Exhibit 10.7
[LETTERHEAD OF ANATEL]
INSTRUMENT OF AUTHORIZATION PVCP/SPV NO. 014/2003 - ANATEL
INSTRUMENT OF AUTHORIZATION FOR THE USE OF RADIO FREQUENCY BLOCKS ENTERED
INTO BY AND BETWEEN AGENCIA NACIONAL DE TELECOMUNICACOES - ANATEL AND TNL
PCS S.A.
By this instrument, AGENCIA NACIONAL DE TELECOMUNICACOES (the National
Telecommunications Agency), hereinafter referred to as ANATEL, a FEDERAL
GOVERNMENT entity, in exercising the authority bestowed on it under article 19,
IX of Federal Law No. 9472 of July 16, 1997, together with article 194, II of
Anatel Internal Regulations, approved by Resolution No. 270 of July 19, 2001,
herein represented by its Private Service Superintendent, JARBAS JOSE VALENTE,
Brazilian, married, bearer of identity card RG No. 4.346/D issued by the
Regional Council of Engineers, Architects and Agronomists (CREA/DF) and enrolled
in the Individual Taxpayers' Register of the Finance Ministry (CPF/MF) under No.
184059671-68, pursuant to Act No. 37.566 of July 8, 2003, published in the
Official Gazette of the Federal Executive on July 9, 2003, on the one part; and
TNL PCS S.A., enrolled in the National Register of Legal Entities of the Finance
Ministry (CNPJ/MF) under No. 04.164.616/0001-59, herein represented by its Chief
Executive Officer LUIZ EDUARDO FALCO PIRES CORREA, Brazilian, married, bearer of
identity card RG No. 6056736 SSP/SP and CPF/MF 052425988-75, and by its Officer
PAULO ALTMAYER GONCALVES, Brazilian, married, bearer of identity card RG No.
8002420647 SSP/RS and CPF/MF No. 153421660-04, hereinafter referred to as
AUTHORIZED PARTY, on the other part, enter into this Instrument of Authorization
for the Use of Radio Frequency Blocks, hereinafter referred to as Instrument,
Anatel Proceeding No. 53500.001359/2001, which shall be governed by the rules
referred to below and by the following clauses:
SECTION I - PURPOSE
CLAUSE 1.1 - The purpose of this Instrument is the Concession of Authorization
for the Use of Radio Frequency Blocks without exclusivity, on a primary basis
and restricted to the respective sectors of the General Concessions Plan - PGO,
approved by Decree No. 2534 of April 2, 1998, associated with the authorization
for provision of Personal Mobile Service (Servico Movel Pessoal - PMS) to TNL
PCS S.A., as set forth below.
SECTOR BLOCKS FREQUENCY BAND (MHZ)
- ------ ------ --------------------
1 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
3 1,730 to 1,732.5/1,825 to 1,827.5
2 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
3 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
5 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
8 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
11 1 1,725 to 1,727.5/1,820 to 1,822.5
2 1,727.5 to 1,730/1,822.5 to 1,825
CLAUSE 1.1.1 - The Concession of Authorization for the Use of Radio Frequency
Blocks is a binding administrative act, associated with the concession,
permission or authorization for telecommunications service provision, which
gives the interested party, for a determinate period of time, the right to use
radio frequencies pursuant to legal and regulatory conditions.
SECTION II - EFFECTIVENESS
CLAUSE 2.1 - This Authorization for the Use of Radio Frequency Blocks is issued
for the remaining period of the Authorization for the Use of Radio Frequency
associated with the Authorization for Rendering of PMS, ANATEL INSTRUMENT OF
AUTHORIZATION PVCP/SPV No. 001/2001 of March 12, 2001, Official Gazette of the
Federal Executive of March 13, 2001, and expiring on March 13, 2016, extendable
a single time for a period of fifteen (15) years on a remunerated basis,
associated with the Authorization for Rendering of Personal Mobile Service -
PMS, the validity of which being conditional on observance of the provisions set
out in this Instrument.
SECTION III - THE PRICE FOR CONCESSION OF AUTHORIZATION FOR THE USE OF RADIO
FREQUENCY BLOCKS
CLAUSE 3.1 - The Price for the Concession is the value for the Right of Use of
Radio Frequencies pursuant to the provisions set out in article 48, paragraph 1,
of Law No. 9472 of July 16, 1997.
CLAUSE 3.1.1 - The Price payable for the Concession of Authorization for the Use
of Radio Frequency Blocks shall be paid to the Telecommunications Monitoring
Fund - FISTEL.
CLAUSE 3.1.2 - The Price payable for this Concession of Authorization for the
Use of Radio Frequency Blocks is sixty-six million ninety-five thousand seven
hundred and seventy-five reais and ninety-one centavos (R$ 66,095,775.91), to be
paid as follows:
I - The total amount or ten percent (10%) of this amount shall be paid on the
date of the corresponding Instrument for Concession of Authorization for the Use
of Radio Frequency Blocks.
II - The remaining ninety percent (90%) shall be paid in six equal and annual
installments, which shall be due, respectively, in up to thirty-six (36),
forty-eight (48), sixty (60), seventy-two (72), eight-four (84) and ninety-six
(96) months as from the date of issue of the
corresponding Instrument for Concession of Authorization for the Use of Radio
Frequency Blocks, and the amount payable shall be adjusted by the variation of
the General Price Index - Domestic Availability (IGP-DI) published by the
Getulio Vargas Foundation, from the date of the corresponding Instrument for
Concession of Authorization for the Use of Radio Frequency Blocks until the date
of actual payment, should said payment take place after twelve (12) months from
the date of the corresponding Instrument for Concession of Authorization for the
Use of Radio Frequency Blocks, plus interest at one percent (1%) per month,
charged on the amount that has been adjusted from the issue date of the
Instrument for Concession of Authorization for the Use of Radio Frequency
Blocks.
PARAGRAPH 1 - If the remaining term for the authorization for the use of radio
frequencies corresponding to the authorization for provision of the PMS is less
than eight (8) years, this amount shall be distributed in six (6) equal and
annual installments, at the most, so that it is fully paid before expiration of
the first term of said grant.
PARAGRAPH 2 - Late payment of the amounts established in this clause shall
result in imposition of a default fine of zero point thirty-three percent
(0.33%) per day up to the limit of ten percent (10%), plus interest at the SELIC
rate for federal bonds, to be applied on the amount of the debt computing all
the days that the payment has been in arrears.
PARAGRAPH 3 - Default on payment of the amount stipulated in this clause shall
imply cancellation of the Authorization for the Use of Radio Frequency Blocks,
irrespective of applying the other penalties set out in the Anatel Regulations.
PARAGRAPH 4 - Effectiveness of the Authorization for the Use of Radio Frequency
Blocks shall be conditional on the actual payment of the price offered, or when
payment is in installments, of the amount of the first installment.
SECTION IV - COVERAGE COMMITMENTS
CLAUSE 4.1 - The AUTHORIZED PARTY undertakes in each sector of this
Authorization:
I - to hold an area of coverage equivalent to at least fifty percent (50%) of
the urban area of fifty percent (50%) of the state capitals, of municipalities
with over five hundred thousand (500,000) inhabitants and, in Region II and in
the Federal District, up to twelve (12) months following execution of this
Instrument of Authorization.
II - to service the state capitals, the municipalities with over five hundred
thousand (500,000) inhabitants and, in the Region II, also the Federal District,
up to twenty-four (24) months following execution of this Instrument of
Authorization.
III - to hold an area of coverage equivalent to at least fifty percent (50%) of
the urban land area and fifty percent (50%) of the municipalities with over two
hundred thousand (200,000) inhabitants up to thirty-six (36) months following
signature of this Instrument of Authorization.
IV - to service municipalities with over two hundred thousand (200,000)
inhabitants within forty-eight (48) months following execution of this
Instrument of Authorization; and
V - to service municipalities with over one hundred thousand (100,000)
inhabitants within sixty (60) months following execution of this Instrument of
Authorization.
CLAUSE 4.2 - A location shall be considered serviced when the area of coverage
encompasses at least eighty percent (80%) of the urban area
CLAUSE 4.3- Noncompliance with the commitments shall subject the AUTHORIZED
PARTY to the sanctions set out in this Instrument and in the regulation, and may
result in cancellation of authorization.
CLAUSE 4.4 - The locations that are the subject matter of the commitments
provided for in 4.1 shall be defined, taking into consideration the population
estimates for the states and
municipalities with a reference data set at July 1, 2000, disclosed by IBGE
under Resolution No. 9 dated August 8, 2000.
CLAUSE 4.5 - All the terms shall run as of the date of publication of the
extract of the Acts corresponding to the Concessions of Authorization for the
Use of Radio Frequency Blocks in the Official Gazette of the Federal Executive
(DOU).
SECTION V - ANATEL PREROGATIVES
CLAUSE 5.1 - Without prejudice to the other regulatory provisions, it is
incumbent on ANATEL:
I - to comply with the rules and regulations in effect and those that may be
issued during effectiveness of this Instrument;
II - to prevent conduct that adversely affects free competition;
III - to impede economic concentration, including by imposing restrictions,
limits or conditions to this Instrument;
IV - to manage the radio frequency spectrum, applying the legal and regulatory
penalties;
V - to extinguish this Instrument in the cases set forth in this instrument and
in applicable law.
CLAUSE 5.2 - ANATEL may order the AUTHORIZED PARTY to immediately cease
transmission from any telecommunications station that has been causing
interference that is prejudicial to regularly operated telecommunications
services, until said interference has ceased.
SECTION VI - OVERALL CONDITIONS FOR THE CONCESSION OF AUTHORIZATION FOR THE USE
OF RADIO FREQUENCY BLOCKS.
CLAUSE 6.1 - The Concession of Authorization for the Use of Radio Frequency
Blocks may only be associated with the authorization for rendering of the
Personal Mobile Service.
CLAUSE 6.2 - AUTHORIZED PARTY undertakes to strictly observe all regulations
governing the Authorization for the Use of Radio Frequency Blocks (hereinafter
GRANTEE), and shall be subject to the new regulations and any amendments that
may be issued.
CLAUSE 6.3 - AUTHORIZED PARTY shall not have vested right to continue the
conditions in effect on the execution date hereof, and shall observe the new
conditions that may be imposed by law or by regulations to be issued by ANATEL.
CLAUSE 6.4 - AUTHORIZED PARTY shall ensure that installation of the
telecommunications stations and expansion thereof is in conformity with
applicable regulations, especially with regard to limitations related to
distance from airports, aerodromes, radio-goniometric stations and Indigenous
areas.
CLAUSE 6.5 - The installation, operation and deactivation of a
telecommunications station shall observe the provisions set out in the
regulations.
CLAUSE 6.6 - AUTHORIZED PARTY shall use the respective blocks on its own account
and risk, and it shall be held fully and solely liable for any losses resulting
from use thereof.
CLAUSE 6.7- AUTHORIZED PARTY shall be held solely liable for any damage suffered
by its users or by third parties due to use of the respective blocks, and ANATEL
shall be held harmless from and against any liability in this regard.
CLAUSE 6.8 - The equipment that make up the telecommunications stations of the
systems shall have certification issued or accepted by ANATEL, according to the
regulations in effect.
SECTION VII - AVAILABILITY OF AUTHORIZATION FOR THE USE OF RADIO FREQUENCY
BLOCKS
CLAUSE 7.1 - The right to use radio frequency blocks referred to in this Section
does not eliminate ANATEL's prerogative to modify its use or to arrange for a
change in power or other technical features.
CLAUSE 7.2 - Unjustified failure to use the radio frequency blocks shall subject
AUTHORIZED PARTY to the applicable penalties, according to regulations.
SECTION VIII - TRANSFER OF AUTHORIZATION FOR THE USE OF RADIO FREQUENCY BLOCKS
CLAUSE 8.1 - Authorization for the use of radio frequency blocks may not be
transferred without the corresponding transfer of authorization for the related
service provision.
CLAUSE 8.2 - Authorization for the use of radio frequency blocks shall be
extinguished by expiration of the final term, or due to irregular transfer, or
forfeiture, decline, waiver or annulment of authorization for performance of the
telecommunications service used thereby.
SECTION IX. - NON-OBLIGATION TO CONTINUE AND THE RIGHT OF WAIVER
CLAUSE 9.1 - This Instrument does not impose on AUTHORIZED PARTY the duty to
continue using the respective blocks, and AUTHORIZED PARTY shall be entitled to
waiver pursuant to the terms of article 142 of Law 9472 of 1997, with due regard
for the provisions of this Instrument.
PARAGRAPH 1 - The right of waiver does not eliminate the duty of AUTHORIZED
PARTY to ensure users, as established in this Instrument and in the regulation,
to be notified in advance of any interruption of use of the authorized radio
frequency blocks.
PARAGRAPH 2 - The right of waiver, at the same time, does not eliminate the
obligation of AUTHORIZED PARTY to comply with the commitments that are to the
interest of society, which are assumed thereby upon execution of this
Instrument.
SECTION X - MONITORING
CLAUSE 10.1 - AUTHORIZED PARTY shall permit the ANATEL agents at any time, free
access to the equipment and facilities, and moreover, should provide them with
all the documents and information required for performance of the monitoring
activities.
SOLE PARAGRAPH - AUTHORIZED PARTY may appoint an assignee to accompany
inspectors during their visits, monitoring and activities.
CLAUSE 10.2 - AUTHORIZED PARTY undertakes to pay the monitoring fees pursuant to
law, especially the Installation and Operation Monitoring Fees.
SOLE PARAGRAPH - The monitoring fees shall be paid according to the schedule in
Exhibit I to Law No. 5070 of July 7, 1966, with amendments thereto.
SECTION XI - PENALTIES
CLAUSE 11.1 - Noncompliance with the conditions or undertakings assumed,
associated with the Authorization for the Use of Radio Frequency Blocks, shall
subject the AUTHORIZED PARTY to the penalties established in a specific
regulation, without prejudice to the civil and penal sanctions.
SECTION XII - EXTINGUISHMENT
CLAUSE 12.1 - This Instrument shall be extinguished by cancellation, forfeiture,
decline, waiver or annulment, with due regard for the provisions of this
Section.
CLAUSE 12.2 - Cancellation of the Concession of Authorization for the Use of
Radio Frequency Blocks may be decreed whenever there is a loss in conditions
indispensable for maintenance of the respective Authorization for the Use of
Radio Frequency Blocks.
CLAUSE 12.3 - Forfeiture of the Authorization for the Use of Radio Frequency
Blocks may be decreed in the following events:
I - practice of a serious infraction;
II - transfer of Authorization for the use of radio frequency blocks;
III - repeated default on the commitments assumed in this Instrument or in the
provisions of the regulations;
IV - failure to pay the Installation Monitoring Fees and the Operation
Monitoring Fees, as set forth in Law No. 5070 of July 7, 1966, with amendments
thereto.
CLAUSE 12.4 - Annulment of the Concession of Authorization for the Use of Radio
Frequency Blocks shall derive from recognition by the administrative or judicial
authority of an incurable irregularity in this Instrument.
CLAUSE 12.5 - Bilateral termination shall be effected upon a request for
termination made by the AUTHORIZED PARTY, stipulating the period in which it
intends to continue using the radio frequency blocks before their definitive
interruption, which may not be less than six (6) months.
PARAGRAPH 1 - Termination shall not eliminate AUTHORIZED PARTY's obligation to
answer for damages extended to users.
PARAGRAPH 2 - The instrument of bilateral termination shall contain provisions
stipulating the conditions and terms of this termination.
CLAUSE 12.6 - Extinguishment of the Concession of Authorization for the Use of
Radio Frequency Blocks shall be declared in a specific administrative
proceeding, that guarantees adversary proceedings and full defense of AUTHORIZED
PARTY.
CLAUSE 12.7 - ANATEL shall not be held responsible by users or third parties for
any charges, encumbrances, obligations or commitments with third parties or with
employees of AUTHORIZED PARTY provided by extinguishments set forth in the
regulations and in this Instrument.
SECTION XIII - LEGAL SYSTEM AND APPLICABLE DOCUMENTS
CLAUSE 13.1 - This Instrument is governed by Law 9472 of 1997, and its
respective regulation, especially the Regulations for the Use of Radio Frequency
Spectrum.
SECTION XIV - THE COURT
CLAUSE 14.1 - The parties elect the courts of the Judiciary Section of the
Federal Courts in Brasilia, Federal District, to settle any disputes arising out
of this Instrument.
SECTION XV - FINAL PROVISIONS
CLAUSE 15.1 - This Instrument shall be valid and effective as of the date of its
publication in the Official Gazette of the Federal Executive.
In Witness Whereof, the parties sign this instrument in three (3) counterparts
of equal form and content, in the presence of the undersigned witnesses to
produce legal and judicial effects.
Brasilia, July 11, 2003
BY ANATEL:
- ----------------------------------------
JARBAS JOSE VALENTE
Private Services Superintendent
By AUTHORIZED PARTY:
- ----------------------------------------
LUIZ EDUARDO FALCO PIRES CORREA
Chief Executive Officer
- ----------------------------------------
PAULO ALTMAYER GONCALVES
Officer
WITNESSES:
- ----------------------------------------
NELSON MITSUO TAKAYANAGI
ID No. 435.023 - SSP/DF
- ----------------------------------------
BRUNO DE CARVALHO RAMOS
CREA-SP Registration No. 5.060.107.391/D