 mesi, EIR/IMEI manager, Traffic steering, La sai Chiama ora) | Allowing operator to improve time to market in launching of new VAS through a multiservice platform (in tim brasil network) | January - December 2009 | 154.370 |
| DBR 2009 evolution maintenance | To continue to use the actual sistem according to network evolution (new Network Element SW/HW release) | February - December 2009 | 222.696 |
| IRMA 2009 evolution maintenance | To continue to use the actual sistem according to network evolution (new Network Element SW/HW release) | February - December 2009 | 183.776 |
| i-NMS 2009 evolution maintenance (mandatory evolution) | To continue to use the actual sistem according to network evolution | February - December 2009 | 309.576 |
| Operation and Maintenance Support for IBOX – Outsourcing | Skilled Support for O&M Activity | January - December 2009 | 630.000 |
| Operation and Maintenance Support for TGDS - Easy Config, Traffic Steering, EIR, Lo Sai/Chiama Ora | Skilled Support for O&M Activity | January - December 2009 | 223.625 |
| Development of network planning tools | Support to the network dimensioning: Improvement of budget process and definition. Updating of related tools according to network evolution (e.g. 3G, WiMax, ) | January - December 2009 | 118.550 |
| Technical Support to the development of network planning tools | Technical support (models & algorithms definition, ...) – know how transfer - Training on the job | January - December 2009 | 39.878 |
| SQM | Customization services for VAS (SMS e MMS) | February - December 2009 | 109.000 |
| SMOP | Customization services | February - December 2009 | 113.816 |
| ANTS | Customization services | February - December 2009 | 113.816 |
| SANS | Customization services and Evolution Maintenance | February - December 2009 | 148.576 |
| | | | |
| TOTAL INFORMATION TECHNOLOGY | 4.800.115 |
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