0000912057-01-535138.txt : 20011019
0000912057-01-535138.hdr.sgml : 20011019
ACCESSION NUMBER: 0000912057-01-535138
CONFORMED SUBMISSION TYPE: 20-F/A
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20011011
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TRICOM SA
CENTRAL INDEX KEY: 0001052124
STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812]
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 20-F/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-14816
FILM NUMBER: 1757016
BUSINESS ADDRESS:
STREET 1: AVE LOPE DE VEGA NO 95
CITY: SANTO DOMINGO
STATE: G8
BUSINESS PHONE: 8094766000
MAIL ADDRESS:
STREET 1: AVE LOPE DE VEGA NO 95
CITY: SANTO DOMINGO
STATE: G8
ZIP: 00000
20-F/A
1
a2060683z20-fa.txt
20-F/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 20-F/A
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED:
DECEMBER 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number:
[LOGO]
TRICOM, S.A.
(Exact name of Registrant as specified in its charter)
DOMINICAN REPUBLIC
(Jurisdiction of incorporation or organization)
AVENIDA LOPE DE VEGA NO. 95, SANTO DOMINGO, DOMINICAN REPUBLIC
(Address of principal executives offices)
Securities registered pursuant to Section 12(b) of the Act.
AMERICAN DEPOSITARY SHARES
CLASS A COMMON STOCK, PAR VALUE RD$10 PER SHARE
Securities registered pursuant to Section 12(g) of the Act.
NONE
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act.
11-3/8% SENIOR NOTES DUE SEPTEMBER 1, 2004
Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close
of the period covered by the annual report.
AT DECEMBER 31, 2000, THERE WERE 9,700,000 SHARES OF CLASS A COMMON STOCK
AND 19,144,538 SHARES OF CLASS B STOCK ISSUED AND OUTSTANDING.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark which financial statement item
the Registrant has elected to follow:
Item 17 Item 18 X
----- -----
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TABLE OF CONTENTS
PAGE
----
GENERAL INTRODUCTION..............................................................................................5
PART I 6
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS*..............................................6
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE*............................................................6
ITEM 3. KEY INFORMATION.....................................................................................6
ITEM 4. INFORMATION ON THE COMPANY.........................................................................17
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.......................................................42
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.........................................................51
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS..................................................55
ITEM 8. FINANCIAL INFORMATION..............................................................................60
ITEM 9. THE OFFER AND LISTING..............................................................................60
ITEM 10. ADDITIONAL INFORMATION.............................................................................62
ITEM 11. QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........................................68
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES*............................................69
PART II 70
ITEM 13. DEFAULTS, DIVIDED ARREARAGES AND DELINQUENCIES.....................................................70
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS*......................70
ITEM 15. [RESERVED].........................................................................................70
ITEM 16. [RESERVED].........................................................................................70
PART III 70
ITEM 17. FINANCIAL STATEMENTS**.............................................................................70
ITEM 18. FINANCIAL STATEMENTS...............................................................................70
ITEM 19. EXHIBITS...........................................................................................70
-------------
* Omitted because the Item is not applicable or the answer is negative.
** The Company has completed Item 18 in lieu of this Item.
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(This page has been left blank intentionally.)
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GENERAL INTRODUCTION
UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES TO (I) THE "COMPANY"
OR "TRICOM" REFER TO TRICOM, S.A. AND ITS CONSOLIDATED SUBSIDIARIES AND THEIR
RESPECTIVE OPERATIONS, AND INCLUDE TRICOM'S PREDECESSORS, AND (II) "GFN" REFERS
TO GFN CORPORATION LTD. AND ITS DIRECT AND INDIRECT SUBSIDIARIES, OTHER THAN THE
COMPANY AND ITS SUBSIDIARIES, AND INCLUDES GFN'S PREDECESSORS.
PRESENTATION OF CERTAIN FINANCIAL INFORMATION
The Company prepares its consolidated financial statements in conformity
with generally accepted accounting principles in the United States. The Company
adopted the United States dollar as its functional currency effective January 1,
1997. See "Item 5. Operating and Financial Review and Prospects" and Note 2 of
Notes to the audited consolidated financial statements of the Company at
December 31, 1999 and 2000 and for the years ended December 31, 1998, 1999 and
2000 (the "Consolidated Financial Statements"). Unless otherwise stated,
Dominican peso amounts that appear in this Annual Report have been translated
into United States dollars. As of December 31, 1999 and 2000, the rates used by
the Company to translate Dominican peso-denominated accounts at the year-end
were RD$16.05 and RD$16.69, respectively.
In this Annual Report references to "$," "US$" or "U.S. dollars" are to
United States dollars, and references to "Dominican pesos" or "RD$" are to
Dominican pesos. This Annual Report contains translations of certain Dominican
peso amounts into U.S. dollars at specified rates solely for the convenience of
the reader. These translations should not be construed as representations that
the Dominican peso amounts actually represent such U.S. dollar amounts or could
be converted into U.S. dollars at the rate indicated. The average of prices of
one U.S. dollar quoted by certain private commercial banks (the "Private Market
Rate") as reported by Banco Central de la Republica Dominicana (the "Central
Bank") on December 31, 2000 was RD$16.65 = US$1.00, the date of the most recent
financial information included in this Annual Report. The Federal Reserve Bank
of New York does not report a noon buying rate for Dominican pesos. On April 27,
2001, the Private Market Rate was RD$16.86 = US$1.00.
FORWARD-LOOKING STATEMENTS
The statements contained in this Annual Report which are not historical
facts are forward-looking statements that involve risks and uncertainties.
Management cautions the reader that these forward-looking statements are only
predictions; actual events or results may differ materially as a result of risks
facing the Company. Such risks include, but are not limited to, the following
factors: competition; declining rates for international long distance traffic;
reliance on resellers; our inability to minimize credit risks; customer churn;
rapid technological change; rejection of our concession agreement in the
Dominican Republic; cellular fraud; our ability to implement our business plan
on schedule, including our Central American strategy; social, political and
economic conditions in our existing and target markets; our significant capital
expenditure and working capital requirements and our need to finance such
expenditures; the effect of our indebtedness on our ability to fund expansion
and remain competitive and of restrictions contained in such indebtedness;
concerns about health risks associated with wireless equipment; our inability to
manage effectively our rapid expansion; our inability to obtain licenses or
concessions in markets outside the Dominican Republic; the continued growth of
the Dominican and Central American economies, demand for telecommunication
services in the Dominican Republic and Central America and moderation of
inflation; and the continuation of a favorable political, economic and
regulatory environment in each of the Dominican Republic and Central America.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
SELECTED FINANCIAL DATA
The following table provides selected financial and operating data of
TRICOM for the periods indicated. We have derived the selected financial data
from our consolidated financial statements, which have been audited by KPMG,
independent auditors. You should read the information in the following tables in
conjunction with "Operating and Financial Review and Prospects" and the
consolidated financials included in this Annual Report.
YEAR ENDED DECEMBER 31,
1996 1997 1998 1999 2000
(IN THOUSANDS)(1)
STATEMENTS OF OPERATIONS DATA:
Operating revenues:
Toll $ 13,108 15,511 17,645 23,118 28,666
International 42,069 39,432 50,332 60,592 84,187
Local service 1,770 6,412 12,942 33,859 54,771
Cellular and PCS 11,011 13,073 20,364 26,474 35,796
Paging 5,170 5,079 4,528 2,696 1,704
Sale of equipment 3,969 5,502 4,115 7,690 5,263
Installation and activation fees 1,943 5,071 12,937 15,502 13,749
Other 24 21 2,640 889 162
Total operating revenues 79,064 90,102 125,501 170,819 224,298
Operating costs:
Satellite connections and carrier 30,172 31,271 32,309 43,688 68,608
Network depreciation 5,797 7,433 11,382 15,983 29,342
Expense in lieu of income taxes(2) 5,348 6,248 9,562 12,764 10,174
General and administrative expenses 22,185 25,631 39,379 51,501 70,691
Other 1,021 3,659 3,391 5,421 4,462
Total operating costs 64,523 74,242 96,024 129,357 183,276
Operating income 14,540 15,860 29,478 41,462 41,022
Other income (expenses):
Interest expense, net (10,699) (12,047) (12,873) (20,041) (30,736)
Foreign currency exchange gain (loss) 23 (706) 104 (203) (303)
Gain on sale of land - - - 898 -
Gain on sale of equipment - - - - 30
Other, net 233 (83) 845 179 (197)
Other expenses, net (10,443) (12,836) (11,924) (19,166) (31,206)
Earnings before income taxes,
extraordinary item and
cumulative effect of accounting change 4,098 3,023 17,554 22,296 9,816
Income taxes - - 352 (142) (588)
Extraordinary item - (5,453)(3) - - -
Cumulative effect of accounting change: - - - - -
Organization costs - - - (120) -
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Installations and activations revenues - - - - (16,453)(4)
Net earnings (loss) $ 4,098 (2,430) 17,906 22,035 (7,226)
Basic earnings per common share:
Earnings before extraordinary item and
cumulative effect of accounting change $ 0.41 0.17 0.78 0.89 0.33
Extraordinary item - (0.31)(3) - - -
Cumulative effect of accounting change - - - - (0.59)(4)
Net earnings (loss) $ 0.41 (0.14) 0.78 0.89 (0.26)
Average number of common shares outstanding 9,880 17,600 22,945 24,845 27,724
BALANCE SHEET DATA:
Cash and cash equivalents $ 4,292 5,733 15,377 13,460 18,200
Working capital (deficit) (43,586) 4,846 (19,600) (83,659) (125,299)
Property, plant and equipment, net 119,334 202,978 330,456 455,045 586,224
Total assets 163,480 321,144 444,815 531,478 682,440
Long-term debt and capital leases
(excluding current portion) 60,000 232,000 200,000 240,413(5) 276,744(5)
Total indebtedness 128,677 242,755 279,257 336,468 398,809
Shareholders' equity 24,523 42,093 127,561 149,869 210,796
OTHER FINANCIAL DATA:
Capital expenditures $ 32,104 92,668 142,101 145,426(5) 168,913(5)
Net cash provided (used) by operating
activities (2,908) 39,095 26,912 31,526 42,339
Net cash used in investing activities (32,440) (168,636) (121,171) (64,360) (149,395)
Net cash provided by financing activities 35,419 132,059 104,065 30,966 111,796
EBITDA(6) 26,407 31,497 53,662 75,063 87,681
Ratio of EBITDA to net interest expense 2.5x 2.6x 4.2x 3.7x 2.9x
Ratio of total indebtedness to EBITDA 4.9x 7.8x 5.2x 4.5x 4.5x
OTHER OPERATING DATA:
International minutes (in thousands) 126,484 157,411 231,075 360,532 597,204
Local access lines in service (at period
end) 17,071 43,195 80,616 118,926 148,312
Mobile subscribers (at period end) 16,136 41,107 108,532 176,080 284,991
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(1) Except per share, ratios and other operating data.
(2) Since 1996, we have made payments in lieu of income tax to the
Dominican government, in accordance with the terms of our concession
agreement. These payments represent 10% of gross domestic revenues,
after deducting charges for access to the local network, plus 10% of
net international revenues. Expense in lieu of income taxes also
includes a tax, implemented in 1998, of 2% on international settlement
revenues collected. This tax amounted to $0.3 million in 1998, $0.6
million in 1999 and $0.4 million in 2000.
(3) Represents a write-off related to the refinancing of indebtedness.
(4) Effective January 1, 2000, we adopted the U.S. Securities and Exchange
Commission's Staff Accounting Bulletin No. 101, concerning the
recognition of revenue. This pronouncement provides that we recognize
net revenues from installations and activations over the period in
which we retain our clients, which based on our experience is
approximately 35 months. Since we previously recognized these revenues
when they were collected, this change in revenue recognition resulted
in a one-time, non-cash charge to earnings in 2000 of $16,452,799. At
December 31, 2000, deferred revenues for installations and activations
aggregated $14,654,886, which will be recognized as follows: $9,010,741
in 2001; $4,793,662 in 2002; and $850,483 in 2003. See Note 12 of Notes
to Consolidated Financial Statements.
(5) Includes capital lease obligations incurred during 1999 of $26.2
million and during 2000 of $17.7 million.
(6) EBITDA typically consists of earnings (loss) before interest and other
income and expenses, income taxes and depreciation and amortization. As
described in note 2 above we make payments to the Dominican government
in lieu of income taxes. As a result, we calculate EBITDA prior to the
deduction of payments to the Dominican government in lieu of income
taxes. Our calculation of EBITDA may not be comparable to EBITDA
calculated by other companies. We believe that EBITDA is useful to
investor because it commonly is used in the telecommunications industry
to analyze companies on the basis of operating performance, leverage
and liquidity. However, it does not purport to represent cash generated
or used by operating activities and should not be considered in
isolation or as a substitute for a measure of performance in accordance
with generally accepted accounting principles. For 1999 and 2000, we
have also added back to EBITDA amortization of radio frequency rights
of $198,333 and $320,186, respectively.
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EXCHANGE RATES
The Federal Reserve Bank of New York does not report a noon buying rate for
Dominican pesos. The following table sets forth the average official rate for
each of the five most recent years and each fiscal quarter within those
years, and the high and low official exchange rates for each of the previous
six months, all as reported by the Central Bank. The average official rate
has been calculated by using the average of the exchange rates on the last
day of each month during the period. At October 5, 2001, the average official
exchange rate was RD$16.66 per $1.00 while the average private market rate
was RD$16.90 per $1.00.
AVERAGE OFFICIAL RATE AVERAGE PRIVATE RATE
(RD$ PER $) (RD$ PER $)
--------------------- --------------------
YEAR ENDED DECEMBER 31, 1996.................... 13.19 13.66
YEAR ENDED DECEMBER 31, 1997.................... 13.97 14.25
YEAR ENDED DECEMBER 31, 1998.................... 14.70 15.23
YEAR ENDED DECEMBER 31, 1999.................... 15.83 16.03
YEAR ENDED DECEMBER 31, 2000.................... 16.18 16.37
PREVIOUS SIX MONTHS FOR YEAR ENDING OFFICIAL RATE PRIVATE RATE
DECEMBER 31, 2001 (RD$ PER $) (RD$)
-------------------- --------------------
HIGH LOW HIGH LOW
---- --- ---- ---
April........................................... 16.66 16.66 16.90 16.85
May............................................. 16.66 16.66 16.85 16.85
June............................................ 16.66 16.66 16.85 16.85
July............................................ 16.66 16.66 16.85 16.84
August.......................................... 16.66 16.66 16.85 16.84
September....................................... 16.66 16.66 16.90 16.85
RISK FACTORS
You should carefully consider the risks described below and other
information in this report.
RISKS RELATING TO OUR CAPITAL STRUCTURE
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR ABILITY TO FUND
EXPANSION AND OUR COMPETITIVE POSITION.
We are highly leveraged. At December 31, 2000, we had outstanding
approximately $398.8 million in aggregate principal amount of indebtedness,
including capital leases. At December 31, 2000, we had approximately $210.8
million total shareholders' equity.
The degree to which we are leveraged could have important consequences
to us, including the following:
- a substantial portion of our cash flow must be used to pay
interest on our indebtedness. Therefore, our cash flow available
for use in our business will be reduced;
- our high degree of leverage could increase our vulnerability to
changes in general economic conditions;
- our ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate purposes or
other purposes could be impaired;
- we are much more leveraged than our principal competitor, which
may be a competitive disadvantage in our principal market; and
- our failure to comply with covenants and restrictions contained
in our notes' indenture could lead to a default which could cause
that and other debt to become immediately payable.
WE MAY NOT BE ABLE TO GENERATE SUFFICIENT CASH FLOW FROM OPERATIONS TO
MEET OUR DEBT SERVICE REQUIREMENTS.
Our ability to pay interest on our indebtedness and meet our debt
service obligations will depend on our future performance, which in turn depends
on successful implementation of our strategy and on financial, competitive,
regulatory, technical and other factors, many of which are beyond our control.
Our interest expense for the year ended December 31, 2000 was $34.0 million and
our cash flow from operations for the year ended December 31, 2000 was $42.3
million. Approximately $122.0 million of our indebtedness will mature during the
year ending December 31, 2001, however, most of these borrowings will be renewed
or rolled over at maturity. Our ability to refinance any of this indebtedness
will depend on our financial condition at the time it matures, the restrictions
in the agreements governing our indebtedness and other factors, including
general market and economic conditions. If refinancing were not possible, we
could be forced to dispose of assets at unfavorable prices. In addition, our
inability to refinance these obligations could result in our defaulting on our
other debt obligations.
WE DEPEND ON SHORT-TERM BORROWINGS IN THE DOMINICAN FINANCIAL MARKETS,
WHICH BEAR HIGH INTEREST RATES AND WE CANNOT BE CERTAIN THAT THEY WILL
CONTINUE TO BE AVAILABLE.
We fund a substantial portion of our capital expenditure and working
capital requirements with short-term borrowings in the Dominican financial
markets. As of December 31, 2000, we had with Dominican financial institutions
RD peso-denominated debt equivalent to $3.5 million with interest rates at 26%
and U.S. dollar-denominated debt of $35.0 million, with interest rates ranging
from 9.69% per annum to 12% per annum. These borrowings have maturities ranging
up to 180 days and often are rolled over and payable on demand. However, our
current lenders may be unable or unwilling to lend to us in the future. Even if
these short term borrowings continue to
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be available to us, due to their short-term maturities, we may be required to
repay them at times when replacement financing is not available on
commercially attractive terms.
RISKS RELATED TO OUR OPERATIONS
OUR PRINCIPAL COMPETITOR IN THE DOMINICAN REPUBLIC, CODETEL, HAS
SUBSTANTIALLY GREATER MARKET SHARE AND RESOURCES, WHICH MAY PREVENT US
FROM MAINTAINING OR INCREASING OUR MARKET SHARE.
We compete primarily with Compania Dominicana de Telefonos C. por A.,
or Codetel, a wholly owned subsidiary of Verizon Communications Inc. Codetel has
an established market presence, networks and resources substantially greater
than ours. More than 75% of the Dominican Republic's local access line customers
are customers of Codetel. The growth of our market share depends upon our
ability to obtain customers in areas that currently are not served, or are
underserved, by Codetel and to convince Codetel customers to either add, or
switch to, the telephony services we offer. If Codetel implements significant
price reductions for particular services we may be forced to reduce our rates in
response in order to remain competitive. In addition, Codetel could expend
significantly greater amounts of capital than are available to us in order to
upgrade its network and/or sustain price reductions over a prolonged period. As
a result we may not be able to maintain or increase our market share.
THERE ARE NEW ENTRANTS IN THE DOMINICAN MARKETS, PARTICULARLY FOR
WIRELESS SERVICES, WHICH COULD INCREASE COMPETITION FOR OUR SERVICES,
REDUCE OUR MARKET SHARE OR INCREASE PRICE COMPETITION.
The Dominican government has granted telecommunications concessions to
a number of companies in the last several years. In 1999, France Telecom
acquired a company which has a concession to provide telecommunication services.
France Telecom has used the concession to offer wireless services. France
Telecom's marketing efforts has included offering services at discounts. In
January 2000, Centennial Cellular Corp. acquired 70% of All America Cables and
Radio, Inc., an integrated telecommunications provider. Centennial is attempting
to expand All America's share of the Dominican market for cellular and PCS
services. In the international long distance market, investment by U.S.
telecommunications companies in Dominican markets could limit the number of U.S.
carriers that would send a significant number of minutes to us or otherwise
adversely affect our ability to generate international settlement revenues. As a
result of these and other potential new entrants, we expect to face more
competition in the Dominican telecommunications market in the future, which
could adversely affect our ability to maintain our market share or require us to
lower prices.
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SETTLEMENT RATES FOR INTERNATIONAL TRAFFIC FROM THE UNITED STATES AND
PUERTO RICO COULD CONTINUE TO DECLINE, WHICH COULD REDUCE OUR
INTERNATIONAL SETTLEMENT REVENUES AND PROFIT MARGINS FROM THESE
REVENUES.
Revenues from incoming international long distance calls represented
approximately 40% of our operating revenues in 1998, 36% in 1999 and 38% in
2000. Approximately 98% of these revenues were attributable to calls originating
in the United States and Puerto Rico. Settlement rates for traffic between the
United States and the Dominican Republic have declined from $0.41 per minute
during 1996 to $0.10 per minute during 2000. We believe that competitive and
regulatory pressures could continue to push settlement rates lower. Future
decreases in settlement rates, without a corresponding increase in our
international long distance traffic from the United States, would reduce our
international settlement revenues and adversely affect the profit margins that
we realize on these revenues.
BECAUSE WE ARE RECEIVING AN INCREASING PORTION OF OUR INTERNATIONAL
MINUTES FROM U.S.-BASED RESELLERS, WE MAY EXPERIENCE SUBSTANTIAL
FLUCTUATION IN OUR INTERNATIONAL REVENUES.
Since 1997, we have derived an increasing proportion of international
revenues from U.S.-based resellers, which are companies that typically buy long
distance minutes in bulk and resell the minutes to other companies or individual
end users. During 2000, resellers originated approximately 45% of our
international long distance minutes from the United States to the Dominican
Republic. While we enter into agreements with resellers, they are not required
to provide us with any specified amount of traffic. The volume of minutes and
revenues we receive from these resellers may vary significantly because of their
uncertain financial condition.
INTENSE COMPETITION IN U.S. MARKETS AMONG INTERNATIONAL LONG DISTANCE
CARRIERS HAS RESULTED IN BANKRUPTCY FILINGS BY A NUMBER OF OUR RESELLER
CLIENTS. WE MAY NOT BE ABLE TO COLLECT MONIES THAT THESE CLIENTS OWE TO
US.
During 2001, six U.S. carriers with which we exchanged, exchange or
contracted at one time to exchange long distance service filed voluntary
petitions for bankruptcy. In four cases, our subsidiary, TRICOM USA, is an
unsecured, pre-petition creditor and has claims aggregating approximately US$1.5
million. We may not be able to recover the amounts owed to us and we may face
substantial delays in resolving our claims. In two cases, the bankrupt carriers
applied to prevent us from altering, refusing or discontinuing services,
although the courts in these cases did not grant the requests of these carriers.
We may be compelled to provide service to other carriers in bankruptcy under
terms mandated by the court, which may not be as favorable to us as terms that
we receive from other resellers.
EFFORTS TO MINIMIZE CREDIT RISKS MAY ADVERSELY AFFECT OUR EFFORTS TO
EXPAND OUR CUSTOMER BASE.
During 1996, we terminated service for a significant number of mobile
subscribers due to credit considerations, which adversely affected our results
of operations. Since that time, we have instituted measures to minimize consumer
credit risks. However, our efforts to minimize consumer credit risks may not be
successful as we expand and offer our services across many different social and
economic markets, including our expansion in Central America. Moreover, efforts
to minimize credit risks may limit the number of our new subscribers.
OUR NET GROWTH IN SUBSCRIBERS MAY BE REDUCED BY CUSTOMER DISCONNECTIONS
OR CHURN.
Our results of operations in the past have been, and in the future may
be, affected by subscriber disconnections. In order to realize net growth in
subscribers, we must replace disconnected subscribers and add new subscribers.
The sales and marketing costs associated with attracting new subscribers are
substantial, relative to the costs of providing service to existing subscribers.
Our average monthly disconnection rate, or "churn rate," during 2000 was 3.1%
for cellular and PCS subscribers and 2.3% for local access line subscribers. If
we are not able to maintain our credit policies, or not otherwise able to limit
churn, we will not experience net growth in subscribers.
WE MAY NOT HAVE SUFFICIENT RESOURCES TO KEEP PACE WITH CHANGES IN
TECHNOLOGIES USED TO PROVIDE TELECOMMUNICATIONS SERVICES OR THE
TECHNOLOGIES THAT WE HAVE CHOSEN TO PROVIDE SERVICE MAY BE LESS POPULAR
AMONG USERS THAN OTHER TECHNOLOGIES.
-11-
If we do not offer the latest technology, we may not be able to retain
our existing customers or attract new ones. Our digital mobile technology could
become obsolete. Our investment, to date, in our Dominican market exceeds $700
million and we would require substantial investment to replace all or a
substantial part of it or our Central American network.
SPECIAL TAX PROVISIONS CONTAINED IN OUR CONCESSION AGREEMENT ARE
REQUIRED TO BE APPROVED BY THE DOMINICAN CONGRESS BUT HAVE NOT BEEN TO
DATE, WHICH MAY CAUSE OUR FUTURE TAXES PAYABLE TO THE DOMINICAN
GOVERNMENT TO INCREASE.
Our concession agreement with the Dominican government, which grants us
our right to operate as a telecommunications provider, provides for payments to
the Dominican government, in lieu of income tax imposed on other Dominican
corporations. Under the Dominican Constitution, provisions of agreements with
the Dominican government that contain exemptions from income tax only become
effective upon approval by the Dominican Congress. Neither our existing
concession agreement, nor the concession agreements of Codetel and other
competitors, all of which contain tax provisions identical to ours, has been
submitted to the Dominican Congress for approval. We are not aware of any plans
of the Dominican government to submit any concession agreements to the Dominican
Congress for approval.
If our concession agreement is presented to the Dominican Congress, it
may not approve or validate those provisions of the concession agreement
relating to the payment of taxes. If the provisions relating to the payment of
taxes in our concession agreement were to be disapproved by the Dominican
Congress, we believe that Dominican tax law would require the payment of a tax
equal to 25% of our adjusted net income, but never less than 1.5% of gross
revenues, payable in advance on a monthly basis, which is the current tax regime
generally applicable to Dominican corporate taxpayers. For 2000, this would have
resulted in our paying income taxes of $2.5 million compared to taxes in lieu of
income taxes of $10.2 million for 2000. However, the calculation of taxes on the
basis applicable to other Dominican corporations could result in our paying
greater taxes than we would otherwise pay under the terms of our concession
agreement.
WE MAY LOSE REVENUE OR INCUR INCREASED COST AS A RESULT OF FRAUDULENT
USE OF OUR PCS AND CELLULAR NETWORKS.
During 2000, we estimate that our lost revenues from fraudulent use of
our PCS and cellular networks totaled $711,000. Anti-fraud technology
continually becomes obsolete, and we will have to make future expenditures to
acquire and use anti-fraud technology.
OUR NETWORK OPERATIONS MAY BE VULNERABLE TO HACKING, VIRUSES AND OTHER
DISRUPTIONS.
"Hacking" involves efforts to gain unauthorized access to information
or systems or to cause intentional malfunctions or loss or corruption of data,
software, hardware or other computer equipment. Hackers, if successful, could
misappropriate proprietary information or cause disruptions in our services.
Security breaches could have a material adverse effect on our business. In
addition, the inadvertent transmission of computer viruses could expose us to a
material risk of loss or litigation and possible liability. Moreover, if a
computer virus affecting our system is highly publicized, our reputation could
be materially damaged and our user traffic may decrease.
RISKS RELATING TO OUR EXPANSION STRATEGY
WIRELESS TELECOMMUNICATIONS SERVICES COMPANIES HAVE A LIMITED HISTORY
IN OUR EXISTING AND TARGETED MARKETS, ACCEPTANCE OF OUR SERVICES IS
UNCERTAIN, AND WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR
BUSINESS PLAN.
Due, in part, to the limited history of wireless communications
services in our existing market in the Dominican Republic and our targeted
markets in Central America, we face many uncertainties in our markets that may
affect our ability to grow or implement our business plan. These uncertainties
include:
-12-
- the size of the markets for wireless communications services;
- the penetration rates of these markets;
- the ability of potential subscribers to pay subscription and
other fees;
- the extent and nature of the competitive environment in these
markets; and
- the immediate and long-term commercial viability of wireless
communications service in these markets.
As a result of these uncertainties, we may make significant investments
in developing a network and promoting our digital mobile services in markets
where we may not achieve significant market acceptance for our services. If this
occurs we may be unable to recover our investment in these markets.
WE MAY NOT BE ABLE TO FINANCE OUR CAPITAL EXPENDITURE NEEDS WHICH COULD
RESULT IN THE DELAY OR ABANDONMENT OF SOME OR ALL OF OUR DEVELOPMENT
AND EXPANSION PLANS AND EXPENDITURES.
We currently anticipate that our capital expenditures will be
approximately $122 million in 2001. We believe that we will continue to expend
substantial amounts in subsequent years. We believe our cash generated by
operations and borrowings available to us will be sufficient to fund our
expected capital expenditures through the end of 2001. In the event additional
funds are required, we would be forced to obtain them through additional
borrowings, including, if available, vendor financing or through the public or
private sale of debt or equity securities. Acquisitions or investments may
require additional financing. There can be no assurance that additional
financing will be available to us or, if available, that it can be obtained on
terms acceptable to us or within limitations that are contained in our current
or future financing arrangements. Our ability to access additional funds may be
limited by:
- the terms of our existing financing agreements, including
restrictive covenants;
- conditions in the U.S. and in international markets that may
adversely affect the availability or cost of capital;
- the volatility of the economies of Latin America and Asia, or in
the local markets in which we operate, which may make lenders
less likely to extend credit to us;
- our high level of indebtedness, which may affect our
attractiveness as a potential borrower; and
- the market's perception of our performance.
Failure to obtain additional financing could result in the delay or
abandonment of some or all of our development and expansion plans and
expenditures, including the building of our iDEN network in Central America.
WE DO NOT HAVE EXPERIENCE IN OPERATING A CABLE TELEVISION BUSINESS AND
IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE TELECABLE, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS COULD BE ADVERSELY AFFECTED.
We have not previously operated a cable television business. The
success of our acquisition, in part, will depend on our ability to integrate it
into our existing systems. Some of our existing operational, financial and
management systems may be incompatible with or inadequate to effectively
integrate and manage the Telecable systems. In addition, we may not be able to
retain or recruit qualified personnel which may be required. We also may
encounter unexpected operating difficulties, liabilities or contingencies. Any
of these or other factors could significantly delay or even preclude our
realizing synergies or other benefits from our acquisition or place significant
demands on our management and financial resources.
SOCIAL, POLITICAL AND ECONOMIC CONDITIONS IN CENTRAL AMERICAN MARKETS,
INTO WHICH WE PLAN TO EXPAND, MAY CAUSE VOLATILITY IN OUR OPERATIONS
AND ADVERSELY AFFECT OUR REVENUES FROM THESE MARKETS.
We plan to expand into Central American telecommunications markets in
which we have not operated previously and these markets will present numerous
challenges to us. Poor social, political and economic conditions, matters over
which we have no control, could inhibit our market entry and subsequent
performance. Social and
-13-
political conditions in parts of the Central American markets are volatile
and may cause the nature and results of our operations to fluctuate.
Historically, volatility in parts of the Central American markets has been
caused by:
- significant governmental influence over many aspects of local
economies;
- political and economic instability;
- unexpected changes in regulatory requirements;
- social unrest;
- slow or negative growth;
- imposition of trade barriers;
- wage and price controls;
- natural disasters; and
- this volatility could make it difficult for us to sustain our
operations in these markets, which could adversely affect our
business.
GOVERNMENT REGULATIONS IN VARIOUS COUNTRIES MAY HAMPER OUR ABILITY TO
GROW AND IMPLEMENT OUR STRATEGY.
In each market that we are considering, one or more regulatory entities
regulate the licensing, construction, acquisition, ownership and operation of
our wireless communications systems. Adoption of new regulations, changes in the
current telecommunications laws or regulations or changes in the manner in which
they are interpreted or applied could adversely affect our operations. Because
of the uncertainty as to the interpretation of regulations in some countries in
which we may operate, we may not always be able to provide the services we have
planned in each market. It is possible that, in the future, we may face
additional regulatory prohibitions or limitations on our services or on foreign
ownership of telecommunications companies. Inability to provide planned services
could make it more difficult for us to compete in the affected markets. These
issues could affect our ability to operate in targeted markets, and therefore
impact our growth and strategy plans.
IN CENTRAL AMERICAN MARKETS, GOVERNMENT-OWNED OR AFFILIATED
TELECOMMUNICATIONS COMPANIES, WIRELINE MONOPOLY OPERATORS AND
MULTINATIONAL TELECOMMUNICATION COMPANIES MAY HAVE SIGNIFICANT
COMPETITIVE ADVANTAGES THAT WOULD HINDER THE DEVELOPMENT OF OUR
WIRELESS BUSINESS THERE.
In some markets in Central America, we may not be able to compete
effectively against:
- incumbent government-owned telecommunications companies;
- formerly government-owned companies in which the government may
or may not retain a significant interest;
- wireline monopoly operators; and
- multinational telecommunications companies.
We may be at a competitive disadvantage in these markets because these
competitors may have:
- close ties with national regulatory authorities;
- control over connections to local telephone lines;
- larger customer base;
- greater managerial and technical talent;
- ability to cut prices;
- better name recognition;
-14-
- larger spectrum positions;
- greater managerial and technical talent;
- ability to cut prices;
- larger coverage areas than those of our operating companies; or
- the ability to subsidize competitive services with revenues
generated from other services they provide.
For example, in Panama, Cable & Wireless has temporary exclusivity over
wireline services and only an affiliate of Bell South and Cable & Wireless are
licensed to provide wireless services. These competitors, among others, may
adversely affect our ability to develop our wireless business in Central
America.
INITIALLY, OUR COVERAGE IN CENTRAL AMERICAN MARKETS WILL NOT BE AS
EXTENSIVE AS THOSE OF OTHER WIRELESS SERVICE PROVIDERS IN OUR MARKETS,
WHICH MAY LIMIT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.
At first, we plan to provide wireless services only in the metropolitan
areas and large business centers of Central America. Since our digital mobile
networks will not initially offer nationwide coverage in the countries in which
we are considering and our technology limits our potential roaming partners, we
may not be able to compete effectively with other wireless providers in our
markets.
Many of the wireless providers in our targeted markets have entered
into roaming agreements with each other, which permit these providers to offer
coverage to their subscribers in each other's networks. While the iDEN
technology that we will deploy is compatible with GSM technology (Global System
for Mobile Communications), it is not compatible with any other wireless
technology operating in our spectrum. As a result, we cannot enter into roaming
agreements with the operators of these other networks. Our customers also will
not be able to roam on other systems using technology identical to or compatible
with ours where we do not have a roaming agreement. As a result, we will not be
able to provide coverage to our subscribers outside of our planned operating
digital mobile markets until:
- we build out additional networks in areas outside our initially
planned markets;
- other operators deploy technology compatible to the technology
that we will deploy in markets outside of our planned coverage
areas and we enter into roaming agreements with those operators;
or
- handsets that can be used on both our wireless communications
networks and networks deploying other technologies become
available and we enter into roaming agreements with the operators
of those networks.
OUR EQUIPMENT IS MORE EXPENSIVE THAN THAT OF SOME COMPETITORS IN
CENTRAL AMERICA MARKETS, WHICH MAY AFFECT OUR ABILITY TO ESTABLISH AND
MAINTAIN A SIGNIFICANT SUBSCRIBER BASE.
We will market multi-function digital handsets. The higher cost of our
equipment, as compared to analog handsets and some digital handsets that do not
incorporate a comparable multi-function capability, may make it more difficult
or less profitable for us to attract customers. This may reduce our growth
opportunities or profitability.
WE MAY FACE DELAYS CONSTRUCTING OUR DIGITAL MOBILE NETWORK IN CENTRAL
AMERICA WHICH WOULD HARM OUR OPERATIONS.
We may not be able to complete our currently planned construction
successfully or in a timely manner. If we do not, our ability to establish a
subscriber base, improve the transmission quality of our digital mobile services
and expand our service area could be impaired. It may be necessary to
substantially change our proposed plans or otherwise alter our currently
anticipated time frames or budgets because we are not able to:
- locate suitable sites for communications sites or towers;
- obtain any required zoning variances or other governmental or
local regulatory approvals;
-15-
- negotiate acceptable purchase, lease, or other agreements; or
- obtain quality supplies in a timely manner, if at all.
We also may encounter delays caused by
- frequency cross-interference with other radio spectrum users,
including television stations;
- shortages of equipment or skilled labor;
- engineering or environmental problems;
- work stoppages;
- weather interference; and
- unanticipated cost increases.
WE ARE NOT EXPERIENCED IN SELLING AND MARKETING IDEN SERVICES OR IN
CENTRAL AMERICAN MARKETS WHICH COULD AFFECT OUR ABILITY TO ESTABLISH OR
MAINTAIN A SIGNIFICANT SUBSCRIBER BASE.
Once our digital mobile network operations are in place in a particular
market, the development of a significant, quality subscriber base depends on the
success of our sales and marketing efforts and the receptiveness of the
marketplace to our services. We have limited experience in marketing iDEN
services and local conditions in our target markets may require us to modify our
sales and marketing efforts or rely, in part, on the efforts of independent
dealers and distributors to market our services. If the sales and marketing
teams of our operating companies and the independent dealers and distributors
are not able to establish a large subscriber base consisting of quality
customers in our new markets, our revenues will not grow as planned.
SINCE WE RELY PRINCIPALLY ON ONE SUPPLIER TO IMPLEMENT OUR DIGITAL
MOBILE NETWORKS, ANY FAILURE OF THAT SUPPLIER TO PERFORM COULD HURT OUR
OPERATIONS.
Motorola is currently our sole source for the iDEN digital network
equipment and handsets used throughout our markets. If Motorola fails to deliver
necessary technology improvements and enhancements and system infrastructure
equipment and handsets on a timely, cost-effective basis, or discontinues
providing this technology altogether we would not be able to service our
existing subscribers or add new subscribers.
MOTOROLA MAY SUPPLY IDEN TECHNOLOGY TO OTHER COMPANIES WHICH COULD
NEGATIVELY AFFECT OUR COMPETITIVE POSITION IN THE CENTRAL AMERICA.
Motorola, which supplies the iDEN system that we use in Central
America, agreed that it would not sell iDEN technology to anybody else for use,
before agreed upon dates, in Panama, Costa Rica, Guatemala, Honduras, El
Salvador and Nicaragua. Its agreement was conditioned upon our placing orders
for systems in each of those countries by specified dates. Except for Panama, we
have not placed the orders necessary to preserve the head start afforded to us
by Motorola's agreement. As a result, Motorola is free to provide the technology
in those countries to anybody else. If it did so, we could lose an important
competitive advantage to us.
CONCERNS ABOUT HEALTH RISKS ASSOCIATED WITH WIRELESS EQUIPMENT MAY
REDUCE THE DEMAND FOR OUR SERVICES.
Portable communications devices have been alleged to pose health risks,
including cancer, due to radio frequency emissions from these devices. The
actual or perceived risk of mobile communications devices could adversely affect
us through a reduction in subscribers, reduced network usage per subscriber or
through reduced financing available to the mobile communications industry.
Studies performed by wireless telephone equipment manufacturers have
investigated these allegations and additional studies are ongoing.
-16-
RISKS RELATING TO OUR PRINCIPAL MARKET, THE DOMINICAN REPUBLIC
OUR FINANCIAL CONDITION AND RESULTS OF OPERATION COULD BE ADVERSELY
AFFECTED BY DOWNTURNS IN THE DOMINICAN ECONOMY.
Most of our operations are conducted in, and most of our customers are
located in, the Dominican Republic. Accordingly, our financial condition and
results of operations are substantially dependent on economic conditions in the
Dominican Republic. While the Dominican Republic's GDP has grown every year
since 1991, this growth may not continue in the future. Future developments in
the Dominican economy could impair our ability to proceed with our business
strategies, our financial condition or our results of operations. Our financial
condition and results of operations also could be adversely affected by changes
in economic or other policies of the Dominican government or other political or
economic developments in or affecting the Dominican Republic, as well as
regulatory changes or administrative practices of Dominican authorities, over
which we have no control.
POVERTY, SOCIAL UNREST AND SHORTAGES OF BASIC SERVICES IN THE DOMINICAN
REPUBLIC COULD AFFECT THE USE OF TELECOMMUNICATIONS SERVICES, WHICH
WOULD DECREASE OUR REVENUES.
The Dominican Republic has widespread poverty. As recently as November
1997, the country experienced riots, partly as a result of price increases and
shortages of water and electricity. Several state-owned companies have been
privatized, including the country's state-owned electric utility company, and
there can be no assurance that the implementation of these privatizations will
not cause social unrest. Any increase of poverty, social unrest or shortage of
basic services could adversely affect the use of telecommunications services.
ALTHOUGH INFLATION IN THE DOMINICAN REPUBLIC HAS BEEN MODERATE SINCE
1990, INCREASES IN THE INFLATION RATE WOULD ADVERSELY AFFECT THE
DOMINICAN REPUBLIC'S ECONOMY AND THE DEMAND FOR OUR TELECOMMUNICATIONS
SERVICES.
Inflation has moderated in the Dominican Republic since 1991, following
an austerity program instituted by the Dominican government. According to the
Central Bank, the annual rates of inflation were 3.9% for 1996, 8.4% for 1997,
7.8% for 1998, 5.1% for 1999 and 9.0% for 2000. However, the country has
experienced high levels of inflation in the past, including an inflation rate of
79.9% for 1990. Any increase in the value of the U.S. dollar against the
Dominican peso directly affects the Dominican Republic's inflation rate because
the Dominican Republic relies heavily on imports from the United States of raw
materials and consumer goods. High inflation levels could adversely affect the
Dominican Republic's economy and reduce demand for telecommunications services.
THE VOLATILITY AND DEPRECIATION OF THE DOMINICAN PESO AGAINST THE U.S.
DOLLAR COULD REDUCE THE AMOUNT OF CASH WE WILL HAVE TO REPAY OUR
INDEBTEDNESS OR FUND OUR OPERATIONS, INCLUDING THE PURCHASE OF
TELECOMMUNICATIONS EQUIPMENT.
For 1998, 1999 and 2000, we earned between 55% and 65% of our operating
revenues in Dominican pesos and the remainder of our operating revenues in
foreign currency, primarily in U.S. dollars. The percentage of operating
revenues in Dominican pesos could increase if we successfully increase our share
in Dominican local markets in accordance with our strategy. The Dominican peso
has depreciated in value against the U.S. dollar in the past and may be subject
to fluctuations in the future. Most of our outstanding indebtedness is U.S.
dollar-denominated and must be paid in U.S. dollars. Vendors of
telecommunications equipment all require that we pay for equipment in U.S.
dollars. The devaluation of the Dominican peso could affect adversely our
ability to purchase U.S. dollars in order to service our debt obligations and
pay our equipment vendors. Our purchase of substantial amounts of U.S. currency
in Dominican markets could adversely affect the value of the Dominican peso in
relation to the U.S. dollar, and make these purchases more costly for us.
ITEM 4. INFORMATION ON THE COMPANY
TRICOM, S.A. is incorporated in the Dominican Republic. Our operations
are headquartered at Ave. Lope de Vega No. 95, Santo Domingo, Dominican Republic
and our telephone number at the above address is 809-476-4000.
- 17 -
Our website address is www.tricom.net. Our agent in the United States is CT
Corporation System. This agent can be reached at 1633 Broadway, New York, NY
10019 and at telephone number (212) 664-1666.
BUSINESS OVERVIEW
OVERVIEW
We are a leading full service communications service provider in the
Dominican Republic. We offer local, long distance, mobile, Internet and
broadband data transmission services. Our wireless network covers
approximately 85% of the population in the Dominican Republic. Our network
providing local service is 100% digital, the only such network in the
Dominican Republic. Telecommunications networks that employ digital
technology can transmit higher quality signals at lower cost. We also own
interests in undersea fiber optic cable networks that connect and transmit
telecommunications signals between Central America, the Caribbean, the United
States and Europe. Fiber optic cable is composed of glass strands and
transmits telecommunications signals in the form of light. Through our
subsidiary, TRICOM USA, Inc., we own telecommunication switching facilities
in New York, Miami and Puerto Rico. Using these facilities, we originate,
transport and terminate international long-distance traffic. We are one of
the few Latin American long distance carriers that is licensed by the U.S.
Federal Communications Commission to use switching facilities that it
operates to connect long distance traffic.
Since our inception in 1992, we have diversified our operations, and
have captured a significant share in key markets entirely through internal
growth. In 1999, we carried approximately 40% of the southbound voice and data
traffic from the United States to the Dominican Republic. Since we introduced
wireless services in 1995, we have achieved an approximate 40% market share as
of year-end 2000, based upon data published by the Instituto Dominicano de las
Telecomunicaciones, or INDOTEL, the Dominican agency that regulates
telecommunications. From 1996 to 2000, we increased revenues from $79.1 million
to $224.3 million, representing a compounded annual growth rate of 30%.
We were the leader in the Dominican Republic for 1998 and 1999 in net
new customer additions in the market for local service and in 1998 for net new
customer additions for mobile services, based upon data published by INDOTEL.
Our recent success is reflected in the following period-to-period changes in
operating statistics from 1999 to 2000:
- Local access lines increased 24.7% to 148,312;
- Cellular and PCS subscribers increased 61.9% to 284,991; and
- International long distance traffic increased 65.6% to 597.2
million minutes.
Our growth has resulted from aggressive marketing, excellent customer
service, rapid deployment of state-of-the-art technologies and the use of highly
integrated management information systems. Our experienced core management team,
in place since 1996, has successfully executed our business strategy,
implementing our entry into new markets and introducing new product offerings.
We have built a strong brand name in the Dominican Republic. Today, our wireless
network covers approximately seven million people. In 1999, as part of our local
services product offering, we launched a wireless local loop system in areas of
Santo Domingo and Santiago, the two largest cities in the Dominican Republic, as
well as in nine other cities. Using wireless local loop technology, we can
connect a customer within 48 hours, substantially less time than required for
wireline installation.
We plan to establish in selected Central American markets a mobile
service network targeted at business customers that will provide uninterrupted
connection throughout the region without any change in service provider or
equipment. We will deploy an advanced integrated radio-telephone and dispatch
communications system known as IDEN-Registered Trademark-, developed by
Motorola. This technology enables us to use spectrum efficiently and offer
multiple wireless services on one digital handset. We plan to capitalize on the
increasing demand by business customers for a product that provides advanced
mobile services and a complete solution for their intra-regional communication
needs.
- 18 -
We have purchased a 51% interest in a Panamanian company, Cellular
Communications of Panama, S.A., now TRICOM Panama, S.A., which owns the
frequency rights for 107 channels of 25 megahertz each. TRICOM Panama has
approximately 1,600 analog mobile users. These frequencies will give us access
to nationwide coverage, covering a population of approximately 2.81 million
people. Currently, we are constructing an iDEN network, at a cost as of June 30,
2001 of approximately $30 million, in Panama City and Colon, the two largest
cities in Panama, and in important transportation corridors in other parts of
the country. Our expected completion date for this phase of the buildout is the
fourth quarter of 2001. We will offer digital mobile integrated services,
including two-way radio, paging and interconnect services.
In 2000, we were awarded, in a government auction, radio frequency
rights in Guatemala to 172 channels of 25 megahertz, providing us with
nationwide coverage. We also have acquired in El Salvador radio frequency rights
for an aggregate of 185 channels of 25 megahertz, that provides spectrum to
operate our iDEN network. We currently do not intend to develop a network in
either Guatemala or El Salvador in 2001
MARKET OPPORTUNITIES
We believe that the Dominican and Central American telecommunications
markets represent attractive opportunities and that the following factors will
drive growth in these markets:
- UNDERSERVED DOMINICAN MARKET. At December 31, 1999, teledensity, the
ratio of local access lines per 100 inhabitants, in the Dominican
Republic was 9.3 and the ratio of wireless subscribers per 100
inhabitants was 3.1, according to the International Telecommunications
Union, or ITU. The ratios in Puerto Rico were 32.7 for teledensity and
15.0 for wireless.
- DOMINICAN ECONOMY AMONG THE FASTEST GROWING IN LATIN AMERICA. Gross
Domestic Product in the Dominican Republic grew at an average annual
rate exceeding 7.9% from 1996 through 2000, according to the Central
Bank of the Dominican Republic. The Dominican Republic experienced real
Gross Domestic Product growth of 8.3% in 1999 and 7.8% in 2000
according to the Central Bank. This has made it one of the fastest
growing economies in Latin America. The World Bank projects growth for
the Dominican Republic to exceed 7% in 2001.
- STRONG GROWTH IN THE DOMINICAN TELECOMMUNICATIONS MARKET. In 2000, the
total telecommunications market in the Dominican Republic was
approximately $1.1 billion, according to the Central Bank. The
telecommunications market in the Dominican Republic grew at an average
annual rate of 17.5% from 1995 to 2000 according to the Central Bank.
- UNDERSERVED CENTRAL AMERICAN BUSINESS MARKETS. Markets in Central
America share many of the characteristics of markets in the Dominican
Republic, including:
-rapidly growing economies;
-the development of intra-regional trading markets fostered by
the adoption of free trade agreements;
-low penetration of telecommunications services, continuing
privatization and liberalization of markets for
telecommunications services; and
-and current limited competition in the telecommunications
service sector.
COMPETITIVE STRENGTHS
We believe that the following factors give us a competitive advantage
in our existing and targeted markets:
ADVANCED NETWORK. We have the only network providing 100% digital local
service in the Dominican Republic and a wireless network covering approximately
85% of the population. Our local network features a wireless local loop system
that enables us to connect a customer within 48 hours, substantially less time
than required
- 19 -
for wireline installation. We currently have switching facilities in New York
and Puerto Rico, and interests in international fiber optic cable undersea
systems that connect Central America and the Caribbean with the United States
and Europe. These facilities enable us to originate, transport and terminate
traffic at reduced costs. Our advanced networks also provide our customers
with high quality voice and data transmission.
STRONG BRAND NAME RECOGNITION AND MARKETING CAPABILITIES. Our creative
marketing and excellent customer service have allowed us to build a strong brand
in our existing markets and to achieve substantial market share in each of our
service offerings. We capitalize on our brand name recognition and marketing
programs both in the Dominican Republic and to target ethnic communities in New
York, New Jersey, New England, Florida and Puerto Rico. In the Dominican
Republic we consistently lead the market in introducing innovative business
practices and products using advanced technology. We were the first operator in
the Dominican Republic to offer prepaid cellular, international calling cards,
Internet service and offerings combining different services and pricing options.
STRONG TRACK RECORD OF REVENUE AND EBITDA GROWTH. We have increased
revenue and earnings before interest, taxes depreciation and amortization
sequentially in each of the last five years. We have increased our revenue and
cash flow by internal growth and without acquiring other operations. This
enables us to minimize our reliance on borrowings in funding our network
build-out. We believe that the revenue and cash flow growth characteristics of
our existing businesses will give us the financial flexibility to capitalize on
future expansion opportunities.
EXPERIENCED MANAGEMENT. Our management team has significant experience
in the telecommunications industry and a track record of building revenues and
positive cash flows in telecommunications markets. The core team has been with
us since the inception of commercial service in the Dominican Republic. Our
ability to identify market opportunities and adapt to new technologies has
enabled us to attain significant market share while competing with a dominant
provider with greater resources.
OUR STRATEGY
Our goal is to capitalize on our key strengths to further build our
market share and penetrate new markets, while maximizing revenues and cash
flows. We intend to:
EXPAND EXISTING MARKET COVERAGE IN THE DOMINICAN REPUBLIC AND THE UNITED STATES
BY:
DEPLOYING CAPITAL PRUDENTLY TO ENHANCE REVENUE GROWTH AND MARGINS
In building our networks in the Dominican Republic, we have managed our
investments to respond to the demand for our services, market conditions and the
availability and cost of financial resources. In implementing our expansion
programs, we plan to build on our business model, targeting markets in Central
America with characteristics similar to markets in which we have competed to
date. We will manage our expenditures to respond to the success of our different
programs and will deploy our financial resources where the combination of demand
and the likelihood of returns are greatest. In Central America, we intend to
build out our network in one local market or country at a time, initiating
service in Panama, for example, before making a significant commitment to other
countries. We believe this should allow us to measure the results of our
strategy before committing additional resources.
FOCUSING ON HIGH-GROWTH MARKET SEGMENTS IN THE DOMINICAN REPUBLIC, INCLUDING
RESIDENTIAL LOCAL AND WIRELESS SERVICES.
Substantial unmet demand for residential local service remains in the
Dominican Republic as large segments of the Dominican population still have
limited access to this service. Based upon information published by the
Instituto Dominicano de las Telecomunicaciones or INDOTEL, at December 31, 2000,
there were approximately 894,164 local access lines in service, representing a
teledensity rate of approximately 10.5%. As part of our local service offering,
we plan to expand our wireless loop system into three additional cities in 2001
and increase capacity in the areas currently covered by the system. In December
1999, we introduced prepaid local access service, which accounted for the
addition of 43,920 gross line in 2000.
- 20 -
The mobile wireless market has been the fastest growing segment of the
Dominican telecommunications market since 1996. Based on information published
by INDOTEL, we believe that, since 1996, the mobile wireless market has grown at
an annual average rate of 71%. We believe that there potentially is a market of
approximately 1.5 million subscribers. Our cellular network covers approximately
85% of the population and our PCS network covers approximately 66% of the
population. With these two networks we are able to offer dual-band service,
allowing PCS customers to use their mobile phone over our analog service as
well. We intend to expand our PCS system into additional cities over the next
several years, resulting in coverage of 75% of the Dominican population.
EXPANDING OUR LONG DISTANCE OPERATIONS IN THE UNITED STATES TO TARGET ADDITIONAL
ETHNIC AND GEOGRAPHIC MARKETS AND TO EXPAND OUR OWNERSHIP AND CONTROL OF
DISTRIBUTION CHANNELS
As we expand our long distance network in Central America and the
Caribbean, we plan to target additional ethnic and geographic markets in the
United States through TRICOM USA. We will then be able to offer end-to-end long
distance services to these new markets by connecting calls in each country
through telecommunications facilities that we own and operate in each country.
TRICOM USA relies on distributors and resellers for the placement of
its prepaid calling cards and the generation of international traffic to the
Dominican Republic and other destinations. Resellers do not operate their own
telecommunications networks but purchase minutes and re-sell them to consumers.
In order to expand our market presence, and at the same time enhance the
profitability to us of traffic generated by our prepaid cards, we will consider
opportunities to acquire distributors of prepaid calling cards.
Through the acquisition of resellers, we can capture a greater share of
the market for outgoing minutes and increase direct access to customers, which
should enhance our profit margins. Resellers also give us greater access to
ethnic markets in which we already participate and access to new ethnic markets.
CAPITALIZING ON OPPORTUNITIES IN THE DOMINICAN REPUBLIC CREATED BY THE GROWING
DIGITAL ECONOMY TO EXPAND OUR BROADBAND DATA TRANSMISSION BUSINESS AND INTERNET
OPERATIONS.
As the Dominican economy has expanded, there has been greater demand
for broadband data transmission and Internet services. Our fully digital
network positions us to provide broadband access and high speed data
transmission to both the corporate and residential markets. During 2000, we
introduced:
- digital subscriber lines, or xDSL, that provides high-bandwidth
transmission of voice and data over regular telephone lines
- very small aperture terminal, or VSAT, a relatively small
satellite antenna used for high speed satellite-based single to
multiple point data transmissions, including for the internet, and
- local multipoint distribution service, or LMDS, technologies,
which is a broadband wireless single to multiple point
communication system that can be used to provide digital two-way
voice, data, Internet and video services.
The implementation of these technologies on a commercial basis enhances
our delivery of broadband service. We will also consider acquiring or investing
in cable television systems that would enhance our access to the market for
voice and high speed data transmission.
EXPAND INTO SELECTED CARIBBEAN AND CENTRAL AMERICAN MARKETS BY:
OFFERING A DIFFERENTIATED SET OF SERVICES DIRECTED TO CORPORATE CUSTOMERS,
FOCUSING ON HIGHLY CONCENTRATED BUSINESS CENTERS IN OUR TARGETED CENTRAL
AMERICAN MARKETS.
We believe that several countries in Central America have markets that
have demographic, regulatory and demand characteristics similar to those in the
Dominican market at the time we initiated our operations. These characteristics
include underserved markets and increased liberalization of the
telecommunications industry. In these countries, we believe we have the
opportunity to export our business model. We will target business customers
- 21 -
because they offer certain advantages, including a stronger credit profile
and, on average, higher revenue per user. In other markets, including the
United States and in Latin America, the deployment of iDEN technology has
resulted in some of the highest revenues per unit within the wireless markets.
We will offer a package of services and features that combines multiple
communications services in one digital subscriber unit. We intend to emphasize
the differentiated features of iDEN technology and our networks, including
digital mobile telephone services, mobile dispatching, two-way messaging,
push-to-talk and one-to-many connections.
APPLYING WIRELESS OPERATING EXPERTISE, SCALABLE BACK OFFICE SYSTEMS AND
MARKETING KNOW-HOW TO DEVELOP OUR IDEN CENTRAL AMERICAN OPERATIONS.
We will rely on the technical expertise that we have developed to
deploy wireless technologies to enter new markets. Our deployment of a
CDMA-based wireless network has enabled us to enhance our mobile services
capabilities while also accelerating the expansion of our local access presence
in the Dominican market. Our scalable back office systems, which integrate
sales, customer service, collections and financial control functions will allow
us to expand our operations in a cost-efficient manner. We believe that our
marketing know-how is an integral part of our sales model. This model features
proactive sales efforts, targeted sales campaigns and reduction of credit risk
through promotion of prepaid services. We believe this model can be exported to
other markets in Central America.
LEVERAGING OUR EXISTING RELATIONSHIPS WITH KEY SUPPLIERS, INCLUDING MOTOROLA,
NORTEL AND HARRIS, TO CONTINUE OUR BUILDOUT IN THE DOMINICAN REPUBLIC AND TO
PROVIDE TURNKEY SOLUTIONS IN OUR TARGETED CENTRAL AMERICAN MARKETS.
Our relationships with our suppliers, including Motorola, Nortel and
Harris, are important as we continue to upgrade and deploy our digital mobile
networks and provide new products and services to expand our subscriber base.
Access to the technology, supplier relationships, network development and
marketing expertise of these companies could afford us significant competitive
advantages. We intend to continue to leverage their expertise in the future as
we enhance and expand our networks and launch new products and services.
SERVICE OFFERINGS
Our service offerings include:
- Local service;
- Mobile services;
- International long distance; and
- Broadband data transmission and Internet.
LOCAL SERVICE
We are a competitive local exchange carrier in the Dominican Republic
and had 148,312 local access lines in service at December 31, 2000, including
29,386 net line additions during 2000. We were the leader in net line additions
in 1998 and 1999. Our local access network covers areas with approximately 85%
of the population of Santo Domingo, Santiago and eight additional cities.
All of our basic telephone service customers have access to a range of
value-added services, including call forwarding, three-way calling, call
waiting, caller ID and voicemail applications. In addition to local service, we
provide direct-dialed, collect and operator-assisted international and domestic
long distance services and Internet access to our residential and corporate
customers.
We offer our customers broad flexibility in assembling customized
packages of services, which provide our customers with cost savings and enhanced
control over their consumption of telephone services. Customers may choose from
a menu of services, including domestic and international long distance services,
local service and value-
- 22 -
added services. They also may bundle their local access service with cellular
or PCS, paging and Internet services. Service packages permit customers to
preset their monthly bills based upon, for example, local service minutes as
well as long distance minutes and specified destinations. Customers are
responsible for paying for usage levels in excess of preset package amounts,
at regular per minute rates. We believe that providing customers with such
budgeting capability increases consumer confidence in using
telecommunications services, consequently allowing for increased service
penetration, higher levels of customer satisfaction and lower incidence of
delinquent payments.
We have accelerated our local access network expansion program by
deploying a wireless local loop. The wireless local loop consists of
receivers, that are installed at a customer's house, and digital switches.
The receiver is connected by cable to a standard telephone jack that connects
to a standard telephone. The receiver is powered by the customer's home power
supply and also contains a battery that allows operation to continue for up
to approximately 24 hours of standby and eight hours of talk time in the
event of a power outage. The wireless local loop offers voice quality as
clear as telephones connected by wirelines.
We also sell fully integrated systems and components for both turnkey
systems and private telephone networks used within enterprises. We are an
exclusive distributor in the Dominican Republic for Mitel and Comdial equipment,
two leading manufacturers of private branch exchanges and key telephone systems.
We are also a leading provider of computer telephony integration systems in the
Dominican Republic.
MOBILE SERVICES
Our mobile network covers approximately 85% of the Dominican Republic's
population. We currently offer both cellular and PCS service. According to
INDOTEL, there were approximately 705,431 analog and PCS cellular subscribers in
the Dominican Republic at December 31, 2000. At December 31, 2000, we had
284,991 cellular subscribers, including 32,809 PCS subscribers, representing
approximately 40% of the Dominican mobile telephony market. Our net addition of
cellular and PCS subscribers in 2000 was 108,911, which represents 39% of net
subscriber additions for 2000 in the Dominican Republic. We were the leader in
net addition of mobile wireless subscribers in 1998.
The number of our cellular and PCS subscribers grew by 62% during 2000.
We attribute a substantial portion of this growth to our prepaid cellular and
PCS card, the Amigo card. At December 31, 2000, prepaid cellular and PCS
subscribers accounted for 285,038, or 94%, of our 302,613 total cellular and PCS
subscribers in the Dominican Republic. We estimate that other companies
accounted for an additional 158,600 prepaid cellular and PCS subscribers, and
that the total Dominican market base for cellular and PCS was 856,613
subscribers, so that prepaid cellular and PCS accounted for 52% of the entire
cellular and PCS market of the Dominican Republic at December 31, 2000. Our
Amigo card program has expanded our cellular and PCS customer subscriber base
because it offers cellular and PCS service to individuals who would not satisfy
our current credit policies and because it appeals to customers who prefer to
budget their cellular and PCS telephone spending.
We have offered PCS service since April 1999. This technology provides
for added security and privacy compared with traditional analog systems, and it
also offers greater capacity. PCS customers are able to receive all of the
benefits related to a digital service, including digital messaging, caller ID
and voicemail. Our PCS network covers areas with approximately 66% of the
population in the Dominican Republic and is less extensive than our analog
network. We offer a dual-band service, allowing customers to use seamlessly
their mobile phones nationwide over both digital and analog networks.
We also have entered into arrangements with major consumer electronics
retailers and a network of independent cellular and PCS dealers to offer our
cellular and PCS services in conjunction with their sale of handsets. As a
result of our arrangements with major electronics retailers for the sale by them
of handsets in conjunction with subscriptions for our services, we sold handsets
to less than 15% of our new subscribers in 2000. We do not subsidize or provide
credit on the sale of cellular and PCS handsets.
We have provided paging services since April 1995. At December 31,
2000, we provided paging services to 21,622 subscribers, representing
approximately 16.1% of the Dominican paging market. In 1999 we stopped
soliciting new paging subscribers. We believe that the success of our prepaid
cellular and PCS program has contributed
- 23 -
to the decline of paging as a significant part of our business because
customers have replaced paging services with prepaid cellular services.
INTERNATIONAL LONG DISTANCE
In the Dominican Republic, we provide international long distance
services to our local access, cellular and PCS customers. In addition, we offer
prepaid calling cards for international long distance, the Efectiva and Conexion
cards, that can be used from any telephone in the Dominican Republic. We operate
telephone centers that provide access to telephone services to individual
customers who either do not have telephone services in their own homes or who
are attracted by the competitive pricing of the telephone centers. The centers
offer a wide range of telephone services, including bill payments and sales of
service in addition to long distance.
In the United States, our subsidiary TRICOM USA provides international
carrier services primarily to resellers, which account for an increasing share
of international long distance traffic between the United States and the
Dominican Republic. Through our telecommunications switching facilities in the
United States, we have been able to provide resellers with an alternate channel
for sending international long distance traffic. In addition, by controlling the
origination, transport and termination of international long distance traffic
between the United States and the Dominican Republic, we believe that we are
able to send and receive such traffic at a lower cost to us than by exchanging
traffic with traditional international carriers.
Each year since the initiation of TRICOM USA's operations, we have
derived a greater percentage of international revenues from resellers. During
2000, resellers originated approximately 45% of the international long distance
minutes from the United States to the Dominican Republic that we received.
Minutes delivered by resellers may fluctuate significantly. While we enter into
agreements with resellers, they are not required to provide to us any amount of
traffic. The price per minute charged by us to a reseller is negotiated as often
as dictated by the market. At December 31, 2000, we received traffic from
approximately 38 resellers.
TRICOM USA also markets a number of prepaid cards to ethnic communities
in New York, New Jersey, Rhode Island, Massachusetts, Illinois, California,
Saint Thomas, Puerto Rico and Canada. Each prepaid card is assigned a unique
identification number and a face value ranging from $2 to $20. The prepaid
card's dollar balance is reduced by the cost of each call. TRICOM USA sells the
cards to distributors that resell the cards to retail outlets.
BROADBAND DATA TRANSMISSION AND INTERNET
We provide broadband data transmission services to 119 of the 400
largest business customers in the Dominican Republic based on assets, through
several means of delivery including fiber optic cable and digital wireless
point-to-point radio links. In addition, we provide these large customers with
data circuits Internet access, private networks and frame relay services with
branches in the different cities in the country. We recently increased
transmission capacity to provide larger bandwidths and data services are
expected to have a strong growth with the commercial launch of both the digital
subscriber lines, or xDSLs, that provide high-bandwidth transmission of voice
and data over regular telephone lines and the very small aperture terminals, or
VSATs, relatively small satellite antennas used for high speed satellite-based
single to multiple point data transmissions, including for the internet.
In the Dominican Republic we are the second largest Internet Service
Provider. We provide Internet connectivity to the residential and corporate
markets through traditional dial-up connections, dedicated lines and very small
aperture terminals, or VSATs, relatively small satellite antennas used for high
speed satellite-based single to multiple point data transmissions, including for
the internet, with speeds ranging from 56 kilobytes per second to 2 megabytes
per second. During 2000, we deployed our digital subscriber lines, or xDSLs,
that provides high-bandwidth transmission of voice and data over regular
telephone lines, and wireless broadband delivery solutions. Our PCS and paging
services are now fully integrated with our Internet service, offering short
messaging services, including email and digital messaging through our website,
www.tricom.net.
In March 2000, we entered into a five-year $25 million contract with
the Dominican Republic Department of Education to provide broadbased satellite
Internet access and Intranet services to every public high school in the
Dominican Republic. We have been utilizing Intellicom's, a wholly owned
subsidiary of SoftNet Systems, state-of-
- 24 -
the-art content caching technology and comprehensive family of value-added
services to deliver fast and efficient end-user access to the Internet.
Intellicom is a wholly owned subsidiary of SoftNet Systems.
MARKETING AND SALES
Our advertising and promotional materials in the Dominican Republic
emphasize that we are a full-service provider of local, cellular, data and
long distance services and that customers can realize significant savings
from the packaging of services. We use targeted marketing programs,
concentrating on those areas of urban centers where we currently provide
services and employ marketing techniques often used to promote consumer
products, including television, radio and newspaper advertising, door-to-door
sales for basic local service and the use of credit card lists and other
databases to identify and contact potential users of cellular and PCS
services. We distribute gifts to potential and new subscribers, including
prepaid calling cards, bonus coupons and other promotional goods bearing our
logo. Other means of advertising include billboards, block parties and
telemarketing.
LOCAL AND MOBILE SERVICE
In the initial stages of our deployment of local services, we relied
primarily on door-to-door sales, reflecting the limited geographic extent of
our conventional local telephone network buildout. Since the deployment of
the wireless local loop which gave us ubiquitous presence in the major cities
of the country, we have used mass media to a greater extent to promote our
local telephone services. Approximately 65% of gross additions of local
access lines are by direct sales and 35% are completed at our commercial
points of sale.
We have achieved our mobile market share growth through direct sales
and database marketing techniques, telemarketing and aggressive massive
advertising. We sell mobile services from 13 of our offices and more than 246
other offices operated by independent distributors. Through direct sales, we
also pursue additional corporate and commercial accounts which, in 2000,
accounted for as much as 10% of airtime but represented only 2% of our
cellular and PCS subscriber base. We also have entered into arrangements with
major consumer electronics retailers to offer our cellular and PCS services
in conjunction with their sale of handsets.
Our advertising for PCS services emphasizes voice quality, clarity
and value-added services. Our advertising for prepaid cellular services
emphasizes convenience, the ability to budget telecommunication expenses and
accessibility to customers without credit history.
Our corporate sales and marketing approach to large business
customers is to offer comprehensive and customized telecommunications
solutions for each corporate customer's needs. Our sales staff works with
each customer to gain a better understanding of that customer's operations
and to develop application-specific solutions that are appropriate for each
customer. Many of our sales executives have engineering backgrounds and are
supported by product development and customer service teams.
INTERNATIONAL LONG DISTANCE
In the Dominican Republic, in addition to our local access and
mobile subscribers, we target individual customers who do not have telephone
services in their own homes for our long distance services. In the United
States, we target the large immigrant Dominican community and other ethnic
populations.
We feature our prepaid cards, Efectiva and Conexion, in our
advertisements for our basic services, as well as in separate advertising.
Our advertising emphasizes the accuracy and reliability of our billing and
the savings that subscribers can realize. The Efectiva and Conexion cards are
distributed at our commercial offices, call centers and through wholesalers
and retailers. In the Dominican Republic, we have six wholesale distributors
and an internal sales force targeting smaller retailers totaling 3,200 points
of sale for our prepaid cards.
TRICOM USA advertises its prepaid cards on radio and through print
media targeted at Dominican and other ethnic communities. Advertisements
emphasize price, voice quality as well as patriotic or ethnic themes. Cards
are distributed to wholesalers under the TRICOM name and are sold primarily
in small retail stores, including groceries, beauty parlors, drugstores and
newsstands.
- 25 -
BROADBAND DATA TRANSMISSION AND INTERNET
For broadband data transmission services, we target the Dominican
Republic's 400 largest businesses, which require more sophisticated
technology and demand more service and support. Our marketing professionals
target these businesses in the Dominican Republic, including large
multinationals, local business conglomerates and the largest hotels.
In the residential market we offer packages that bundle Internet access
together with our local, wireless and other services. We have entered into
arrangements for the distribution of Internet access services through major
Dominican computer retailers, by pre-installing our services and offering the
first month of service free of charge. In a promotion to increase computer
penetration in the country, we have also launched our "ENTER-NET" plan offering
financing provided by Bancredito, a bank affiliated with GFN, our largest
shareholders, for computer equipment bundled with Internet access via our
service.
We recently launched a number of broadband delivery systems. These
platforms will enable us to increase our penetration into markets requiring high
speed data transmission and Internet access.
CUSTOMER SERVICE
In the Dominican Republic, we provide customer service for all of
our services through 11 service centers and 16 commercial offices. We plan to
add eight service centers during 2001. We also allow customers to pay bills
at offices of Bancredito. There are approximately 275 such offices, all of
which are linked to our central billing and collection system.
Our customers may subscribe for telephone services, pay and obtain
information about monthly bills and inquire about billing adjustments at our
offices. To enhance customer service, our representatives use our customer
service system linked to our central billing and service order system,
enabling them to handle expeditiously both billing and service inquiries.
We provide a 24-hour interactive voice response service through
which customers can register claims and make billing inquiries. In addition,
customers may access their account information online 24 hours a day, 7 days
a week, on our website, www.tricom.net. Our website provides information
about our services and can be used to purchase products including prepaid
cards, cellular phones and accessories.
We seek to provide installation and repair services to our customers
on par with such services provided by the best telecommunications companies
throughout the world. In order to achieve this goal, we have established
service benchmarks for, among other things, network availability,
installation and repair intervals.
Our customer service department gathers information from our
customers, which we then use to tailor our products and services to meet
customer needs. We contact customers shortly after initial installation to
address any service concerns or problems that they may have. We regularly
survey our customers to determine their satisfaction with our services and to
improve services based upon the explanations offered by customers who
voluntarily cancel their services. Furthermore, we have a customer retention
department that works to determine the cause for customer churn and also to
develop appropriate retention strategies to target this segment.
During 2000, in an effort to improve our customer service, we
retained Cambridge Technology Partners to develop a customer relationship
management system, integrating our information systems and our customer
relationship management software. This system allows customer service
representatives to access all billing, service order and other client
specific information. This enables us to offer speedier service and more
efficient follow through and to monitor every step of the customer service
relationship. We expect to complete the implementation of these systems by
the end of 2001.
BILLING AND CREDIT POLICIES
- 26 -
We have developed an integrated billing system for local, long
distance, cellular, paging and value-added services. The integrated billing
system enables our customers to obtain a single bill, providing detailed
information about charges for all services rendered. We have led the
Dominican telecommunications market in the introduction of billing packages
that provide detailed call reports with time-of-day, day-of-week and
destination information as well as flexible billing discount programs which
are similar to those found in the most competitive markets outside the
Dominican Republic. Our subscribers can call our center and speak with a
customer care representative and obtain account and statement information.
Our customers also can access information over the telephone through
"FONOCOM," an interactive voice response system that enables customers to
consult their most recent calls and account balances. Our customers also may
request a copy of their bill, which is then delivered to them via facsimile
transmission.
Cash payments may be made at walk-in commercial offices, centers and
affiliated bank branches, or funds may be debited from credit cards or bank
accounts. Our customers also may pay their bills at any one of our over 200
payment stations, which are located in neighborhood gas stations, grocery
stores and other retail outlets.
Residential customers, who are not prepaid customers, subscribing
for basic telephone service are required to pay an installation fee of up to
RD$1,495 ($88) in cash. If the customer chooses to pay the installation fee
in installments, he must pay a 50% down payment and the balance within two
months. Each residential basic telephone service subscriber has a credit
limit of approximately $313. We contact any customer exceeding this credit
limit and request that such customer pay all or part of the outstanding bill.
In December 1999, we introduced a prepaid local access line program. This
program appeals to customers who prefer to budget their telephone spending
and allows us to expand our market to customers who otherwise would not
qualify under our credit policies.
We require all individuals wishing to subscribe for cellular and PCS
services to own a credit card or prepay either by using the Amigo card or
making a deposit through the Cellflex prepayment program. Our service
contracts do not cover a specified amount of time and remain in effect as
long as each customer remains active and current in paying its bills. Each
cellular and PCS service subscriber is assigned a credit limit, which varies
depending upon the individual's monthly usage and payment history.
Since 1996, our policy has been to suspend service for all
residential basic telephone service subscribers if payment is not received
within 45 days after a bill is issued and to terminate service 45 days after
the suspension date. Cellular, PCS and paging services are suspended when the
prepayment balance is exhausted or when a customer's credit limit is reached.
Customers must pay RD$215 ($13) for wireline services, RD$73 ($5) for paging
services and RD$255 ($16) for Internet services in order to reinstate service
after termination. Cellular subscribers whose service has been terminated may
reconnect only by purchasing an Amigo prepaid card or by paying RD$188 ($12)
to obtain Cellflex services.
We had an average monthly churn rate for cellular and PCS subscribers
of 3.1% in 2000 compared to an average monthly churn rate of 1.8% in 1999,
reflecting primarily our decision in the fourth quarter to eliminate lower
revenue-generating prepaid customers by shortening the expiration of our prepaid
calling cards to 30 days. We calculate average monthly churn by dividing the
number of subscribers disconnected during the year by the sum of subscribers at
the beginning of each month during such year.
TRICOM USA distributes its prepaid cards through wholesale
distributors. Depending on their credit history and the length of their
relationship with TRICOM USA, wholesalers are required to pay in full for
calling cards upon delivery or are extended credit for up to 15 days. All
distributors of prepaid cards in the Dominican Republic are extended credit
for up to 30 days.
TRICOM USA requires that new and smaller reseller customers pay on a
weekly basis for long distance services. Some customers that have a previous
relationship with TRICOM USA are extended a 15-30 day credit, on average,
depending on proven reliable finance conditions. Traditional long distance
carriers generally pay TRICOM USA within 60 to 90 days for traffic.
MANAGEMENT INFORMATION SYSTEMS
- 27 -
Our management information systems are designed to provide two
principal functions. First, they must generate accurate information in real
time, which employees at all levels of the organization can readily access,
particularly those employees who deal directly with customers. Second, our
customers must be able to access directly pertinent information from our
computer network. We have designed a fully integrated, open architecture
computer network with a view to providing these functions.
We use Oracle as our unified database and software application
development tool set. We use Oracle Financials for accounts payable, accounts
receivable, general ledger, purchase orders, inventory control and fixed asset
accounting.
We have developed an integrated billing system that runs on the Oracle
platform. Our billing system rates calls in one-second increments for calls made
from our retail telephone centers, six-second increments for calls made with our
prepaid calling cards and one-minute increments for calls made from local access
lines, cellular and PCS telephones. The billing system also enables us to rate
calls according to each customer's specific service package, thus permitting us
to offer tailored packages.
NETWORK INFRASTRUCTURE
Our state-of-the-art network includes:
- Our local access network;
- A digital wireless point-to-point transmission system;
- Our mobile network ;
- Two satellite earth stations in the Dominican Republic and
capacity in eleven international undersea cables; and
- Switches in New York, Puerto Rico and in Miami to connect
international traffic originating in the U.S.
We invested over $700 million from 1992 through 2000 to develop our
network, which is fully digital except for portions of our cellular network.
LOCAL SERVICE AND MOBILE NETWORK
The core of our network is composed of Nortel International gateway
switches. These switches have switching capacity of more than 4,300 digital
trunk lines and possess special features such as ultra-high-speed, port-to-port
call switching that can handle 240,000 calls per second. Our switch time-of-day
capability allows us to distribute efficiently our telecommunications traffic
and provide, as a result, more competitive pricing. Our switches also provides
statistical call distribution information, which allows us to control our flow
of traffic. Without such capabilities, we would have to conduct these monitoring
tasks manually. The switches also enable us to use one common channel for
signaling purposes, optimizing the channels available for voice transmission.
Without this capability, a network must use each of its channels to signal the
origination and termination for each call, which often results in uncompleted
calls and poor circuit utilization.
Our wireline local access network is composed of Northern Telecom and
Nortel International central switches, 38 remote switches and 33 digital loop
carriers. Each of the central switches is capable of supporting up to 90,000
customers. Our Northern Telecom switches enable us to offer value-added services
including caller identification, three-way calling and automatic recall. Our
intra-city network is comprised of 500 route miles of fiber optic cable and over
3,000 miles of copper cable in seven cities.
We use digital loop carrier technology, which is digital network
transmission equipment used to provide multiple phone conversations, and fiber
optic cable to connect to local access lines. Our central office switches are
-28-
connected by fiber optic cable to various digital loop carriers located
throughout the three largest cities in the Dominican Republic. The digital
loop carriers can be located up to 160 kilometers away from the central
office switch. The digital loop carriers are small in size and can be easily
installed at relatively low cost. These digital loop carriers, in turn, carry
telecommunications traffic by copper or fiber optic lines to the customer.
All these activities are remotely monitored by our management system, located
at our central office. Without the use of the digital loop carriers, we would
have to maintain additional central office switches, which would require us
to incur substantial additional costs, including land acquisition, obtaining
the necessary rights-of-way and hiring additional personnel to manage these
operations.
We transmit our domestic traffic through a fully redundant digital
wireless point-to-point backbone system, which provides both intra-city and
inter-city telecommunications services. A point-to-point backbone system is a
dedicated connection between two endpoints of a communications network. The
backbone system links approximately 85% of the country's population, including
Santo Domingo, Santiago, San Francisco de Macoris and certain key areas in the
eastern and northern regions of the country that are centers of the tourist and
agricultural business industries. The wireless point-to-point system serves the
areas that have high telecommunications usage, including large industrial and
commercial areas. We interconnect with Codetel in 11 cities of the Dominican
Republic.
To oversee and monitor the activities of our network infrastructure, we
have installed a network management system. This system allows us to manage our
central office switches and remotely monitor all network components. The
management system provides continuous information regarding our equipment, any
equipment failure, and the security of the network. In addition, it allows the
central office to send commands and to test our network.
Our cellular network in the Dominican Republic uses analog technology
and our PCS network uses CDMA or digital protocol. Our analog mobile network
currently has 86 cell sites and two mobile switching centers, in Santo Domingo
and Santiago which enable us to provide mobile coverage to those regions of the
Dominican Republic with the greatest demand for mobile services. To provide PCS
service, we use two Motorola digital switches, 72 cell sites and ten digital
repeaters, which allow us to provide PCS service in 12 main cities and
continuous coverage in the main highway routes of the country.
INTERNATIONAL LONG DISTANCE NETWORK
In July 1998, we installed our own state-of-the-art switching facility
in the New York metropolitan area, which we subsequently upgraded to allow us to
provide multiple international signaling protocols. We also installed a switch
in Puerto Rico that became operational in the second half of 2000, and an
additional switch was installed in Miami and became operational in the first
quarter of 2001. By having our own switching facilities, we can provide
termination of international long distance traffic at very competitive rates to
several countries in addition to the Dominican Republic.
By purchasing and leasing international traffic capacity from various
systems, we have diverse options to route our international traffic, and are
fully connected to the international network. We have purchased capacity in
international submarine fiber optic cables that have been built to send and
receive international traffic to and from various countries. These submarine
cables include Americas I, Columbus II, Columbus III, TAINO CARIB and Antilles
1, which directly provide service, or connect with other cables that provide
service to Latin America, the Caribbean and Europe. We own 23% of the Antilles 1
submarine cable, which connects the Dominican Republic to the United States via
Americas I, Columbus II, Taino Carib, Americas II and Arcos I. In addition, we
have an earth station which connects to the PanAmSat satellite system and an
earth station which connects to the INTELSAT satellite system serving the
Atlantic region, Africa and Europe. The use of these satellite facilities also
allows us to route international traffic between the Dominican Republic and most
other countries in the world.
BROADBAND DATA TRANSMISSION AND INTERNET NETWORK
Our Internet Services is provided by a Sun, 3Com and Cisco platform.
The network has equipment to connect to international carriers, including
Teleglobe, UUNET and Sprint. Currently, we have the capacity to handle more than
10,000 dial-up users and provide email, Internet connection, web hosting,news
and real audio/video.
-29-
Other new services are under development through a Nortel Network
Shasta Platform. This platform will enable us to offer virtual private networks
to our customers, which provides security, filtering content, bandwidth
guarantee and other services.
Data communications services are primarily targeted to the business
community and provided at a variety of speeds. Our data communications network
consists of Newbridge data multiplexing nodes, which are network connection
points that allow for the transmission of two or more signals over a single
channel, linked to fiber optic ring and digital wireless point-to-point radio
links. The "last mile" to the customer is provided through fiber optic cable
and/or digital wireless point-to-point radio links. Currently we have 3,269
access lines offering speeds in excess of 56 kilobytes per second. Our data
network has the capability to monitor the communications link all the way to
customer desktop level and to support multiple data protocols such as ATM and
frame relay.
Our technology infrastructure is built and maintained to assure
reliability, security and flexibility and is administered by our technical
staff. Each of our servers can function separately, and key components of our
server architecture are served by multiple redundant machines.
We maintain our central production servers at the data center of our
headquarters. Our operations depend on the ability of the network operating
centers to protect their systems against damage from fire, hurricanes, power
loss, telecommunications failure, break-ins or other events.
We employ in-house and third-party monitoring software to monitor
access to our production and development servers. Our reporting and tracking
systems generate daily traffic, demographic and advertising reports, which are
copied to backup tapes each night.
COMPETITION
LOCAL AND MOBILE OPERATIONS
We currently compete against four other telecommunications companies in
the Dominican market: Codetel, Centennial Dominicana, Orange and Skytel.
Codetel, a wholly owned subsidiary of Verizon, is an integrated
communications service provider which has the largest number of local access
lines in the country.
In January 2000, Centennial Cellular Corp. announced its acquisition of
70% of All America Cables and Radio and during the last quarter of 2000,
introduced PCS service in Santo Domingo. Skytel, a U.S. paging service provider,
has been granted a license by the Dominican government and now provides paging
services in the Dominican Republic.
In 1999, France Telecom acquired a company which had been granted a
concession and launched cellular services during the last quarter of 2000.
The Dominican government also has granted concessions to the following
telecommunications companies which either have not commenced operations yet or
have minimal operations: Telecomunicaciones America, C. por A., Compania
Telefonica del Norte, S.A., Servicios Globales de Telecomunicaciones, S.A.,
Defisa, S.A., Comunicaciones Dominicanas S.A., Turitel S.A. Economitel C. por
A., and Servicios Moviles de Comunicacion, S.A., (MOVICELL). Each of the
concessions allows for the provision of the same telecommunications services
that we provide. In addition, we believe that international telecommunications
companies, from time to time, have considered investments in the Dominican
market.
The growth of our market presence in the Dominican Republic depends
upon our ability to obtain customers in areas that currently are not served or
are underserved by Codetel and to convince these customers to either add or
switch to the telephony services provided by us. We initially attempted to
compete with Codetel by providing lower rates. From time to time, Codetel has
implemented significant price reductions for certain categories of calls in
response to our marketing initiatives and, as a result, forced us to modify
rates for certain services. We will continue our efforts to compete by reaching
unmet demand and providing innovative products and competitive pricing, reliable
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communications, responsive customer service and accurate billing. We emphasize
that customers can realize savings through our packaged service offerings. In
addition, we will leverage our fully integrated and completely digital wireline
network to continue to provide accurate and reliable basic and value-added
telephone services. However, i.e. Codetel, if it decided to do so, could spend
significantly greater amounts of capital than are available to us. Codetel also
could upgrade its network or sustain price reductions over a prolonged period.
Any such efforts by Codetel could have a material adverse effect on our ability
to increase or maintain our market share and on our results of operations.
INTERNATIONAL LONG DISTANCE
The international telecommunications industry is intensely competitive
and subject to rapid change precipitated by changes in the regulatory
environment and advances in technology. Our success depends upon our ability to
compete with a variety of other telecommunications providers in the United
States and in each of our international markets. Our competitors include large
facilities-based multinational carriers including AT&T, MCI/WorldCom and Sprint,
smaller facilities- based wholesale long distance service providers in the
United States and overseas that have emerged as a result of deregulation and
switched-based resellers of international long distance services. We compete on
the basis of price, reliability, quality of transmission, capacity at any time
to terminate traffic and customer service. We expect that competition will
continue to intensify as the number of new entrants increases as a result of the
new opportunities created by the 1996 Telecommunications Act, implementation by
the FCC of the United States' commitments under the World Trade Organization and
basic telecommunications agreements and changes in legislation and regulation in
various foreign target markets.
CENTRAL AMERICA MOBILE SERVICES
STRATEGIC FOCUS
We have targeted markets in Central America in which we intend to offer
mobile services using Motorola's iDEN technology. These services include digital
mobile telephone services, mobile dispatching, two way messaging, push-to-talk
and one-to-many connection. We believe that Central America is an attractive
market to target as one congruous telecommunications region for the following
reasons:
(a) FIRST ENTRANT PROVIDER OF MOTOROLA'S IDEN SERVICES IN CENTRAL
AMERICA
We plan to be the first telecommunications operator to establish a
seamless intra regional mobile network targeted at business customers using a
single transmission technology, iDEN, in the major business centers in Central
America where the majority of the urban population reside. iDEN is a proven
technology, principally used by Nextel, which had over 7.6 million subscribers
worldwide and 4.5 million subscribers in Latin America as of December 31, 2000.
Currently there are no iDEN subscribers in Central America which is a logical
strategic extension of the iDEN network since it fills out the systems between
North and South America. As the first market entrant to offer iDEN in Central
America, we plan to capitalize on the demand by business customers for a product
that provides advanced mobile services.
(b) HIGH OVERALL ECONOMIC GROWTH
The economies in Central America in our target markets are experiencing
a high rate of growth in real Gross Domestic Product. The average compounded
annual growth rate in real Gross Domestic Product for those countries was 3.8%
from 1995 to 2000, and is projected to be 4% in 2001.
(c) STRONG DEMAND IN THE WIRELESS SECTOR
In 1999, cellular penetration in Central America was approximately 6.7%
compared to 8.1% in Latin America and 30.8% in the U.S. Total cellular
subscribers in Central America grew by 259% between 1998 and 1999, according to
Pyramid Research. Growth in the wireless sector is expected to continue in the
region as a result of (1) increased liberalization of telecommunications
markets; (2) continued deregulation within the telecommunications sector; and
(3) the expansion of wireless infrastructure.
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(d) CLOSE INTRA-REGIONAL BUSINESS PRACTICES
Central America consists of seven countries - Belize, Costa Rica, El
Salvador, Guatemala, Honduras, Nicaragua and Panama, linked together by common
borders with a total population of approximately 35 million people. The Mercado
Comun Central Americano (Central American Common Market), started in the mid
1970s, established the framework which allows the free flow of trade throughout
the Central American region (with the exception of Belize). Since being enacted,
an increasing number of multinational companies have established operations
throughout the region and, consequently, have developed similar business
practices. We believe that a seamless wireless network will provide the right
solution to allow business customers to roam across borders and through myriad
networks.
(e) LOGICAL EXTENSION OF OUR EXISTING NETWORK
We have interests in international fiber optic submarine cable systems
that connect Central America and the Caribbean with the United States and
Europe. These facilities will enhance the implementation of our intra-regional
strategy, as well as contributing to our share of international traffic. Our
interests in submarine cable systems and our ownership of switching facilities
enable us to originate, transport and terminate traffic at reduced costs. We
also will capitalize on our scalable back office systems, which integrate sales,
customer service, collections and financial control functions. These allow us to
expend our operations in a cost-efficient manner.
Our objective is to provide roaming throughout the region using a
unified platform. This will allow us to achieve cost savings in network
buildout. Our undersea fiber optic facilities provide connections between each
of our targeted markets and our support systems in the Dominican Republic.
To date, we have obtained rights to frequencies in El Salvador and
Guatemala and have acquired a majority interest in a company that owns
frequencies in Panama. We also will consider offering services in two other
countries, Costa Rica and Honduras.
Generally, in implementing our digital mobile network strategy, we
intend to form an affiliation with a local group in each country to expand our
telecom services and to promote and use the TRICOM name in each market. We
believe that affiliations with local groups will provide the following benefits:
- familiarity with compliance of regulatory matters;
- knowledge in adapting to the local markets; and
- access to an existing customer base.
(f) TECHNOLOGY
We intend to create a digital mobile network in each of our targeted
markets using Motorola's proprietary iDEN-Registered Trademark- technology. iDEN
technology provides one network with four communications systems: dispatch
radio, full-duplex telephone interconnect, short message service and data
transmission, including packet data and circuit data.
Developed by Motorola, iDEN uses a number of technologies, including
single transmission technology, to provide services with maximum spectrum
efficiency. Through the use of TDMA technology, which is a technology used in
digital cellular telephone communication that divides each cellular channel into
three time slots in order to increase the amount of data that can be carried,
iDEN is able to divide channels into time slots. Thus, one channel can perform
multiple voice and data functions. VSELP technology further increases the iDEN
technology by compressing and digitally coding data signals, reducing the amount
of data that is transmitted on the multiple channels provided by TDMA. The
implementation of a digital mobile network using iDEN technology will
significantly increase the capacity of our proposed channels and will permit us
to use our specialized mobile radio spectrum more efficiently.
iDEN is used in Argentina, Brazil, Canada, China, Colombia, Israel,
Japan, Korea, Mexico, Peru, the Philippines, Singapore and the United States.
Some of the advantages of the iDEN technology for us include:
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- marketing primarily to businesses which have a stronger credit
profile;
- ability to transmit more information in a timely manner;
- on average, higher revenue per user; and
- increased capabilities and value-added services, including a
one-to-one mode, a group mode, a pager mode and two-way messaging.
Some of the advantages of the iDEN technology for our customers
include:
- instant access;
- lower cost with bundled pricing;
- work productivity tool;
- worldwide roaming;
- packet data solutions; and
- vertical data applications.
In addition to the iDEN technology, it will be necessary for us to
purchase additional technologies and site components from third parties,
including microwave radios, towers, shelters and power generators. We have
engaged in negotiations for the additional technology and site components for
our Panama system and have not concluded any agreements for them to date.
However, we believe that there are alternate sites or suppliers available and
that we will be able to satisfy our requirements for the technology and site
components for Panama and our other targeted Central American markets.
On July 31, 2000, we entered into an infrastructure supply agreement to
buy systems and license the iDEN technology from Motorola. This serves as a
regional frame agreement for our purchase of systems for each country in the
region, except Belize. The system components to be supplied include switches,
radio subsystems dispatch systems, packet data and intelligent network
components. Motorola will provide installation, integration, optimization,
management and system engineering, software maintenance and training services.
The agreement provides that Motorola will provide us with preferred
deployment consisting of priority production, manufacturing and delivery of the
entire initial system purchase order before the initiation of any work for any
purchase orders of other customers. In Panama and Costa Rica, the period of our
preferred deployment will be until the earlier of the date our system is first
in commercial operation and in the case of Panama, 24 months from the execution
of the agreement and in the case of Costa Rica, 24 months from the placement of
our initial system purchase order. For each of Guatemala, El Salvador, Nicaragua
and Honduras, the agreement provides that Motorola will provide us with a
headstart and will not place another iDEN system into commercial service in each
such country until 24 months after the date of our initial system purchase order
in that country. Motorola's obligation to provide preferred deployment or a
headstart, in each case, is subject to applicable local laws and is conditioned
upon our placing an initial system purchase order from that country by April 30,
2001. We placed an order for an initial system for Panama concurrently with the
execution of the agreement but have not placed any other orders to date. The
agreement also provides price discounts for enhanced base transceiver stations,
or EBTS, which are antennae located at base sites to provide radio coverage in
specific geographic areas, based on the volume of our orders. The agreement
contains a warranty for Motorola manufactured hardware equipment for 12 months
following the date of shipment and other customary terms and provisions.
REGULATORY MATTERS
The licensing, construction, ownership and operation of wireless
communications systems are regulated by governmental entities in each of the
Central American countries we have identified. The grant, maintenance, and
renewal of applicable licenses and radio frequency allocations are also subject
to regulation. In addition, these matters
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and other aspects of wireless communications systems operations, including
rates charged to customers and the resale of wireless communications
services, may be subject to public utility regulation in the jurisdiction in
which service is provided. Changes in the current regulatory environments,
the interpretation or application of current regulations or future judicial
intervention in those countries could impact our business. These changes may
affect interconnection arrangements, requirements for increased capital
investments, prices we may charge for our services or foreign ownership
limitations, among other things.
EXISTING INVESTMENT
Set forth below is a description of our existing investments in Panama,
Guatemala and El Salvador:
PANAMA
OVERVIEW
We have purchased a 51% interest in a Panamanian company, Cellular
Communications of Panama, S.A., known as Celcom, which owns the frequency rights
for 107 channels of 25 megahertz each. Based upon information provided to us by
Celcom, it has approximately 2,300 analog mobile users. These frequencies will
give us access to nationwide coverage, covering a population of approximately
2.81 million people. In Panama, frequency rights are granted for 20 years and
are automatically renewable for additional 20 year terms.
Currently we are constructing a digital network in Panama City and
Colon, the two largest cities in Panama, and in important transportation
corridors in other parts of the country. To date, we have invested $18.0 million
in this deployment, primarily for the purchase of
- a switching office for telephone and radio communications dispatch
through which mobile service traffic is originated or terminated,
- enhanced base transceiver stations, which are antennae located at
base sites to provide radio coverage in specific geographic areas,
and
- site acquisition and construction.
Our expected completion date for this phase of the buildout is the fourth
quarter of 2001.
MARKET OPPORTUNITY.
At December 31, 1999, Panama had a population of approximately 2.81
million, with an estimated Gross Domestic Product of $9.6 billion in 1999, and a
Gross Domestic Product growth rate of 3.2% for that year. Approximately 56% of
the population lives in urban areas. The cellular penetration for Panama in 1999
was 8.6% while wireline penetration was 16.5%.
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MARKETING PLANS
We will offer digital mobile integrated services, including two-way
radio, paging and interconnect services. We plan to offer our digital services
mainly to business customers, offering a wide range of bundled programs with
different services and pricing plans, customized to meet our clients' specific
needs. We intend to market our services primarily through direct sales and
independent dealers.
COMPETITION
The mobile market in Panama has been open to competition since 1996.
TRICOM Panama's digital mobile services will compete with two wireless
communications providers in the country, Cable & Wireless Panama and BellSouth,
both operating 800 megahertz PCS networks using TDMA technology. The Panamanian
government granted a 10-year duopoly service concession to both wireless
operators in 1997 as part of the privatization of the telecommunications
industry. Panama has the highest wireless penetration in the Central American
region, 8.6% at 1999.
REGULATORY AND LEGAL OVERVIEW
To provide telecommunications services, a Panamanian or foreign company
must obtain a service concession from the Ente Regulador de Servicios Publicos,
or ENTE. There are two types of service concessions, Type "A" and Type "B". Type
"A" service concessions currently are awarded on an exclusive basis. Services
under a Type "A" category concession include basic telecommunications and
cellular services. Additional concessions of this type will not be granted again
until 2003.
Type "B" service concessions are awarded to companies which meet
specific requirements and complete the application procedures for the services
they wish to provide. Applicants must include a form of the contract they intend
to enter into with potential customers and a diagram of the system that will be
operated in order to provide the contemplated services, among other information.
Applicants may submit their applications to provide Type "B" services on any one
of four specified dates a year. Additionally, since Type "B" telecommunications
service concessions are open to all companies which meet the requirements, the
terms of the concession are the same for all concession holders. However, each
concession holder must comply with fair competition practices in providing
services to its clients and in relation to other concession holders. Concession
holders also must provide services in a nondiscriminatory manner. Concession
holders may also assign or transfer their concessions to other companies which
meet the same requirements that ENTE considered at the time it awarded the
concession, subject to ENTE's authorization. ENTE may only deny a transfer or
assignment when the transfer or assignment would be prohibited by law or against
fair competition practices. Telecommunications providers are required to pay
annual fees to the government of 1% of their total gross revenues.
Celcom has two of the twenty-four Type "B" service concessions. One to
provide service for conventional trunking systems for public or private use and
one for pager service.
Panamanian telecommunications law prohibits companies using trunking
operations to handle telephone calls from handing off calls in certain
circumstances, even if the hand-off would be from one site to another site owned
by the same company. Therefore, we intend to build additional ETBS in Panama to
minimize the number of calls which would be handed off. We believe that
additional ETBS will prevent a higher percentage of dropped calls than would
otherwise occur due to this Panamanian law.
In addition, Panamanian telecommunications law requires that all
concession holders permit and maintain nondiscriminatory interconnection of
other concession holders to their networks. A concession holder is required to
use its best efforts to reach an interconnection agreement within 120 days from
the date on which another concession holder sends a copy of an interconnection
request to the ENTE, with confirmation that the concession holder with which
interconnection is sought also has received the request. After this 120-day
period, any of the parties may request the intervention of the ENTE in
negotiations. The ENTE may intervene in the process if interconnection is not
negotiated by the parties or is not provided on terms at least equal to those
that other concession holders have obtained in similar circumstances.
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Celcom has requested interconnection with Cable and Wireless, one of
two principal wireless providers. Cable and Wireless has refused interconnection
but Celcom has not yet requested the intervention of the ENTE.
Panama has no restrictions on repatriation or monetary transfers to and
from Panama nor does it have any exchange controls. The unit of currency, the
Balboa, is issued only in coins which are identical in size and value with those
of the United States. Panama's paper currency is the U.S. dollar. There are few
limitations or restrictions on foreign investment, especially for international
business operations based in Panama. One of the few exceptions is that certain
sales to consumers of retail goods are reserved for Panamanian nationals.
As a telecommunications business, we will have to pay a monthly
regulatory fee to ENTE of 1% of our previous month's gross income in addition to
the 1% of gross revenue annual fee required to be paid by telecommunications
providers. We are also subject to certain taxes, including income, franchise,
dividend and commercial license taxes.
GUATEMALA AND EL SALVADOR
In 2000, we were awarded, in a government auction, radio frequency
rights in Guatemala to 172 channels of 25 megahertz, providing us with
nationwide coverage. We have also acquired the spectrum to operate our iDEN
network in El Salvador through the purchase of radio frequency rights for an
aggregate of 185 channels of 25 megahertz, 175 of which from a U.S.
telecommunications company that previously owned the rights and 15 of which
through a government auction. We currently do not intend to develop a network in
either Guatemala or El Salvador in 2001.
LEGISLATION AND REGULATION
Our operations are subject to the Telecommunications Law of the
Dominican Republic and the Dominican system of regulating and structuring the
telecommunications sector. Our U.S. operations are subject to U.S. laws and
Federal Communications Commission regulations. The following summary of these
laws and regulations is not intended to be, and does not purport to be,
comprehensive, and the laws and regulations described may be amended, repealed
or otherwise modified.
GENERAL
The legal framework of the telecommunications sector in the Dominican
Republic consists of General Telecommunications Law No. 153-98, enacted on May
27, 1998, resolutions promulgated under that law and the concession agreements
entered into by the Dominican government or the regulator with individual
service providers.
In addition to the industry-specific legal framework, the Constitution
of the Dominican Republic affects the telecommunications sector. Among other
individual and social rights, the Dominican Constitution guarantees Dominican
citizens the freedom of trade. The Constitution specifically provides that
monopolies must be established by law and only for the benefit of the Dominican
government. None of the existing concession agreements grants a monopoly in any
sector of the telecommunications industry to any carrier, and the Dominican
government has announced a policy of encouraging growth through competition in
the telecommunications industry.
In 1930, Codetel was granted a concession to operate telecommunications
services in the Dominican Republic. Over the years, while other service
providers entered the Dominican telecommunications market, none was successful
in becoming a full-service telephone company able to compete with Codetel
because Codetel was not required to allow other service providers to
interconnect their services with its physical infrastructure. To provide
services, a company would have to install its own wireline telecommunications
network. The economics of this requirement hindered competition. As a result,
Codetel held a de facto monopoly for more than 60 years.
To substantially broaden the number of Dominican citizens with access
to a telephone and to allow for the establishment and growth of other modern
telecommunications services, the Dominican government adopted a policy of
liberalization of the telecommunications sector beginning in the late 1980s. In
1990, the Dominican government granted us a concession to provide a full range
of telecommunications services within, from and to the country.
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Additionally, advancements in wireless technologies made it more
cost-effective for companies to penetrate the market even without being able
to interconnect to Codetel's network. However, interconnection remained
important for full-service competition. In 1994, the Dominican government
enacted a series of interconnection resolutions which require all service
providers in the Dominican Republic to interconnect with all other service
providers pursuant to contracts between them; the guidelines for those
contracts are set forth in those resolutions. In May 1994, we entered into an
interconnection agreement with Codetel which became effective in November
1994. This agreement allowed us to become the second full-service
telecommunications provider in the Dominican Republic.
GENERAL TELECOMMUNICATIONS LAW NO. 153-98 OF 1998
Former Telecommunications Law No. 118 of February 1, 1966 was repealed
by Law No. 153-98 of May 27, 1998. Law No. 153-98 is the result of a joint
government and industry project conducted with the assistance of the ITU, which
studied the telecommunications sector in the Dominican Republic. As part of this
process, the ITU drafted a proposed telecommunications law and various
regulations, including interconnection and tariff regulations, in consultation
with Dominican telecommunications carriers. The project was requested by the
Technical Secretariat of the Dominican Presidency and the country's
telecommunications carriers and was funded by the carriers.
Law No. 153-98 established a basic framework to regulate the
installation, maintenance and operation of telecommunications networks and the
provision of telecommunications services and equipment. The law adopted the
"Universal Service Principle," by guaranteeing access to telecommunications
services at affordable prices in low-income rural and urban areas. The law
creates a fund for the development of the telecommunications sector that is
supported by a 2% tax payable by customers and collected by telecommunications
providers from them based on billings to customers for telecommunications
services. At the same time, the law eliminated the 10% tax previously charged on
billings to customers for international and domestic long distance traffic to
customers.
In addition, the law created an independent regulator with strong
regulatory powers, the Dominican Institute of Telecommunications (Instituto
Dominicano de las Telecomunicaciones, or INDOTEL), and established the
regulator's responsibilities, authorities and procedures. The regulator is
headed by a five-member council, the members of which serve a four-year term,
and includes a representative from the telecommunications industry. Among other
responsibilities, INDOTEL is charged with implementing telecommunications
development projects to satisfy the requirements of the Universal Service
Principle. Law No. 153-98 grants INDOTEL control over all frequency bands and
channels of radio transmission and communications within the country and over
its jurisdictional waters.
Law No. 153-98 encourages competition in all telecommunications
services by enforcing the right to interconnect with existing participants and
ensuring against monopolistic practices, and at the same time upholding those
concessions that are operational. The law establishes mechanisms to set
cost-based interconnection charges and to resolve interconnection disputes by
requiring existing operators to amend their interconnection agreements
consistent with the new requirements. The law also eliminates cross subsidies
and provides for progressive rate rebalancing of those tariffs that
traditionally have been subsidized, in order to reflect costs more closely. This
rates rebalancing process was completed on December 31, 2000 in accordance with
article 120 of Law No. 153-98.
We believe that this legislation, combined with technological advances
and the sustained growth of private investment will significantly contribute to
the development of the telecommunications sector in the Dominican Republic.
Additionally, we expect the increase in demand for long distance
services stemming from reduced long distance fees to encourage continued long
distance traffic growth.
OUR CONCESSION AGREEMENT
In accordance with former Law No. 118, we entered into a concession
agreement with the Dominican government in 1990 under which we were issued a
non-exclusive license to establish, maintain and operate a system of
telecommunications services throughout the Dominican Republic, as well as
between the Dominican Republic and international points. The services which we
were permitted to provide under the 1990 concession agreement included
telegraphy, radio communications, paging, cellular and local, domestic and
international telephone services.
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In February 1996, we entered into a new concession agreement with
the Dominican government which superseded the 1990 concession agreement.
Under the 1996 concession agreement, we were granted the same non-exclusive
license as provided in the 1990 concession agreement to establish, maintain
and operate a telecommunications system throughout the Dominican Republic
until June 30, 2010. Under our original provisions, the concession agreement
and the license granted under it are renewable automatically for 20-year
periods unless, at least three years prior to the end of the then existing
term, either we or the Dominican government advise each other of our
intention not to renew. Law No. 153-98 establishes that the renewal must be
requested during the one year immediately prior to the expiration of the
concession, and that the reasons for non-renewal shall be only those set
forth in the law.
Law No. 153-98 established that within one year after its
effectiveness each concession must be adjusted to the provisions of the new
law. INDOTEL has issued Resolution No. 005-99 on December 1999 for such
purposes, requesting, as a first step, information on each of the
telecommunications companies with valid concession agreements. We have
complied with these requirements. Nonetheless, it seems that INDOTEL is still
evaluating all cases and has not yet completed the process of adjustment for
any of the currently existing concession agreements.
The provisions of our 1996 concession agreement relating to our tax
obligations differ from those of the 1990 concession agreement. Under the
1996 concession agreement, we do not pay income tax imposed on other
Dominican corporations but make payments to the Dominican government in lieu
of income tax on the same basis as Codetel pursuant to its concession
agreement. We must pay to the Dominican government, within the first ten days
of each month:
(1) 10% of gross domestic revenues collected by us during the
preceding month for telephone services, telegraph services,
paging services, cellular services, local, national and
international call services, as well as for any data
transmission or broadcast services, and any other related
telecommunications services provided by us to our clients,
minus any access charges paid to Codetel and to any other
company for interconnection, and
(2) 10% of net settlement revenues collected from foreign
correspondent carriers for the use of our network for
termination of international long distance calls.
The minimum payment to the Dominican government in lieu of income tax
by us is RD$18.0 million ($1.2 million) per annum. We have the right to deduct
monthly up to one percent of our tax for outstanding debts from the government
of 180 days or more and are entitled to the same exemptions granted to other
telecommunications companies under their concessions, with the exception of the
following taxes:
- import duties
- selective consumption tax
- Taxes on the Transfer of Industrialized Goods and Services and
exchanging commission.
The 10% selective consumption tax previously charged on billings of
international and domestic long distance traffic to customers was repealed by
Law No. 153-98 and substituted with the 2% CDT tax. In addition, under the
1996 concession agreement, the Dominican government is obligated to grant to
us any term or condition that it grants by concession to any other
telecommunications provider in the Dominican Republic more favorable than
those contained in the 1996 concession agreement.
Under the Dominican Constitution, agreements with the Dominican
government which contain exemptions from income tax, such as our concession
agreement, only become effective upon approval by the Dominican Congress.
Neither our concession agreement nor the concession agreements of Codetel,
All America Cables & Radio and other companies have been submitted to the
Dominican National Congress. We are not aware of any plans of the Dominican
government to submit our concession agreement for approval to the Dominican
Congress.
If our concession agreement is presented to the Dominican Congress,
it may not validate the provisions of our concession agreement relating to
the payment of taxes. Prior to entering into our existing concession
agreement in
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1996, Dominican tax authorities asserted that we were required to make
payments in lieu of taxes equal to 18% of gross domestic revenues, as was
provided in our 1990 concession agreement. If the provisions relating to the
payment of taxes in the 1996 concession agreement were to be disapproved by
the Dominican Congress, we believe that Dominican tax law would require the
payment of a tax equal to 25% of our adjusted net income, and never less than
1.5% of gross revenues, advanced on a monthly basis, the current tax regime
generally applicable to Dominican corporate taxpayers.
CODETEL'S CONCESSION AGREEMENT
Codetel's concession from the Dominican government, originally granted
in 1930, was modified on January 23, 1995. The terms of Codetel's concession are
substantially identical to those of our 1996 concession agreement. Codetel's
concession, like our concession agreement, must be approved by the Dominican
Congress because it contains an exemption from the income tax applicable to
Dominican corporations. The license provides it with the right to construct,
maintain and operate a telecommunications system throughout the Dominican
Republic and between the Dominican Republic and other countries. Codetel's
concession agreement is valid until April 30, 2010; our concession agreement is
valid until June 30, 2010.
Codetel's concession agreement, as well as our concession agreement,
must be revised and adjusted to the provisions and general principles of the new
legislation one year after the law takes effect. Codetel, like us, has complied
with the information requirements of INDOTEL, under Resolution No. 005-99, but
it is still in the process of adjusting its concession agreement in accordance
with the provisions of Law No. 153-98. Codetel, like us, is required to pay a
fixed monthly tax imposed on gross domestic income, and net revenues from
international settlement payments. Codetel's minimum tax payment is RD$360.0
million ($23.0 million) per annum compared to our minimum of RD$18.0 million
($1.1 million).
INTERCONNECTION RESOLUTIONS
Article 123 of Law No. 153-98 provides that the new regulator,
INDOTEL, must issue an Interconnection Regulation. On August 1, 1998, the
Directorate General, acting provisionally until INDOTEL was formed, enacted
Resolution No. 98-01, which contains the provisional regulation for the
application and collection of the contribution for the development of the
telecommunications. On August 10, 1998, the Directorate General enacted
Resolution No. 98-03, which reorganizes the general assignment of the
cellular frequency bands and granted us a license to operate all of Band A
and its frequency expansions under sub-bands A, and it also granted a license
to Codetel to operate Band B completely, and its expansion under sub-bands B.
OUR INTERCONNECTION AGREEMENT WITH CODETEL
In May 1994, we entered into an interconnection agreement with Codetel
which sets forth the terms and conditions for interconnection between each
party's network in the Dominican Republic. The interconnection agreement, which
has an indefinite term, requires each of us to provide access to the other's
respective network on equal, nondiscriminatory and transparent terms.
Additionally, the interconnection agreement obligates each party to provide to
the other any terms or conditions more favorable than it provides to any other
telecommunications entity for interconnection.
Under the interconnection agreement, the parties began paying an
interconnection charge for local-to-local traffic in 1996, which is revised
annually. Additionally, use of the network by either us or Codetel to
originate or terminate cellular, domestic long distance and international
long distance calls requires payment of an access charge, which is reviewed
annually and is calculated based upon an established formula. The access
charge consists of a usage charge and a subsidy charge which only is incurred
with respect to international calls.
On January 2, 1998, we and Codetel executed an addendum to the
interconnection agreement which provides, among other things, that it will:
(1) remove any technical or operational impediment to telephone
users accessing our network from Codetel's network;
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(2) automatically deliver to us the identification number of
any call originating on Codetel's network which is subject
to our access charge;
(3) install interconnection facilities without delay upon our
request, provided that we bear the expense of installing
any such facilities;
(4) connect calls to emergency services and toll-free numbers on
Codetel's network, and make operators available to assist
calls from our network to numbers on Codetel's network; and
(5) make Codetel's database of telephone numbers available to
us at no charge on a trimonthly basis.
On January 11, 2000, we and Codetel executed a second addendum to the
interconnection agreement to:
(1) provide that local interconnection of each company's
respective Internet nodes and to enable the clients of each
company to access both our respective servers and nodes to
access the Internet;
(2) simplify the billing and collection process for
interconnection services; and
(3) amend the regulation on interconnection costs. In
addition, the second interconnection amendment adjusted the
access charges by:
(1) lowering the charge for international long distance
calls from RD$0.86 ($0.05) per minute to RD$0.84
($0.05) per minute for the first quarter of 2000,
RD$0.80 ($0.05) per minute for the second quarter of
2000, RD$0.76 ($0.05) per minute for the third
quarter of 2000, RD$0.72 ($0.04) per minute for the
fourth quarter of 2000, and RD$0.68 ($0.04) starting
January 1, 2001;
(2) increasing the charges for national long distance
calls and calls made from cellular telephones from
RD$0.63 ($0.04) to RD$0.68 ($0.04); and
(3) charging for "calling party pays" traffic a use
charge of RD$0.68 ($0.04) per minute and a variable
complementary charge depending on the amount of
cellular lines on service.
Law No. 153-98 establishes that interconnection agreements entered into
by the providers must be revised and readjusted to reflect and incorporate the
provisions and general principles set forth in the new law within one year from
the effectiveness of the law. INDOTEL is expected to issue a regulation for
these purposes, but has not, to this date, done so. Codetel and we have, through
our second addendum to the interconnection agreement, adjusted our
interconnection agreement to the provisions of Law No. 153-98.
U.S. TELECOMMUNICATIONS REGULATION
The following summary of United States regulatory developments does not
purport to describe all present and proposed regulations and legislation
affecting the telecommunications industry. Other existing federal and state
regulations are currently the subject of judicial proceedings, legislative
hearings and administrative proposals which could change, in varying degrees,
the regulation of telecommunications companies in the United States.
Certain FCC international policies apply to all carriers that originate
or terminate telecommunications services in the United States.
Through several policy initiatives in the last several years, the FCC
has encouraged greater competition in foreign markets. A particular focus of the
FCC has been "accounting rates" or "settlement rates," which are the amount of
payment negotiated between carriers for the termination of international
telephone calls.
On August 7, 1997, the FCC adopted a Report and Order regarding the
regulation of international accounting rates. The order establishes certain
settlement rate benchmarks based on foreign carriers' publicly available
tariffed
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rates and data published by the International Telecommunications Union, which
the FCC refers to as the "tariffed components price" or "TCP" methodology.
Under the TCP methodology, the FCC analyzes three tariffed network elements:
(1) international transmission facilities;
(2) international switching facilities; and
(3) national extension (domestic transport and termination).
The FCC also considers each country's level of economic development
in determining country-specific settlement benchmark rates. The FCC has
grouped each country into one of four categories based on its level of
economic development -- upper income, upper middle income, lower middle income
and lower income. The settlement rate benchmark for each category is
calculated using the average of the TCPs for all countries in each respective
category. The per-minute benchmark settlement rates are $0.15 for upper
income, $0.19 for upper middle income, $0.19 for lower middle income and
$0.23 for lower income. Under the FCC's income categories, the Dominican
Republic is in the lower middle income group and our benchmark settlement
rate would be $0.19 cents per minute. Pursuant to the order, U.S. carriers
were required to enter into settlement rate arrangements with foreign
carriers in lower middle income countries at or below the applicable
benchmark rate by January 1, 2001. Currently, TRICOM's settlement benchmark
rate for the Dominican Republic is within the prescribed limits.
In April 1999, the FCC adopted an order approving sweeping reform of
the international settlements policy. The 1999 order deregulated inter-carrier
settlement arrangements between U.S. carriers and foreign non-dominant carriers
on competitive routes. Among other rule amendments, the FCC's April 1999 order
eliminated the international settlements policy and contract filing requirements
for arrangements with foreign carriers that lack market power.
On February 15, 1997, 69 countries (including the United States and
the Dominican Republic) signed a global agreement on basic telecommunications
services. Under the auspices of the World Trade Organization, the global
agreement aims to increase competition among its signatories through the
removal or lowering of entry barriers to foreign markets and the
implementation of pro-competitive regulatory principles. On February 5, 1998,
the global agreement went into effect.
In an order released in November 1997, the FCC took the steps necessary
to open the U.S. market to increased competition, in accordance with U.S.
commitments in the WTO Basic Telecom Agreement. The FCC adopted an open entry
standard for applicants from WTO Members seeking to:
(1) obtain Section 214 authority from the FCC to provide
international facilities-based, resold switched and resold
non-interconnected private line services;
(2) receive authorization to exceed the 25 percent indirect
foreign ownership benchmark in Section 310(b)(4) of the
Communications Act for wireless licenses; and
(3) receive submarine cable landing licenses.
The FCC's open entry standard includes a presumption in favor of
foreign participation by applicants from WTO member countries.
On September 11, 1995, the FCC issued an order approving the
application of Domtel Communications, Inc., which later changed its name to
TRICOM USA, Inc., to provide, on a facilities-based basis, voice, data and
private line services between the United States and various international
points, including the Dominican Republic. The FCC also approved Domtel
Communications, Inc. as a non-dominant provider on all routes, including to
the Dominican Republic. We began initiating U.S. traffic pursuant to this
authorization in 1997. Domtel Communications, Inc. was also granted global
resale authority by the FCC in 1996.
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Since the effectiveness of the interconnection agreement with
Codetel, we have entered into operating agreements with U.S. correspondents.
TRICOM USA, Inc. also has the ability as a U.S. carrier to develop its own
business plan for markets other than the Dominican Republic, and has been
approved by the FCC to communicate from the United States with 186 countries
via satellite and with 28 countries via fiber optic submarine cables.
As a carrier holding an international authorization from the FCC,
TRICOM USA is subject to various statutory and regulatory telecommunications
mandates, including the duty to offer services at just and reasonable rates,
the obligation to file and maintain tariffs at the FCC setting forth TRICOM
USA's rates, terms and conditions, and the requirement to obtain prior
approval for most transfers of control and assignments of authorizations,
except those considered non-substantial, or "pro forma" under FCC rules. The
FCC may address regulatory non-compliance with a variety of enforcement
mechanisms, including monetary forfeitures, refund orders, injunctive relief,
license conditions, and/or license revocation.
We believe we are in compliance with all material laws and
regulations in the countries in which we operate. Future regulatory,
judicial, or legislative activities could have a material adverse effect on
our financial condition, results of operations or cash flow.
We are certified by the public utility commissions of Puerto Rico,
Florida and New York, and are currently in the process of obtaining
certification in Alaska, California, Georgia, Illinois, Maryland, Massachusetts,
New Jersey, Pennsylvania, Rhode Island, U.S. Virgin Islands, including St.
Thomas and St. John, and Washington, D.C. In addition, TRICOM USA obtained on
July 7, 2000 a Class B License for the provision of international
telecommunications services, and is in the process of registering to do business
in Ontario and Quebec. TRICOM USA does not operate telecommunications facilities
used in transporting basic telecommunications service traffic between Canada and
other countries. TRICOM USA's services in Canada are provided through a service
arrangement with MCI WorldCom, to handle traffic originated from the prepaid
calling cards sold in Canada.
As we expand our operations into other countries, we may become subject
to varying degrees of regulation in those jurisdictions where we provide
service. Laws and regulations regarding telecommunications differ significantly
from country to country.
PROPERTY, PLANT AND EQUIPMENT
Our principal properties consist of our fiber optic network,
satellite earth stations, nodes and real estate. At December 31, 2000, the
net book value of our real estate and equipment was approximately $586.2
million. Our real estate holdings are strategically located throughout the
Dominican Republic, providing the infrastructure for the telecommunications
network and sales facilities. Most of our properties are related directly to
our telecommunications operations and are used for network equipment of
various types, such as telephone exchanges, transmission stations, wireless
point-to-point radio equipment and digital switching nodes. Our current
headquarters are located in downtown Santo Domingo in a building that we own.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
REVENUE OVERVIEW
We derive our operating revenues primarily from toll revenues,
international settlement revenues, cellular and PCS services, local services,
the sale of equipment and installations. The components of each of these
services are as follows:
Toll revenues are amounts we receive from our customers in the
Dominican Republic for international and domestic long distance calls,
as well as interconnection charges received from Codetel, the incumbent
local service provider, and other carriers, for calls that originate in
or transit their networks but terminate in our network. Toll revenues
are generated by residential and commercial customers, calling card
users, cellular and PCS subscribers and retail telephone centers,
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and large corporate accounts. Toll revenues are recognized as they are
billed to customers, except for revenues from prepaid calling cards
which are recognized as the calling cards are used or expire.
International revenues represent amounts recognized by us for
termination of traffic from foreign telecommunications carriers to the
Dominican Republic. Traffic is based on the minutes that the foreign
telecommunications companies have terminated in the Dominican
telecommunications network, either on our own network or on Codetel's
network, including revenues derived from our U.S.-based international
long distance prepaid calling cards.
Local service revenues consist of monthly fees, local measured service
and local measured charges for value-added services, including call
forwarding, three-way calling, call waiting and voicemail, as well as
calls made to cellular users under the calling-party-pays system and
revenues from other miscellaneous local access services. Local measured
service includes monthly phone line rental for a specified number of
calls within a defined area, plus a charge for additional calls.
Cellular and PCS revenues represent fees received for mobile cellular
and PCS services, including interconnection charges for calls incoming
to our cellular and PCS subscribers from other companies' subscribers.
Cellular and PCS revenues do not include fees received for
international long distance calls generated by our cellular and PCS
subscribers. Cellular and PCS fees consist of fixed monthly fees, per
minute usage charges and additional charges for value-added services,
including call waiting, call forwarding, three-way calling and
voicemail, and for other miscellaneous cellular and PCS services.
Paging revenues consist of fixed monthly charges for nationwide service
and use of paging equipment and activation fees. Beginning in 1999, we
determined that paging will not play a major role in our future
marketing programs.
Revenues from the sale of equipment consist of sales fees for customer
premise equipment, including private automatic branch exchanges, which
are small versions of a phone company's central switching system often
used by private companies, and key telephone systems, residential
telephones, cellular and PCS handsets and paging units.
Installation revenues consist of fees we charge for installing local
access lines, private branch exchanges and key telephone systems as
well as fees for activating cellular phones and PCS. Beginning with
January 1, 2000, we have recognized these revenues over the estimated
period in which, based on our experience, we retain such clients,
approximately 35 months. In prior periods, we recognized these revenues
when they were collected.
Other revenues consist of revenues that are not generated from our core
businesses, including commissions received for providing package
handling services for a courier and commissions received for collection
services for utility companies.
The following table sets forth the percentage contribution of each category
of revenues to total operating revenues for the period indicated:
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YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1999 2000
---- ---- ----
Toll................................................. 14.1% 13.5% 12.8%
International........................................ 40.1 35.5 37.5
Local service........................................ 10.3 19.8 24.4
Cellular and PCS..................................... 16.2 15.5 16.0
Paging............................................... 3.6 1.6 0.8
Sale of equipment.................................... 3.3 4.5 2.3
Installation and activation fees..................... 10.3 9.1 6.1
Other................................................ 2.1 0.5 0.1
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
The following table sets forth certain items in the statements of
operations and EBITDA expressed as a percentage of total operating revenues for
the period indicated:
YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1999 2000
---- ---- ----
Operating costs...................................... 76.5% 75.7% 81.7%
Operating income..................................... 23.5 24.3 18.3
Interest expense, net................................ 10.3 11.7 13.7
Other income (expenses).............................. (9.5) (11.2) (13.9)
Earnings before income taxes and cumulative effect
of accounting change............................. 14.0 13.1 4.4
Net earnings (loss).................................. 14.3 12.9 (3.2)
EBITDA............................................... 42.8 43.9 39.3
2000 COMPARED TO 1999
OPERATING REVENUES. Our total operating revenues increased 31.3% to
$224.3 million in 2000 from $170.8 million in 1999. This growth stemmed
primarily from increases in revenues from our international, local service,
wireless and toll services, offset, in part, by decreased revenues from the
sale and lease of equipment and installations.
TOLL. Toll revenues increased 24.0% to $28.7 million during 2000
from $23.1 million for 1999, as a result of higher domestic long distance and
outbound international traffic derived from the growth of our customer base.
Domestic long distance minutes increased by 47.4% to 45.9 million minutes
during 2000 from 31.1 million minutes during 1999. Outbound international
minutes increased by 9.4% to 32.5 million minutes in 2000 from 29.7 million
minutes in 1999. The increase in numbers of minutes was offset by an decrease
of approximately 15% during 2000 of our average per minute long distance
tariff. The increases in domestic long distance and outbound minutes resulted
from higher traffic volume from our wireless and local service customers.
Wireless and local service customers respectively accounted for 32.3% and
31.3% of our total long distance minutes in 2000 compared to 22.3% and 27.9%
in 1999. Calls from our call centers account for our remaining minutes.
INTERNATIONAL. Our international revenues grew 38.9% to $84.2
million in 2000 from $60.6 million in 1999. This increase was due principally
to the growth of inbound traffic volume received from our U.S.-based
international carrier, TRICOM USA. Inbound minutes increased by 70.9% to
563.4 million minutes in 2000 from 329.7 million in 1999. TRICOM USA
accounted for 71.1% of our total inbound minutes in 2000 compared to 59.4% in
1999.
The increase in international revenues was achieved despite the
continued trend of decreasing settlement rates for traffic between the United
States and the Dominican Republic. Our average settlement rate was $0.14 per
minute during 1999 and $0.10 per minute during 2000. We have been able to
increase revenues from the provision of international long distance services by
increasing the volume of international traffic carried through our network.
Future decreases in settlement rates, without corresponding increases in our
long distance traffic from the United States, would reduce our international
settlement revenues, adversely affect the profit margins that we realize on such
traffic and could have a material adverse effect on our business, financial
condition and results of operations.
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LOCAL SERVICE. Local service revenues grew 61.8% to $54.8 million in
2000 from $33.9 million in 1999, primarily as the result of the continued
growth in the number of local lines in service. In 2000, we added 29,386 net
local access lines compared to 38,310 net local access lines added in 1999.
At December 31, 2000, we had 148,312 local access lines in service, including
48,765 wireless local loop lines, compared to 118,926 local access lines in
service at December 31, 1999, including 19,284 wireless local lines. The
increase in local service revenues also reflects an approximate 15% increase
in local access rates. In addition, local service revenues include internet
service revenues which increased to $3.0 million in 2000 from $500,000 in
1999.
As a result of a higher number of lines in service, interconnection
revenues for local calls received from Codetel and other carriers increased
113.8% to $6.2 million in 2000 from $2.9 million in 1999. Our average monthly
churn rate for local service was 2.3% for 2000 compared to 1.8% in 1999. We
calculate our average monthly churn rate by dividing the number of
subscribers disconnected during a given period by the sum of subscribers at
the beginning of each month during such period. The increase reflected our
policy of financing installation fees for local access adopted in 1999. In
October 1999, we reduced installation fees and stopped providing financing,
which resulted in decreased monthly churn.
CELLULAR AND PCS. Our cellular and PCS revenues grew 35.2% to $35.8
million in 2000 from $26.5 million in 1999. The growth in our wireless
operations was the result of a 61.9% increase in subscribers. At December 31,
2000, we had 284,991 cellular and PCS subscribers compared to 176,080 at
December 31, 1999. As a result of a higher average subscriber base, airtime
minutes increased 27.8% to 166.6 million minutes in 2000 from 130.4 million
minutes in 1999. We attribute the substantial growth of our subscriber base to
the continued success of our prepaid cellular program.
Prepaid cellular and PCS services generated approximately 59% of our
total airtime minutes and 58.7% of total cellular and PCS revenues in 2000.
Prepaid revenues increased by 44.1% to $20.9 million in 2000 from $14.5
million in 1999. Our average monthly churn rate for cellular and PCS services
increased to 3.1% in 2000 from 1.8% in 1999 reflecting primarily our decision
in the fourth quarter to eliminate lower revenue-generating prepaid customers
by shortening the expiration of our prepaid cards to 30 days.
Interconnection revenues attributed to airtime traffic received from
Codetel and other carriers increased by 22.4% to $4.3 million in 2000 from
$3.5 million in 1999 due to a larger subscriber base, as well as a higher
volume of incoming minutes received by prepaid cellular and PCS subscribers.
PAGING. Paging revenues decreased 36.8% to $1.7 million in 2000 from
$2.7 million in 1999, primarily as a result of the Company's decision to
focus on having new customers move away from paging services and into prepaid
cellular services. At December 31, 2000, we had 21,622 paging subscribers
compared to 28,737 paging subscribers at December 31, 1999. Our average
monthly churn rate for paging services increased to 3.4% in 2000 from 2.3% in
1999.
SALE OF EQUIPMENT. Revenues from the sale of equipment decreased
31.6% to $5.3 million in 2000 from $7.7 million in 1999, primarily as a
result of lower sales of customer premise equipment and cellular and PCS
handsets. We have entered into arrangements for the distribution of cellular
and PCS services through major electronics retailers. We believe that these
arrangements will decrease equipment sales revenues but will add subscribers
and increase cellular and PCS service revenues.
INSTALLATION AND ACTIVATION. Installation and activation revenues
decreased 11.3% to $13.7 million in 2000 from $15.5 million in 1999. The
decrease in installation and activation revenues was due to an aggressive
promotional marketing strategy undertaken during 2000, which included
lowering subscriber activation fees for wireless and local access service,
and the effect of adopting a new accounting pronouncement, SAB 101, resulting
in the deferral of the recognition of installation revenues and activation
fees over a period of approximately 35 months.
OPERATING COSTS. Major components of operating costs are:
satellite connections and carrier costs, which include amounts
owed to foreign carriers for the use of their networks for
termination of outbound traffic and payments for international
satellite circuit leases;
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interconnection costs, which are access charges paid primarily to
Codetel; and payments for international satellite circuit leases;
depreciation of network equipment and leased terminal equipment,
and non-network depreciation expense;
expenses in lieu of income tax; and
general and administrative expenses, which include salaries and
other compensation to personnel, maintenance expenses, marketing
expenses and other related costs.
Our operating costs increased to $183.3 million in 2000 from $129.4
million in 1999. These results reflect increased satellite connection and
carrier costs associated with higher volumes of international traffic; higher
general and administrative expenses primarily from increased commissions due to
the growth of our retail operations in the U.S.; and higher network depreciation
expenses resulting from our capital investment and domestic and international
network expansion programs. As a percentage of revenues, operating costs
increased to 81.7% in 2000 from 75.7% in 1999.
SATELLITE CONNECTIONS AND CARRIER COSTS. Satellite connections and
carrier costs increased by 57.0% to $68.6 million in 2000 from $43.7 million in
1999, primarily as a result of higher outbound carrier costs, as well as higher
interconnection costs. Outbound carrier costs increased by 86.1% to $35.6
million in 2000 from $19.1 million in 1999. The increase was attributable to
increased international traffic through our TRICOM USA hubbing operations.
Interconnection costs increased by 37.9% to $27.0 million in 2000 from $19.8
million in 1999, the result of a higher volume of inbound traffic terminating in
Codetel's network.
NETWORK DEPRECIATION AND DEPRECIATION EXPENSE. Network depreciation
increased 83.6% to $29.3 million in 2000 from $16.0 million in 1999, as a result
of the continued investments in our local and international networks, including
telecommunications equipment and facilities. Depreciation expense with respect
to other fixed assets grew 40.6% to $6.8 million in 2000 from $4.9 million in
1999.
EXPENSE IN LIEU OF INCOME TAXES. We make payments to the Dominican
government in lieu of income tax equal to 10% of gross domestic revenues,
after deducting charges for access to the local network, plus 10% of net
international revenues. Expense in lieu of income taxes also includes a tax
of 2% on international settlement revenues collected. Expense in lieu of
income taxes during 2000 decreased by 20.3% to $10.2 million from $12.8
million in 1999. The decrease reflects increases in international costs,
interconnection costs and accounts receivable reserve which are deducted from
revenues in calculating the tax and which increased at a greater rate than
the increase in domestic revenues on which the tax is based.
GENERAL AND ADMINISTRATIVE. General and administrative expenses,
excluding depreciation expense, increased 36.9% to $63.9 million in 2000 from
$46.6 million in 1999. The increase in the amount of general administrative
expenses reflected the greater amount of commissions paid to wholesale
distributors of prepaid cards as a result of higher revenues from sales of
the cards and increased personnel costs due to a higher employee headcount.
At December 31, 2000, we had 1,740 employees compared to 1,534 employees at
December 31, 1999. As a percentage of total operating revenues, general and
administrative expenses, excluding depreciation expense, increased to 28.5%
in 2000 compared to 27.3% in 1999.
Commissions paid to wholesale distributors of prepaid cards grew
89.3% to $11.6 million in 2000 from $6.1 million in 1999, primarily as a
result of the expansion of our prepaid cellular subscriber base, and a 113%
increase in the number of prepaid cards sold in the United States in 2000.
OTHER COSTS. Other costs which consist of the cost of sale from
local, wireless and prepaid services decreased by 17.7% to $4.5 million in
2000 from $5.4 million in 1999, primarily as a result of the lower cost of
sale from residential telephones, cellular and PCS handsets and paging units.
OPERATING INCOME. Operating income was approximately $41.0 million
in 2000 compared to $41.5 million in 1999. Operating income as a percentage
of total operating revenues decreased to 18.3% in 2000 from 24.3% in 1999.
OTHER INCOME (EXPENSES). Other expenses increased to $31.2 million
in 2000 from $19.2 million in 1999, reflecting increased interest expenses
resulting from higher short-term bank borrowings and vendor financing used to
purchase network and telecommunications equipment.
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NET EARNINGS (LOSS). Earnings before cumulative effect or accounting
change totaled $9.2 million, or $0.33 per share, in 2000 compared to $22.2
million, or $0.89 per share, in 1999. Including the $16.5 million cumulative
effect of accounting change for the adoption of SAB 101, we had a net loss of
$7.2 million, or $0.26 per share, in 2000.
EBITDA. Earnings before interest and other income, taxes and
depreciation and amortization increased by 16.8% to $87.7 million in 2000 from
$75.1 million in 1999. We calculate earnings before interest and other income
and expenses, taxes and depreciation and amortization prior to the deduction of
payments to the government in lieu of income taxes.
1999 COMPARED TO 1998
OPERATING REVENUES. Our total operating revenues increased 36.1% to
$170.8 million in 1999 from $125.5 million in 1998. This growth stemmed
primarily from increases in revenues generated by the expansion of our local
exchange network, international business and of our cellular services.
TOLL. Toll revenues increased 31.0% to $23.1 million in 1999 from $17.6
million in 1998. This resulted from both higher domestic long distance and
outbound international traffic. Domestic long distance minutes increased by
54.2% to 31.1 million minutes in 1999 from 20.2 million minutes in 1998 due to a
higher number of local access lines in service. Outbound international minutes
increased by 32.2% to 29.7 million minutes in 1999 from 22.5 million minutes in
1998, reflecting increased traffic volume from our local and Efectiva prepaid
calling card customers. Local access lines and Efectiva accounted for 27.9% and
26.2% of our total outbound minutes in 1999 compared to 29.2% and 29.1% for
1998. Interconnection revenues increased by approximately 63.1% to $5.2 million
in 1999 from $3.2 million in 1998.
INTERNATIONAL. Our international revenues increased 20.4% to $60.6
million in 1999 from $50.3 million in 1998, primarily as a result of the growth
of inbound traffic volume received from our U.S.-based international carrier,
TRICOM USA. Inbound minutes increased by 59.6% to 329.7 million minutes in 1999
from 206.6 million in 1998. TRICOM USA accounted for 57% of our total inbound
minutes in 1999 compared to 53.2% in 1998.
The increase in international revenues was achieved despite the
continued trend of decreasing settlement rates for traffic between the United
States and the Dominican Republic. Our average settlement rate was $0.21 per
minute during 1998 and $0.14 per minute during 1999. We have been able to
increase revenues from the provision of international long distance services by
increasing the volume of international traffic carried through our network.
Future decreases in settlement rates, without corresponding increases in our
long distance traffic from the United States, would reduce our international
settlement revenues, adversely affect the profit margins that we realize on such
traffic and could have a material adverse effect on our business, financial
condition and results of operations.
LOCAL SERVICE. Local service revenues increased 161.6% to $33.9 million
in 1999 from $12.9 million in 1998. Higher local service rates and continued
growth in the number of local lines in service resulted in increased local
service revenues for 1999.
In 1999, we added 38,310 net local access lines compared to 37,421 net
local access lines added in 1998. At December 31, 1999, we had 118,926 local
access lines in service, including 19,289 wireless local loop lines, compared to
80,616 local access lines in service at December 31, 1998. There were not any
wireless local loop lines in service at December 31, 1998.
On January 14, 1999, we announced price increases, effective as of
January 1, 1999, for residential monthly fees and for measured local service
rates as part of the industry's process of price rebalancing initiated under the
new Telecommunications Law No. 153-98. Residential monthly fees increased by
approximately 86%. Local service rent revenues increased by 188.6% to $22.3
million in 1999 from $7.7 million in 1998. We adjusted the price per minute of
measured local service in increments of RD$0.01 until the per-minute rate
reached RD$0.25 ($0.015) at December 31, 1999. Measured local service revenues
increased by 80.2% to $3.8 million in 1999 from $2.1 million in 1998, reflecting
increased rates.
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As a result of a higher number of lines in service and higher rates for
service, interconnection revenues for local calls received from Codetel
increased 193.5% to $2.9 million in 1999 from $1.0 million in 1998.
Our average monthly churn rate for local service was 1.8% for 1999
compared to 0.8% in 1998. Average monthly churn increased as a result of
disconnections due to Hurricane Georges, institution of our policy of offering
financing of installation fees for local access and rate rebalancing. We
calculate our average monthly churn rate by dividing the number of subscribers
disconnected during a given period by the sum of subscribers at the beginning of
each month during such period.
CELLULAR AND PCS. Cellular and PCS revenues increased 30.0% to $26.5
million in 1999 from $20.4 million in 1998, primarily as a result of the
increase in the number of cellular and PCS subscribers. In 1999, we added 67,548
net cellular and PCS subscribers, compared to 67,425 net cellular subscribers
added in 1998. At December 31, 1999, we had 169,656 cellular and 6,424 PCS
subscribers compared to 108,532 cellular subscribers at December 31, 1998. We
attribute the substantial growth of our subscriber base to the continued success
of the Amigo prepaid program introduced in the third quarter of 1997.
As a result of a higher average subscriber base, airtime minutes
increased 38.7% from 94.0 million in 1998 to 130.4 million in 1999.
Interconnection revenues attributed to airtime traffic received from Codetel
increased by 123.7% to $3.5 million in 1999 from $1.6 million in 1998 due to a
higher volume of incoming minutes received by prepaid cellular and PCS
subscribers, as well as to a larger subscriber base.
Prepaid cellular and PCS services generated approximately 52.0% of our
total airtime minutes and 53.2% of total cellular and PCS revenues in 1999.
Prepaid revenues increased by 83.4% to $14.5 million in 1999 from $7.9 million
in 1998.
Our average monthly churn rate for cellular and PCS services declined
to 1.8% in 1999 from 3.6% in 1998 resulting from the increased proportion of
prepaid subscribers in our subscriber base.
PAGING. Paging revenues decreased 40.5% to $2.7 million in 1999 from
$4.5 million in 1998. This reflects increased competition which lowered prices
and margins for paging services. Paging revenues represented 1.6% of total
operating revenues in 1999 compared to 3.6% of total operating revenues in 1998.
At December 31, 1999, we had 28,737 paging subscribers compared to
28,873 paging subscribers at December 31, 1998. Our average monthly churn rate
for paging services declined to 2.3% in 1999 from 3.4% in 1998.
SALE OF EQUIPMENT. Revenues from the sale of equipment increased 86.9%
to $7.7 million in 1999 from $4.1 million in 1998. The increase was attributable
to higher sales of customer premise equipment, including private branch
exchanges and key telephone systems, residential telephones and cellular and PCS
handsets in 1999. We have entered into arrangements for the distribution of
cellular and PCS services through major electronics retailers. We believe that
these arrangements will decrease equipment sales revenues but will add
subscribers and increase cellular and PCS service revenues.
INSTALLATION AND ACTIVATION. Installation and activation revenues
increased 19.8% to $15.5 million in 1999 from $12.9 million in 1998, as a result
of our adding 59,513 gross local access lines and 96,363 gross cellular and PCS
customers during 1999 compared to 43,198 gross local access lines and 97,778
gross cellular additions in 1998. The increase in installations in 1999 helped
offset reductions in installation fees for local lines as part of the rate
rebalancing plan that took effect January 1, 1999.
OPERATING COSTS. Our operating costs increased 34.7% to $129.4 million
in 1999 from $96.0 million in 1998. The increase in operating costs was
primarily the result of higher satellite connection and carrier costs, increased
general and administrative expenses reflecting our continued expansion, and
depreciation associated with our continued capital expenditure program. However,
operating costs as a percentage of operating revenues declined in 1999,
representing 75.7% of total operating revenues in 1999 compared to 76.5% in
1998.
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SATELLITE CONNECTIONS AND CARRIER COSTS. Satellite connections and
carrier costs increased by 35.2% to $43.7 million in 1999 from $32.3 million in
1998 primarily as a result of the 54.2% increase in outbound traffic and higher
interconnection costs. Outbound carrier costs increased by 62.1% from $11.8
million in 1998 to $19.1 million in 1999. Interconnection costs increased by
47.9% to $19.8 million in 1999 from $13.4 million in 1998, the result of a
higher volume of inbound traffic terminating in Codetel's network.
NETWORK DEPRECIATION. Network depreciation increased 40.4% from $11.4
million in 1998 to $16.0 million in 1999, as a result of our continued
investments in plant and equipment.
EXPENSE IN LIEU OF INCOME TAXES. We make payments to the Dominican
government in lieu of income tax equal to 10% of gross domestic revenues, after
deducting charges for access to the local network, plus 10% of net international
revenues. Expense in lieu of income taxes also includes a tax of 2% on
international settlement revenues collected. Expense in lieu of income taxes
increased by 33.5% to $12.8 million in 1999 from $9.6 million in 1998 reflecting
the increase in revenues derived from our domestic and international business.
GENERAL AND ADMINISTRATIVE. General and administrative expenses,
including non-network depreciation expenses, increased 30.8% to $51.5 million in
1999 from $39.4 million in 1998 primarily as a result of increased personnel
costs due to a higher employee headcount, a higher level of allowance for
doubtful accounts, and higher commissions paid to sales staff and
intermediaries. At December 31, 1999, we had 1,534 employees compared to 1,341
employees at December 31, 1998. As a result, personnel costs, net of capitalized
labor expenses, increased by 29% to $22.2 million in 1999 from $17.2 million in
1998. Commissions increased by 26.4% to $17.0 million in 1999 from $13.4 million
in 1998.
Commissions paid to wholesale distributors of prepaid cards grew
91.2% to $6.1 million in 1999 from $3.2 million in 1998, primarily as a
result of the expansion of our prepaid cellular subscriber base, and a 83%
increase in the number of prepaid cards sold in the United States in 1999.
Our expense for doubtful accounts increased by $3.6 million to $4.3
million in 1999 from $0.7 million in 1998 as the result of the disconnection of
local service customers who had unpaid balances reaching as far back as 1998,
and who contested the bills as a result of Hurricane Georges' interruption of
telephone service. We allowed these customers to be reconnected and provided for
the deferral of payment of this debt. Those clients who did not accept the
payment plan were considered in default and were disconnected. We set aside an
amount equal to 100% of the outstanding debt as an additional provision during
the second quarter of 1999.
As a percentage of total operating revenues, general and administrative
expenses represented 30.1% in 1999 compared to 31.4% in 1998.
OTHER COSTS. Other costs increased by 59.9% to $5.4 million in 1999
from $3.4 million in 1998, primarily as a result of increases in the costs of
sale of customer premise equipment, residential telephones and cellular handsets
in 1999.
OPERATING INCOME. Operating income increased 40.7% to $41.5 million in
1999 from $29.5 million in 1998. Our operating income as a percentage of total
operating revenues improved to 24.3% in 1999 from 23.5% of total operating
revenues in 1998. This reflects increased economies of scale in our operations.
OTHER INCOME (EXPENSES). Other expenses increased by 60.7% to $19.2
million in 1999 from $11.9 million in 1998, reflecting increased short-term bank
borrowings and reduced interest income as a result of the application of pledged
securities to pay interest on the senior notes due 2004 and the principal amount
of loans from the Caribbean Basin Project Financing Authority, and additional
short-term financing during 1999.
NET EARNINGS. Net earnings increased by 23.1% to $22.0 million in 1999
from $17.9 million in 1998. On a per share basis, earnings increased to $0.89
per share in 1999 from $0.78 per share in 1998. The weighted average number of
shares outstanding used in the calculation at December 31, 1998 was 22,944,544
compared to 24,844,544 at December 31, 1999. Net earnings represented 12.9% of
total operating revenues in 1999 compared to 14.3% in 1998.
EBITDA. Earnings before interest and other income and expenses, taxes
and depreciation and amortization increased by 39.9% to $75.0 million for 1999
from $53.7 million for 1998. We calculate earnings before interest and other
income and expenses, taxes and depreciation and amortization prior to the
deduction of payments to the government in lieu of income taxes.
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EFFECTS OF INFLATION
The annual inflation rate in the Dominican Republic was 7.8% for 1998,
5.1% for 1999 and 9.0% for 2000. The effects of inflation on our operations have
not been significant.
CHANGE IN FUNCTIONAL AND REPORTING CURRENCY
Through December 31, 1996, we used the Dominican peso as our functional
and reporting currency. While a significant portion of our revenues, assets and
liabilities historically were denominated in U.S. dollars, a clear determination
of the functional currency was difficult, and we used the Dominican peso as our
functional currency. However, in our opinion, with the issuance of the 11 3/8%
senior notes due 2004, in August 1997, our cash flows and financial results of
operations are more appropriately presented in the U.S. dollar as the functional
currency. Effective January 1, 1997, we changed our functional currency from the
Dominican peso to the U.S. dollar. Our financial statements for periods prior to
January 1, 1997 have not been restated for this change in the functional
currency. However, we did retroactively change our reporting currency to the
U.S. dollar.
LIQUIDITY AND CAPITAL RESOURCES
Substantial capital is required to expand and operate our
telecommunications networks. For 2000, we made capital expenditures of $167.1
million for the installation of additional local access lines, enhancement of
our cellular and PCS network, expansion of international facilities and other
network improvements. Expansion of international facilities included the
installation of a switch in New York and investments in submarine fiber optic
cables. We currently anticipate making capital expenditures of approximately
$133 million in 2001 for increasing capacity and coverage in our local access
and mobile networks, expanding our international facilities to support increased
traffic volume, expanding our local network and other international expansion
and for the implementation of our Central American strategy. In Central America,
capital expenditures will consist of investments in a mobile switching office in
Panama and enhanced base transceiver stations and mobile backhaul for Panama,
Guatemala and El Salvador. However, the amounts to be invested for these
purposes will depend upon a number of factors, including primarily the demand
for our services.
In addition, as we expand our operations into new areas we will be
required to support increased working capital and capital expenditure needs. We
have satisfied our working capital requirements and funded capital expenditures
from cash generated from operations, short and long-term borrowings, trade
finance, capital leases, vendor financing and equity and debt issuances. We
believe our cash generated by operations and borrowings available to us will be
sufficient to fund our expected capital expenditures through the end of 2001. We
frequently evaluate potential acquisitions and joint venture investments.
Acquisitions or investments may require us to obtain additional financing. There
can be no assurance that additional funding sources will be available to us on
terms which we find acceptable or at all.
Net cash provided by operating activities was $31.5 million for 1999
and $42.3 million for 2000. We had net accounts receivable of $26.1 million and
$32.1 million at December 31, 1999 and December 31, 2000.
Our indebtedness was approximately $398.8 million at December 31, 2000,
of which $200.0 million was our 113/8% senior notes due 2004, $76.7 million was
in long-term borrowings and capital leases, with maturities ranging from two to
six years, and $122.1 million was short-term bank loans, telecommunications
equipment financings, trade financings and current portion of capital leases and
of long-term debt. At December 31, 2000, our U.S. dollar borrowings, other than
the 11 3/8% senior notes due 2004, had interest rates ranging from 9.8% per
annum to 12.9% per annum, and our peso borrowings had interest rates ranging
from 24% per annum to 26% per annum. At December 31, 2000, our U.S. dollar
borrowings, other than the 11 3/8 senior notes due 2004, totaled $189.1 million
and our peso borrowings totaled $9.7 million.
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We have credit facilities which, in the aggregate, permit us to borrow
up to $265.7 million. At December 31, 2000, there was $198.8 million outstanding
under these facilities. We had approximately $66.9 million available for
borrowing under these facilities, of which $31.2 million was under facilities
with maturities of less than one year.
At December 31, 2000, we had $79.7 million of short-term and long-term
credit facilities with Dominican banks and institutions and $186.1 million of
U.S. dollar-denominated credit facilities with international banks. We expect
that we will reborrow amounts we pay with such proceeds to fund a portion of our
capital expenditures and our working capital requirements beginning in 2002.
However, our current lenders may be unable or unwilling to lend to us in the
future.
At December 31, 2000, our current liabilities exceeded our current
assets by $125.3 million. This reflects our short-term borrowings in the
Dominican Republic with related companies, local and international banks.
Dominican banks lend on a short-term basis in order to negotiate interest rates
should market conditions change, without necessarily demanding the repayment of
credit facilities. It is our belief that the existence of negative working
capital does not affect adversely the continuity of our business.
We will seek additional credit facilities with international banks to
refinance our short-term credit facilities. During 2000, we obtained credit
guarantees from Export-Import Bank of the United States of up to $56 million for
loans made by The International Bank of Miami, N.A. to be used for purchases of
communications equipment and material from Motorola and other U.S. suppliers. At
December 31, 2000, the amount of $20.2 million has been disbursed under this
facility. The credit guarantees will be available for disbursement over a
12-month period and will be repayable over five years. We have discussed with
Export-Import Bank of the United States a new facility that would provide
additional credits of as much as $125 million.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
We are managed by a Board of Directors, the members of which, in
accordance with our by-laws, are elected at the annual shareholders' meeting and
serve for a period of one year. The Board of Directors is composed of a
Chairman, Vice President, Treasurer, Secretary and eight additional members. The
Board of Directors meets at least once every three months. Special meetings of
the Board of Directors may be held at any time.
The names of our executive officers and directors are set forth below
together with their ages at December 31, 2000 and current positions.
NAME AGE POSITION
-------------------------------- --- ------------------------------------------------
BOARD OF DIRECTORS
NAMED BY GFN CORPORATION, LTD.:
Manuel Arturo Pellerano Pena 46 Chairman
Hector Castro Noboa 59 Vice President
Marcos J. Troncoso 52 Secretary
Carl H. Carlson 43 Treasurer
Juan Felipe Mendoza 46 Director
Anibal De Castro 52 Director
NAMED BY MOTOROLA, INC.:
Kevin J. Wiley 41 Director
Jesus Barona 39 Director
Carl O. Barry 41 Director
Peter Rojas 45 Director
INDEPENDENT DIRECTORS:
Fernando Antonio Rainieri 53 Director
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Jose Manuel Villalvazo 54 Director
EXECUTIVE OFFICERS
Manuel Arturo Pellerano Pena 46 President
Marcos J. Troncoso 52 Executive Vice President of International Business Development and
Member of the Office of the President
Carl H. Carlson 43 Executive Vice President and Member of the Office of the President
Carlos F. Vargas 47 Vice President of Corporate Center and Chief Financial Officer
Virgilio Cadena del Rosario 48 Vice President, Engineering TRICOM Latin American Division
Carlos Ramon Romero 48 Vice President, Customer Relationship Management
Lorenzo Vicens 43 Vice President, Planning, Marketing and Business Division
Valeriano Valerio 42 Vice President, Network Engineering and Operations
Ramon Tarrago 37 Vice President, International Division
Each of the current members of the Board of Directors has been elected
pursuant to an amended and restated shareholders agreement, dated as of May 8,
1998, among Motorola, Inc., Oleander Holdings, Inc., Zona Franca San Isidro,
S.A. and certain individuals, Oleander and Zona, are wholly owned subsidiaries
of GFN, and the individual parties to the agreement are all affiliates of either
GFN or TRICOM.
The Directors are elected annually at the Annual General Meeting of
Shareholders. Each Director (when ever elected) holds office until the next
Annual General Meeting of Shareholders following his election and until his
successor is elected or until his earlier resignation or removal.
As of this date, no date has been set for the Annual General Meeting of
Shareholders.
MANUEL ARTURO PELLERANO PENA has served as our Chairman of the Board of
Directors and President since August 1994 and as a member of our Board of
Directors since our formation in January 1988. Mr. Pellerano has served as the
Vice President of Bancredito, a bank affiliated with GFN and one of the largest
commercial banks in the Dominican Republic, since March 1989. Mr. Pellerano has
been a member and the Vice President of the Board of Directors of GFN since
April 1989. Mr. Pellerano graduated from Universidad Nacional Pedro Henriquez
Urena with a degree in economics.
HECTOR CASTRO NOBOA has served as the Vice President of our Board of
Directors since August 1994 and has served as a member of our Board of Directors
since our formation in January 1988. He has served as a director and Executive
Vice President of GFN since April 1989. Between March 1993 and September 1997,
Mr. Castro served as the Executive Vice President of Bancredito. Mr. Castro also
held various positions at the Deutsche Sudamerikanische Bank (Germany), Citibank
(as Marketing Vice President), Bonanza Dominicana (as Financial Vice President),
Banco Metropolitano (as Financial Advisor) and Universidad Nacional Pedro
Henriquez Urena (as a professor of international economics and macroeconomics).
Mr. Castro graduated from Madrid's Universidad Complutense where he studied
business economics.
MARCOS J. TRONCOSO has served as our Executive Vice President since March
1992, as Secretary of the Board of Directors since our formation in January 1988
and as Member of the Office of the President since September 1995. Prior to
assuming these positions, Mr. Troncoso served as Executive Vice President of GFN
beginning in May 1979. Mr. Troncoso received a law degree from Universidad
Nacional Pedro Henriquez Urena and a BS degree in business administration with a
major in accounting from the University of Puerto Rico.
CARL H. CARLSON, our Executive Vice President since March 1998, has served
as Treasurer of the Board of Directors since January 2000 and as a Member of the
Office of the President since September 1995. Mr. Carlson was a Senior Vice
President from March 1993 until March 1998 and Chief Financial Officer from
September 1993 until September 1995. Mr. Carlson served as a Vice President of
Finance and Administration from December 1989 until September 1993. Mr. Carlson
was an Assistant Vice President for GFN's insurance division from 1987 until
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December 1989. From 1983 to 1987, Mr. Carlson was a Vice President at Chase
Manhattan Bank. Mr. Carlson is a graduate of Instituto Technologico de Santo
Domingo where he majored in business administration and accounting and finance.
Mr. Carlson earned an MBA from a joint program between the University of South
Carolina and Pontifica Universidad Catolica Madre y Maestra.
CARLOS F. VARGAS has served as our First Vice President of the Finance and
Administrative Division and as the Chief Financial Officer since July 1996.
Immediately prior to his arrival, Mr. Vargas was employed by Bancomercio, S.A.,
where he held the positions of Vice President, Assistant to the President and
Executive Vice President of Finance and Operations from May 1992 until July
1996. Mr. Vargas served as Executive Vice President of Finance and Operations at
Banco Popular Dominicano and the Finance Vice President at Grupo Financiero
Popular from 1982 until May 1992. Mr. Vargas was employed by Coopers & Lybrand
as an audit manager from 1974 until 1982. He is a certified public accountant
and earned his degree in accounting from Universidad Nacional Pedro Henriquez
Urena.
VIRGILIO CADENA DEL ROSARIO has served as our Vice President Engineering
TRICOM Latin American since June 2000. Mr. Cadena was First Vice President of
Planning and Operations since from September 1995 until June 2000. Mr. Cadena
was the Second Vice President of Planning and Operations between July 1991 and
September 1995 and Telecommunications Manager from July 1989 until July 1991.
Mr. Cadena graduated with a degree in electromechanical engineering from the
Universidad Autonoma de Santo Domingo and studied at the Electrical Engineering
Department of the University of Kyoto in Japan.
CARLOS RAMON ROMERO has served as our Vice President of our Customer
Relationship Management Division since July 2000. He was First Vice President of
the Residential and Business Division from July 1996 until July 2000.
Immediately prior to his arrival, Mr. Romero served as chief executive of a
brokerage company which he started in February 1994. Mr. Romero served as Vice
President of the Technical Area of Compania Nacional de Seguros, a subsidiary of
GFN, from 1980 until February 1994. Mr. Romero earned a BA in International
Services from the Universidad Nacional Pedro Henriquez Urena, where he has since
held various academic posts.
LORENZO VICENS has served as our First Vice President of the Residential
and Business Division since July 2000. Prior to his arrival, Mr. Vicens served
as Vice President of Marketing at Banco Popular Dominicano from February 1997
until July 2000. Mr. Vicens has extensive experience as a consultant and
coordinator of company restructure procedures, working closely with local
government agencies and the United Nations. Mr. Vicens holds a BS in
Electro-Mechanic Engineering Technology and an MBA from the Pontificia
Universidad Catolica Madre y Maestra and a PHD in Business Administration from
the University of South Carolina.
VALERIANO VALERIO has served as our First Vice President of Planning and
Operations since June 2000 and as Second Vice President of Institutional
Relationships between June 1995 and June 2000. Mr. Valerio graduated with a
degree in Electrical Engineering from the Universidad Pedro Henriquez Urena and
studied at the Nippon Telegraph and Telephone Public Corporation of Tokyo,
Japan.
RAMON TARRAGO has directed the International Division since its
organization as a separate business unit in July 1996 as First Vice President.
He was a Second Vice President of the Corporate Center from August 1995 until
July 1996. He was a Second Vice President of the International Division from
August 1995 until July 1996. He was Director of International Relations from
November 1993 until August 1995. From February 1992 until November 1993, he was
our Director of Finance. Between May 1991 and February 1992, he was a management
associate in the Corporate Banking Unit at the Santo Domingo branch of Citibank.
Mr. Tarrago worked for the World Bank's International Finance Corporation in
Washington, D.C. from May 1990 to September 1990 and for Bancredito between
October 1986 and March 1988. He is the former dean of the MBA program at the
Pontificia Universidad Catolica Madre y Maestra and has held an academic post at
the Instituto Tecnologico de Santo Domingo. Mr. Tarrago holds both a BA in
economics from Universidad Nacional Pedro Henriquez Urena and an MBA with a
finance concentration from the Virginia Polytechnic Institute and State
University.
JUAN FELIPE MENDOZA has been a member of our Board of Directors since June
1997. Mr. Mendoza currently serves as Chief Executive Officer of Bancredito and
President of Compania Nacional de Seguros. He was recently elected Vice
President of FIDES (Inter-American Federation of Insurance Companies) and its
regional commission for Central America and the Caribbean. Mr. Mendoza is a
director of Reaseguradora Nuevomundo, Caribbean Hotel
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Association Insurance Company, Bancredito and GFN Corporation USA. Mr.
Mendoza joined GFN in 1977. Prior to joining GFN, Mr. Mendoza was employed in
the Internal Audit Department for the Caribbean of the Royal Bank of Canada.
Mr. Mendoza graduated from Universidad Nacional Pedro Henriquez Urena and
also attended Specialized Insurance Training Programs at Royal Global
Insurance of New York and Swiss Insurance Formation Center, Swiss Re,
Switzerland. Mr. Mendoza is a certified public accountant.
ANIBAL DE CASTRO has been a member of our Board of Directors since May
1998, and has served as President of Editorial AA, a subsidiary of GFN, since
May 1994. Mr. De Castro has served on the Board of Directors of Corporacion
Dominicana de Electricidad (C.D.E), the country's state-owned electric utility
provider from 1979 to 1982, and currently serves on the Board of Directors of
several Dominican companies and professional associations including Banco de la
Pequena Empresa and Fondo de Financiamiento de la Micro-Empresa. Mr. De Castro
graduated from Universidad Autonoma de Santo Domingo with a degree in journalism
and holds a B.A. in economics from the University of East Anglia in Great
Britain.
KEVIN J. WILEY has been a member of our Board of Directors since December
1998. Mr. Wiley has been employed by Motorola Network Management Group as the
Director of Regional Cellular Operations for the Latin America Region since
October 1998. Prior to joining Motorola in July 1997, Mr. Wiley was the Vice
President and General Manager of Aliant Cellular Communications from July 1995
to July 1997. Mr. Wiley has been involved in various positions within the
wireless telecommunications industry throughout his entire career. Mr. Wiley
graduated from Creighton University with a B.S. in finance and management.
JESUS BARONA has been a member of our Board of Directors since December
1998 and served as the Director of Business Operations in Latin America since
April 1997. Prior to joining Motorola, Mr. Barona served as the Director of
Marketing and Operations for BellSouth Panama from January 1996 to March 1997.
From December 1992 to March 1996, Mr. Barona served as the Senior Manager of
Marketing Operations for BellSouth International. Mr. Barona holds a degree in
marketing from Columbia Business School.
CARL O. BARRY has been a member of our Board of Directors since January
2000. He has been employed since 1991 by Motorola, including as Senior
Operations Controller since February 1996, Pan American Service & Quality
Operation Controller from July 1993 until February 1996 and another
Manufacturing Controller from November 1991 until June 1993. Prior to joining
Motorola, he was a Price Waterhouse Audit Manager for eight years. Mr. Barry
holds a BA in Business Administration from the University of Puerto Rico and is
a Certified Public Accountant.
PETER ROJAS has been a member of our Board of Directors since January 2000.
Mr. Rojas joined Motorola in December 1999 as a Director of Latin American
Business Development. He was Vice President of both Sales and Business
Development in Latin America for GE Capital Spacenet from April 1996 until
December 1998 and Gilat Latin America from December 1998 until November 1999.
Mr. Rojas has a Bachelor of Science in Mechanical Engineering Technology from
the Virginia Polytechnic Institute and an MBA from Drexel University.
FERNANDO ANTONIO RAINIERI has been a member of our Board of Directors since
July 1998. Mr. Rainieri served as Advisor to the Central Bank of the Dominican
Republic since December 1990 to August 1996, as the Dominican Republic's
Secretary of Tourism from August 1986 to August 1990 and Advisor to the World
Tourism Organization from 1988 to 1990. From 1979 to 1985, Mr. Rainieri served
as General Director of the Fund for the Development of Tourism Infrastructure
(INFRATUR). From 1970 to 1975, Mr. Rainieri held positions as Executive
Assistant at Gulf & Western Americas Corporation. In addition, Mr. Rainieri is
currently on the Board of Directors of several Dominican companies including
Fimaca, Servicios Aereos Dominicanos, La Antillana Comercial, Helados Bon and
Inversiones Bohechio. Mr. Rainieri holds a bachelors degree in Business
Administration and a degree in marketing from Texas A & M University.
JOSE MANUEL VILLALVAZO has been a member of our Board of Directors since
July 1998. A pioneer in the Mexican cellular industry, Mr. Villalvazo has been
an active member of the wireless and satellite communication sectors. In 1990
Mr. Villalvazo co-founded Baja Cellular, the Band A service provider in the
northwestern region of Mexico, and in 1993 he founded Leo One Panamericana, a
Mexican-based low-earth-orbiting satellite service providing mobile data
services throughout Latin America. Since 1989 he has served as the Chairman and
CEO of Tecelmex, a holding company with interests in mobile communication. Other
positions within the telecommunications industry which Mr.
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Villalvazo has held have included Vice-Chairman of the Mexican Association of
Cellular Telephone Concessionaires (AMCEL) from 1992 to 1995, and Chairman,
as well as founder, of the Latin American Cellular Industry Association
(ALACEL) from 1994 to 1996. Since 1992 he has served as a Member of the
Mexican delegation to the Inter-American Telecommunications Commission
(CITEL). Mr. Villalvazo is a certified public accountant and has a MBA from
the University of Mexico.
EXECUTIVE COMPENSATION
The aggregate amount of compensation we paid during the fiscal year
ended December 31, 2000 to our directors and executive officers, as a group (16
persons), was $2.1 million.
EMPLOYEES.
At December 31, 2000, we had 1,740 employees. Of this number, 30 were
executives, 165 were managers, and the remaining 1,545 were technicians,
salesmen, service and staff employees. The Company believes that this number may
increase over the next several years as the Company expands its network and its
customer base. None of the Company's employees belong to labor unions. The
Company believes that it has good relations with its employees.
SHARE OWNERSHIP
We refer to Item 7 for information with respect to Manuel Arturo
Pellerano Pena, who, to our knowledge, is the only director with 1% or greater
percentage of ownership in TRICOM.
In connection with our initial public offering, our Board of Directors
adopted, and GFN and Motorola approved, our 1998 Long-Term Incentive Plan
pursuant to which 750,000 shares of Class A common stock were reserved for
issuance. Our Board of Directors, which administers the plan, has granted
options to purchase an aggregate of 519,630 shares of Class A common stock to
directors, officers and employees. The options granted expire on the tenth
anniversary of the date of grant and, commencing on or about May 4, 2001, will
become exercisable with respect to 37.5% of the shares of Class A common stock
subject to the option. At December 31, 2000, there were 230,370 shares available
for grant under the plan.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
The following table sets forth certain information known to us with respect
to beneficial ownership of the common stock at February 22, 2001 (unless
otherwise indicated) by each person, to our knowledge, who beneficially owns 5%
or more of the common stock and all officers and directors as a group. Except as
otherwise indicated, the holders listed below have sole voting and investment
power with respect to all shares beneficially owned by them.
For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of a given date which such person or
group of persons has the right to acquire within 60 days after such date.
Information relating to the percentage beneficially owned is calculated in
accordance with SEC rule 13d-3 and includes for each of Oleander Holdings Inc.
and Motorola the shares of Class A common stock issuable upon conversion of the
Class B stock owned by it. Each share of Class B stock is freely convertible at
any time into one share of Class A common stock, subject to adjustment, and may
not be transferred except to GFN, Motorola or permitted transferees, as defined.
Each share of Class B stock has ten votes and of Class A common stock has one
vote. All of the shares owned by GFN and Motorola are Class B stock and
represent 100% of the outstanding shares of Class B stock. If all of the Class B
shares were converted to Class A common stock, then Oleander Holdings, Inc.
would own 39.8% of the Class A common stock and Motorola 26.5% of the Class A
common stock.
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SHARES PERCENTAGE OF PERCENTAGE OF
BENEFICIALLY SHARES BENEFICIALLY CLASS B SHARES
SHAREHOLDER OWNED OWNED BENEFICIALLY OWNED
--------------------------------------------------------- ------------- ------------------- ------------------
Oleander Holdings, Inc.(1)........................... 11,486,726 39.8 60.0
Motorola, Inc........................................ 7,657,818 26.5 40.0
Orient Star Holdings LLC............................. 1,175,000(2) 12.1 --
Prime 66 Partners, L.P............................... 1,174,000(3) 12.1 --
WaterView Capital Management LLC..................... 1,500,000(4) 15.5 --
Directors and executive officers as a group (16 persons) 11,583,668(5) 39.8 60.0
------------------------------------------------------------------------------------------------------------------------
(1) Oleander Holdings, Inc., a Panamanian corporation, is a wholly
owned subsidiary of GFN. GFN is controlled by Manuel Arturo Pellerano
Pena, our Chairman of the Board of Directors and President, and members
of his family.
(2) Inmobiliaria Carso, S.A. de C.V., as the sole member of Orient
Star Holdings LLC, is deemed to beneficially own indirectly the ADSs
owned directly by Orient Star Holdings LLC. Carlos Slim Helu, Carlos
Slim Domit, Marco Antonio Slim Domit, Patrick Slim Domit, Maria Soumaya
Slim Domit, Vanessa Paola Slim and Johanna Monique Slim Domit own all of
the outstanding voting securities of Inmobiliaria Carso, S.A. de C.V.,
and are deemed to beneficially own indirectly the ADSs deemed
beneficially owned by Inmobiliaria Carso, S.A. de C.V. and directly
owned by Orient Star Holdings LLC. This information is based on a
Schedule 13-G dated November 6, 2000 and filed with the Securities and
Exchange Commission.
(3) P-66 Genpar, L.P., a Texas limited partnership, and P-66, Inc.,
a Texas corporation, as the two general partners of Prime 66 Partners,
L.P., Carmel Land & Cattle Co., a Texas corporation, as the sole general
partner of P-66 Genpar, L.P., and the Sid R. Bass Management Trust, a
revocable Texas trust and the sole shareholder of P-66, Inc., may be
deemed to be the beneficial owners of the shares of Class A common
stock. In his capacity as the sole shareholder of Carmel Land & Cattle
Co., William P. Hallman, Jr. may be deemed to be the beneficial owner of
the shares. As Trustee of the Sid R. Bass Management Trust, Sid R. Bass
may also be deemed the beneficial owner of the shares. This information
is based on a Schedule 13G/A dated February 13, 2001 and filed with the
Securities and Exchange Commission.
(4) WaterView Capital Management LLC, a Delaware limited liability
company, possesses sole power to vote and direct the disposition of all
shares held by WaterView Partners, L.P., a Delaware limited partnership,
which owns 958,500 shares, and of D&DF WaterView Partners, L.P., a
Delaware limited partnership, which owns 41,500 shares. Georgica
Advisors LLC, a Delaware limited liability company, is the holder of,
and possesses sole power to vote and direct the disposition of, 500,000
shares. WaterView Capital Management LLC and Georgica Advisors LLC may
act together, from time to time, with respect to the shares. Each of the
entities discussed above is deemed to beneficially own 1,500,000 shares
or 15.5% of the Class A Shares. This information is based on a Schedule
13-D dated November 15, 2000 and filed with the Securities and Exchange
Commission.
(5) Includes 11,486,720 shares of Class B stock that may be deemed
to be beneficially owned by Mr. Pellerano, our Chairman of the Board of
Directors and President, in his capacity as a controlling person of GFN.
Does not include 313,420 shares of Class A common stock issuable upon
exercise of options that are exercisable commencing in 2001 and through
2008.
Motorola Inc. has announced its intention to sell its shares of
Class B stock. Our By-laws provide that upon transfer of such shares
(unless to GFN or one of its affiliates), these shares will convert to
Class A common stock.
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SHAREHOLDERS AGREEMENT
Each of the current members of the Board of Directors has been elected
under the terms of an amended and restated shareholders agreement, dated as of
May 8, 1998, among TRICOM, Motorola, Oleander, Zona and certain nominal
shareholders that are affiliates of GFN or TRICOM.
The shareholders agreement provides that the Board of Directors will
consist, and GFN and Motorola each will vote all of the shares owned by it (or
in the case of any transfer of shares to its permitted transferee, as defined in
the shareholders agreement, will cause such permitted transferees to vote their
shares) in favor, of six directors to be designated by GFN, four directors to be
designated by Motorola and two independent directors. The shareholders agreement
provides that in order for a person to qualify as an independent director such
person must not be:
- an officer, employee, principal stockholder, consultant or partner
of TRICOM, apart from such directorship, or an officer, employee,
principal stockholder, consultant or partner of an entity that was
dependent upon TRICOM or any affiliate of TRICOM for more than 5%
of its revenues or earnings in its most recent fiscal year;
- an officer, director, employee, principal stockholder, consultant
or partner of a person that is a competitor of TRICOM or any of
its affiliates, any affiliate of such competitor, or any other
person that was dependent upon such competitor or affiliate of
such competitor for more than 5% of its revenues or earnings in
its most recent fiscal year; or
- an officer, director, employee, principal stockholder, consultant
or partner of Motorola or GFN or an officer, employee, principal
stockholder, consultant or partner of an entity that was dependent
upon Motorola or any affiliate of Motorola for more than 5% of its
revenues or earnings in its most recent fiscal year.
Each of Motorola and GFN will be entitled to nominate one independent
director so long as it together with its permitted transferees owns at least 25%
of the issued and outstanding shares of Class B stock. In calculating the number
of shares of Class B stock owned by either GFN or Motorola, there will be
included the number of shares of Class B stock owned by any of it permitted
transferees.
The composition of the Board of Directors is intended to approximate the
respective ownership interests of GFN (11,486,720 shares of Class B stock,
representing 39.8% of the shares of common stock and 60% of the shares of Class
B stock and 57% of the total voting power), Motorola (7,657,818 shares of Class
B stock, representing 26.5% of the shares of common stock and 38% of the shares
of Class B stock and 38.8% of the total voting power) and the public. The number
of directors other than independent directors that GFN or Motorola each may
designate will change if its percentage ownership of Class B stock changes as
follows:
- if GFN and Motorola each owns 50% of the then outstanding shares
of Class B stock, each would have the right to designate five
directors;
- if either GFN or Motorola owns shares of Class B stock
- greater than 50% but less than or equal to 60% of the
then outstanding shares of Class B stock, it would
designate six directors and the other four directors;
- greater than 60% but less than or equal to 70% of the then
outstanding shares of Class B stock, it would designate
seven directors and the other three directors;
- greater than 70% but less than or equal to 80% of the then
outstanding shares of Class B stock, it would designate
eight directors and the other two directors;
- greater than 80% but less than or equal to 90% of the then
issued and outstanding shares of Class B stock, it would
designate nine directors and the other one director; or
- greater than 90% of the issued and outstanding Class B
stock, it would designate all ten directors.
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Until such time as either Motorola or GFN owns less than 25% of the
outstanding shares of Class B stock, the shareholders agreement requires the
affirmative vote of nine directors to approve the following actions:
- the acquisition or formation by TRICOM of any entity or the making
of any investments in an other entity of business, including, but
not limited to, the purchasing of equity or debt interests in or
the extension of credit to such entity;
- the incurrence of indebtedness, if after giving effect to such
incurrence, including the proposed application of the proceeds of
such indebtedness to pay existing indebtedness, the ratio of
indebtedness to shareholders' equity would be greater than three
to one;
- approval of annual budgets relating to income, capital
expenditure, operating expenses and cash flows (provided that this
does not require approval of any projected debt incurrence that
otherwise complies with the limits described above or of any other
proposed corporate action for which super-majority approval is not
specifically required); and
- the issuance, or redemption, of Class A common stock or other
securities or instruments exercisable for or convertible into
Class A common stock.
In addition, approval by the independent directors is required for any
transaction that has a fair market value exceeding $1.0 million which we enter
into with either GFN or Motorola and their respective affiliates. The vote of a
majority of the directors present at a duly convened meeting is required for all
other board actions (and at such time that Motorola or GFN owns less than 25% of
the then outstanding shares of Class B stock for the four actions specified as
requiring a greater vote).
Under the shareholders agreement, if we propose to register any of our
securities under the Securities Act of 1933 (other than a registration in
connection with a reorganization on Form F-4 or in connection with any employee
stock option, stock purchase or savings plan on Form S-8 or similar registration
forms), whether or not for our own account, GFN and Motorola are entitled to
include shares of Class A common stock owned by them in any such registration,
subject to the right of the managing underwriter of any such offering to
exclude, due to market conditions, some or all of such securities. In addition,
GFN and Motorola each has the right to require us to prepare and file on three
occasions a registration statement covering registrable securities with a market
value of at least $5.0 million, subject to customary blackout periods. We are
generally required to bear the expenses (except underwriting discounts and
commissions and fees and expenses of any special counsel) of all such
registrations, whether or not initiated by GFN or Motorola.
VOTING AGREEMENTS FOR THE 11 3/8% SENIOR NOTES DUE 2004
In connection with the offering of the 11 3/8% senior notes due 2004,
Oleander and Motorola each entered into separate voting agreements, dated August
21, 1997 with The Bank of New York, as trustee under the indenture for the
senior notes. The voting agreements provide that each of Oleander and Motorola
will grant to the trustee for the 11 3/8% senior notes due 2004 the right to
vote all of its shares of common stock upon the occurrence of the following
events:
- our failure to pay interest on the senior notes when due for a
period of 30 days;
- our failure to pay the principal of or premium on the senior notes
when due, whether at maturity, upon redemption or repurchase or
otherwise;
- our failure to pay principal of and interest on the senior notes
required to be purchased in the event of a change of control;
- a payment default under any debt instrument for money borrowed by
us or any of our guarantor subsidiary (except any such subsidiary
that is not a significant subsidiary); or
- our failure or the failure of any significant subsidiary to pay
final judgments aggregating in excess of $10.0 million within 60
days after the date for which any period for appeal has expired
and during which a stay of enforcement of such judgment shall not
be in effect.
The trustee's right to vote all of the shares of voting stock, once such right
is triggered, will continue (a) during the continuation of the first three
events set forth above and for one year after the date we cure such event of
default or
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(b) during the continuation of the fourth event. Either Oleander or Motorola
may revoke the proxy granted by it under the voting agreement if:
- the Dominican Republic becomes bound by the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (1958);
- if as of the last day of any fiscal quarter we report
shareholders' equity of at least $100 million and for each of the
four full consecutive fiscal quarters ending on such date our
leverage ratio as defined in the senior note indenture is equal to
or less than 2.5 to 1.0;
- the senior notes are rated Ba2 or better by Moody's Investors
Service, Inc. and BB or better by Standard & Poor's Ratings
Group, respectively; or
- our obligations with respect to the outstanding senior notes are
discharged.
If we incur any indebtedness that constitutes senior facilities under the
senior note indenture and the lender or lenders under such senior facilities are
granted a lien by Oleander and Motorola in respect of its voting stock, then the
proxy rights granted under the voting agreement will be suspended and the
trustee will not have the right to exercise such rights until such time as the
senior facilities are repaid in full, provided that:
- the trustee is granted a lien or similar interest in respect of
the voting stock by Oleander and Motorola for the benefit of the
holders, which lien will be subordinated and subject to the prior
rights and claims of the senior lenders and TRICOM; and
- the holders, the trustee and all senior lenders enter into an
escrow agreement and an intercreditor agreement, then the proxy
rights granted under the voting agreement.
The voting agreements do not prohibit or restrict either Oleander or
Motorola from transferring, selling, pledging, or hypothecating any shares of
voting stock. Any shares of voting stock transferred to an affiliate of either
Oleander or Motorola will remain subject to the voting agreements and any shares
of voting stock transferred to a person unaffiliated with either Oleander or
Motorola will no longer be subject to the voting agreements. The voting
agreements will terminate and be of no further force and effect if (a) any
senior lenders holding a security interest in the voting stock foreclose upon
such security interest subject to the terms of the intercreditor agreement to be
entered into by the senior lenders and the trustee or (b) the proxy is revoked
pursuant to the voting agreements.
CERTAIN TRANSACTIONS WITH PRINCIPAL SHAREHOLDERS
GFN
GFN is one of the Dominican Republic's largest privately held companies,
with interests in insurance, finance and publishing. GFN provides a number of
managerial services to its affiliated companies, including TRICOM, for which the
affiliated companies are billed based upon the number of hours that a particular
GFN employee spends on providing such services and other factors. GFN employees
have provided to us internal auditing, public relations, management information
services, legal and personnel management services. For 1998, 1999 and 2000, we
paid to GFN $494,125, $167,470 and $234,348, respectively, for such services.
GFN also provides us with security services for which we paid $111,460, $77,382
and $227,001 in 1998, 1999 and 2000, respectively. We anticipate that we will
continue to receive such services from GFN.
We lease premises and equipment from GFN and its affiliates. During 1998,
1999, and 2000, we paid to GFN and its affiliates $44,610, $108,578 and
$157,600, respectively, for the use of premises and equipment.
During 1999 we bought land from an unaffiliated third-party for $1,826,625
which we later sold to an affiliate of GFN for $2,724,458. We also entered into
various capital leases with an affiliate of GFN for $26,244,000 during 1999 and
17,691,845 during 2000. In 2000, we sold our Internet portal to GFN affiliate
for approximately $2.3 million. In 1999 we had capital lease obligations of
$26.2 million and in 2000 of 17.7 million.
We provide life insurance to our employees and have obtained other
insurance through Compania Nacional de Seguros, a GFN affiliated insurance
company. We paid insurance premiums to affiliates of GFN totaling $1.5 million,
$2.0 million and $4.1 million in 1998, 1999 and 2000, respectively.
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We provide telecommunications services to GFN and its affiliated companies.
GFN and its affiliated companies paid us $0.8 million, $2.0 million and $1.9
million for such services in 1998, 1999 and 2000, respectively.
GFN affiliated banks have loaned us funds. We had borrowings from GFN
affiliated banks, including financing of letters of credit on open accounts, in
the aggregate principal amounts of $17.9 million at December 31, 1999 and $31.4
million at December 31, 2000.
MOTOROLA
We have purchased telecommunications equipment from Motorola, particularly
for the development of our mobile cellular system and our wireless local loop
for aggregate consideration of approximately $2.3 million, $23.1 million and
$20.3 million during 1998, 1999, and 2000, respectively. In July 2000, we also
have entered into an infrastructure supply agreement to buy systems and license
the iDEN technology from Motorola for use in Central America. We placed an order
for an initial system for Panama, for $20 million, concurrently with the
execution of the agreement but have not placed any other orders to date.
OTHER TRANSACTIONS
We have purchased mortgage participation contracts from savings and
loan associations in the Dominican Republic that are maintained as compensating
balances for mortgage loans made by these associations to several of our
officers. At December 31, 1999 and 2000, these mortgage participation contracts
totaled $2,710,572 and $3,289,459, respectively.
ITEM 8. FINANCIAL INFORMATION
See "Item 18. Financial Statements"
OTHER FINANCIAL INFORMATION
LEGAL PROCEEDINGS
In August 1999, a Dominican company, DCS International S.A., and two
individual plaintiffs whom in our belief are officers or employees of DCS, sued
us before Dominican courts for alleged losses and damages of up to approximately
RD$200 million ($12 million) resulting from the imprisonment by Dominican
authorities of two of the individuals for 15 days. The plaintiffs alleged that
their imprisonment was the result of an investigation by the local district
attorney and the police that we instigated following an irregular increase in
telephonic traffic at certain telephone numbers. We requested that the court
dismiss the action because of lack of jurisdiction. The court granted our motion
to dismiss and ruled that the plaintiffs should cover the costs of the
proceedings. The plaintiffs have resubmitted the action before the proper court
and, after numerous requests and hearings before the Court, the case is now
pending decision from the Judge of the Civil and Commercial Court Room of the
Third Circumscription of the Court of First Instance of the National District of
Santo Domingo. After consulting with legal counsel, we believe that this matter
will not have a material adverse effect on our results of operations and
financial position.
There are no other legal proceedings to which we are a party, other
than routine litigation incidental to our business which is not otherwise
material to our business or financial condition.
ITEM 9. THE OFFER AND LISTING
AMERICAN DEPOSITARY SHARES
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The ADSs are traded on the New York Stock Exchange under the symbol
"TDR". Shares of Class A common stock are not traded on any other exchange or
automated quotation system. At April 30, 2001, there were 30 record holders in
the United States of the ADSs.
The following tables provides the high and low prices for the ADSs on
the New York Stock Exchange for (1) each quarter since we completed our initial
public offering on May 4, 1998 and (2) each of the most recent six months.
NEW YORK STOCK EXCHANGE
HIGH LOW
---- ---
YEAR ENDED DECEMBER 31, 1998
Second Quarter........................ 12 9/16 8 3/16
Third Quarter......................... 10 13/16 5 7/8
Fourth Quarter........................ 7 1/2 3 7/16
YEAR ENDED DECEMBER 31, 1999
First Quarter......................... 9 6
Second Quarter........................ 11 5/8 6 1/8
Third Quarter......................... 12 7/16 7 9/16
Fourth Quarter........................ 22 5/8 7 5/8
YEAR ENDED DECEMBER 31, 2000
First Quarter......................... 27.88 17.17
Second Quarter........................ 21.19 14.31
Third Quarter......................... 19.25 14.63
Fourth Quarter........................ 16.00 7.10
YEAR ENDING DECEMBER 31, 2001
First Quarter......................... 12.46 7.00
Second Quarter........................ 7.80 6.00
Third Quarter......................... 6.70 5.30
April................................. 7.80 6.15
May................................... 6.90 6.25
June.................................. 7.40 6.00
July.................................. 6.70 5.80
August................................ 6.26 5.50
September............................. 5.89 5.30
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ITEM 10 ADDITIONAL INFORMATION
MEMORANDUM AND ARTICLES OF ASSOCIATION
Board of Directors
The business and affairs of the Company is managed by the Board of
Directors, which consists of not more than fifteen or less than eight persons.
The Directors of the Company are elected annually at the Annual General Meeting
of Shareholders. Each Director (whenever elected) holds office until the next
Annual General Meeting of Shareholders following his election and until his
successor is elected and qualified or until his earlier resignation or removal.
Any Director may resign at any time upon written notice to the Board of
Directors, to the Chairman of the Board or to the President of the Company. Any
Director may be removed with or without cause at any time by an affirmative vote
of a majority of the shareholders entitled to vote. If any vacancies occur in
the Board of Directors, of if the authorized number of Directors is increased,
the Directors then in office may continue to act, and such vacancies may be
filled by a majority of the Directors then in office. Any vacancies or newly
created directorships also may be filled by an affirmative vote of a majority of
the shareholders entitled to vote at a General Meeting of Shareholders called
for such purpose.
Regular meetings of the Board of Directors may be held at such places
within or out of the Dominican Republic and at such times as the Board of
Directors may from time to time determine. Special meetings of the Board of
Directors may be held at any time or place within or outside of the Dominican
Republic whenever called by the Chairman of the Board, by the President of by
any two Directors. Any member of the Board of Directors may participate in a
meeting of the Board of Directors by means of a telephone conference or similar
communications equipment provided that all persons participating in the meeting
can hear each other.
At all meetings of the Board of Directors, the presence of a majority of
the total number of Directors will constitute a quorum for the transaction of
business. The vote of at least a majority of the Directors present at any
meeting at which a quorum is present is necessary to constitute the act of the
Board of Directors unless otherwise provided by applicable law.
Purpose
Article 2 of our by-laws states that the purpose of the Company is:
- to provide, maintain and operate telecommunications systems in
the Dominican Republic and elsewhere;
- to enter into such agreements as may be required to be
interconnected to the switched public telephone network, as well
as to any domestic networks rendering inter-urban services, as may
be required by said telecommunications systems; and
- to construct, maintain, and exploit a private telecommunications
system for the transmission of national and international calls
and for the transmission or reception of messages and signals of
any kind.
Capital Stock
Our authorized capital stock consists of 55,000,000 shares of Class A
common stock and 25,000,000 shares of Class B stock. Both classes of capital
stock vote together as a single class on matters except any matter that would
adversely affect the rights of either class. These matters would need to be
approved by a special meeting of the holders of the class of shares to be
affected. The Class A common stock has one vote per share and the Class B stock
has ten votes per share. The economic rights of each class of capital stock are
identical.
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Registration and Transfer
All shares are evidenced by share certificates in registered form.
Dominican law requires that all shares be represented by a certificate, although
a single certificate may represent multiple shares of stock. Certificates may be
issued in the name of the registered holder, bearer or to-order form. All of our
share certificates are issued in the name of. Dominican law also requires that
all transfers, encumbrances and liens on nominative shares must he recorded in
the share registry and only are enforceable against us and third parties after
such registration has taken place. The Bank of New York is the registrar and
transfer agent for the Class A common stock, except during shareholders meetings
when we will maintain the share registry for the Class A common stock.
Shareholders Meetings
Shareholders are entitled to vote on all matters at ordinary or special
shareholders' meetings. The board of directors will convene an annual
shareholders' meeting at least once a year in order for shareholders:
- to elect new directors and a vigilance officer;
- to acknowledge the vigilance officer's report; and
- for management to report upon our financial performance and for
the shareholders to decide whether or not to distribute dividends.
Ordinary shareholders' meetings may be convened at other times in order to
transact other business, including to remove directors. Special shareholders'
meetings are convened in order to effect fundamental changes in our structure,
including to approve amendments to our by-laws. Under our by-laws, shareholders'
meetings may be convened by:
- the Chairman of the Board of Directors;
- a majority of the members of the board at any time;
- at the request of the holders of 30% of the shares entitled to be
cast at such meeting; and
- at the request of the vigilance officer in urgent circumstances,
which are not defined under Dominican law.
Shareholders meetings may he convened not less than 30 but not more than 60
calendar days after written notice has been mailed to shareholders. A majority
of the shares entitled to be cast constitutes a quorum at all shareholders
meetings. Our by-laws provide that holders of two-thirds of the votes entitled
to be cast is required to approve:
- amendments to the by-laws, including increases or decreases of
our authorized share capital;
- the issuance of shares of Class B stock in addition to those
shares of Class B stock outstanding on the date of the adoption of
the by-laws, except in connection with a dividend or other
distribution with respect to, or a subdivision, consolidation or
reclassification of all outstanding shares of stock;
- the declaration and payment of any dividend or distribution with
respect to our capital stock;
- any increase or decrease in the number of directors; and
- our voluntary winding up or liquidation or the filing of a
bankruptcy petition.
The affirmative vote of the holders of a majority of votes entitled to be
cast is required to approve all other actions. Shareholders may vote by proxy,
and the depositary will cast proxies as directed by the holders of the ADRs.
Limitation of Officers' and Directors' Liability
In addition to voting for directors at the annual shareholder's meeting,
shareholders are asked to vote upon the performance of management. Our vigilance
officer, an officer elected by the shareholders each year, delivers a report on
our financial performance and other issues related to management's performance.
If the holders of a majority of the votes entitled to be cast approve
management's performance, all shareholders are deemed to have released the
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directors and officers from claims or liability to us or our shareholders
arising out of actions taken or any failure to take actions by any of them on
our behalf during the prior fiscal year, with certain exceptions. Shareholders
will likely fail in any suit brought in a Dominican court with respect to the
acts or omissions deemed to have been released. Officers and directors may not
be released from any claims or liability for criminal acts, fraud, self-dealing
or gross negligence. If the shareholders do not approve management's
performance, the vigilance officer's report may form the basis of any suit
brought by the shareholders against our officers and directors.
Our by-laws provides that we will indemnify any person made or threatened
to be made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person, or a
person of whom he or she is the legal representative, is or was our director,
officer, employee or agent or any of our predecessors, or serves or served any
other enterprise as a director, officer, employee or agent at our request or any
of our predecessors. We are required to pay any expenses reasonably incurred by
a director or officer in defending a civil or criminal action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it ultimately is determined that he or she is
not entitled to be indemnified by us under our by-laws or otherwise. We may, by
action of our Board of Directors, provide for the payment of such expenses
incurred by our employees and agents as it deems appropriate.
Liquidation Rights
Each shareholder is entitled to a proportionate share of any of our assets
available upon dissolution after the payment of debts owed to creditors.
Shareholders are deemed to be creditors of our company to the extent of declared
and unpaid dividends.
Dividends
Under Dominican law, only shareholders may authorize the declaration and
payment of dividends. Shareholders are entitled to receive dividends in
proportion to their respective capital participation, subject to adjustment as
provided in the by-laws. Dividends are payable only from after-tax profits, and
only after we have set aside at least 5% of our annual profits as a legal
reserve (until such reserve equals 10% of paid-in capital). The by-laws provide
that shareholders may only approve the declaration and payment of dividends or
distributions if the declaration or payment of such dividend or distribution
would not violate any obligation, contractual or otherwise, to which we or any
of our subsidiaries are a party or by which any of them or their respective
properties or operations are bound.
Voting Rights
The holders of Class A common stock and Class B stock vote together with
respect to all matters. Every holder of Class A common stock is entitled to one
vote for each share of Class A common stock held and every holder of Class B
stock is entitled to ten votes for each share of Class B stock held by the
number of shares of Class A common stock into which one share of Class B stock
is then convertible. Under our by-laws, Class B stock may not be transferred
except to permitted transferees. Permitted transferees include
1. Oleander
2. Motorola
3. any subsidiary or affiliate, as defined, and
4. with respect to Oleander, Manuel Arturo Pellerano Pena and any
member of the family of Manuel Arturo Pellerano Pena as of the
date of the initial public offering that had an interest
(including indirectly through any corporation, trust or entity) in
Oleander and
- the spouse or surviving spouse and natural and adopted
children of any such family member
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- any trust existing solely for the benefit of family
members and any person who would be a permitted transferee
of any such family member under clause (A) and any trustee
of such trust
- upon the death of any such member or any person who would
be a permitted transferee of any member, such holder's
estate or any executor, administrator or other legal
representative of such holder, and
- any corporation, partnership or other entity all of the
outstanding equity interests of which are owned, or all of
the outstanding voting power of which is controlled,
directly or indirectly by, or any trust or similar entity
the sole beneficiaries of which are, such members and
their permitted transferees.
If, despite these restrictions on transfer, a shareholder owning shares of Class
B stock transferred its shares to a person or entity other than to Oleander,
Motorola or a permitted transferee, the shareholder will only become entitled to
one vote per share. If, with respect to any shares of Class B stock owned by
Oleander and its permitted transferees, the shares of common stock owned by
Oleander and its permitted transferees constitute less than 10% of the
outstanding common stock, such shares of Class B stock will entitle the holder
to one vote per share. If, with respect to any shares of Class B stock owned by
Motorola and its permitted transferees. the shares of common stock owned by
Motorola and its permitted transferees constitute less than 10% of the
outstanding common stock, such shares of Class B stock will entitle the holder
to one vote per share. Oleander, Motorola and any permitted transferee may
pledge shares of Class B stock without reducing the number of votes to which it
is entitled; provided, however, that if such shares of Class B stock are
transferred to or registered in the name of the pledgee (unless the pledgee is a
permitted transferee), the number of votes to which such shares of Class B stock
are entitled will be reduced until Oleander, Motorola or any of their permitted
transferees either cures any default that resulted in the transfer or
registration or reacquires the shares from the pledgee.
Preemptive and Other Rights
The holders of Class A common stock and Class B stock are not entitled to
preemptive or similar rights. The shares of Class A common stock and Class B
stock are not subject to redemption or a sinking fund. Under our by-laws, we are
authorized to issue shares of Class B stock only in connection with a dividend
or other distribution with respect to, or a subdivision, consolidation or
reclassification of, all outstanding shares of Class A common stock. In the
event of any subdivision, consolidation, reclassification or other change in the
Class A common stock, the Board of Directors, in its discretion, in lieu of
issuing additional shares of Class B stock, may adjust the number of shares of
Class A common stock into which the Class B stock is convertible and the number
of votes to which each share of Class B stock is entitled.
Reorganization, Consolidation, Share Exchange or Merger
In the event of a reorganization, consolidation, share exchange or merger
of the Company, each holder of outstanding shares of stock of the Company shall
be entitled to receive for each of his shares the same kind and amount of
consideration (whether consisting of cash, property or securities) to be
received by each other holder of the same class of stock, if any for each of his
shares.
EXCHANGE CONTROLS
FOREIGN EXCHANGE CONTROLS
The foreign exchange system of the Dominican Republic is administered
by the Central Bank. In January 1991, the Monetary Board of the Central Bank
instituted the current foreign exchange system which permits the purchase of
foreign currency from commercial banks located in the Dominican Republic. Prior
to January 1991, persons were required to purchase foreign currency directly
from the Central Bank. The resolution adopted by the Monetary Board in 1991
retained the Central Bank's administrative authority over the foreign exchange
system by
-65-
requiring registration with and approval by the Central Bank in order
to repatriate foreign currency abroad. The Monetary Board further liberalized
the foreign exchange system in September 1994, but it retained the requirement
that the payment of debt obligations abroad be registered with the Central Bank.
This registration generally has been regarded as ministerial in nature, except
that short-term advances for exports of goods and services still require prior
approval of the Central Bank. Dominican banks are required to submit an
application form to the Central Bank for approval of any foreign currency
exchange transactions. We cannot assure you that Dominican authorities will not
change the Dominican Republic's monetary policies to restrict the exchange of
Dominican pesos for U.S. dollars.
The Central Bank requires that any person who has registered foreign
debt obligations pay a 5% commission on amounts of Dominican pesos exchanged for
foreign currency to be remitted abroad.
FOREIGN EXCHANGE SYSTEM
The current foreign exchange system in the Dominican Republic was
instituted in January 1991. Under this system, there are two primary exchange
rates:
- the rate established by the Central Bank at which the Dominican
government buys foreign currency or the official rate; and
- the freely floating, private commercial bank rate at which private
banks and other authorized currency exchange agents sell foreign
currency, or the private market rate.
OFFICIAL RATE
The official rate is the rate at which companies in certain strategic
industries are required to surrender revenues received in foreign currency to
the Central Bank for Dominican pesos. The strategic industries subject to this
requirement include the telecommunications industry, and, as a result, we are
subject to this requirement. Accordingly, every U.S. dollar we receive as
revenues must be surrendered to the Central Bank at the official rate unless
otherwise authorized by the Central Bank. Other strategic industries subject to
this requirement include the coffee, sugar, cocoa, minerals and credit card
industries.
On April 27, 2001, the official rate was RD$16.66 per U.S. dollar.
PRIVATE MARKET RATE
The private market rate is the rate at which we purchase the foreign
currency we need to pay foreign suppliers or otherwise to meet our obligations
abroad.
According to current regulations, all purchases of foreign currency
from private commercial banks must be reported daily to the Central Bank. This
requirement permits the Central Bank to supervise and keep statistics on the
private market rate but does not give the Central Bank direct control over the
private exchange rate. The Central Bank publishes a weighted average private
market rate on a weekly basis. The Central Bank is entitled to receive a 5%
commission on all purchases of foreign currency to be remitted abroad.
Interest, principal and all other payments in respect of the 11 3/8%
senior notes due 2004 are required to be paid to the trustee in U.S. dollars. In
addition, most of our equipment and inventory purchases have been made, and are
expected to continue to be made, in U.S. dollars. Since September 1999, the
Central Bank has allowed us to use revenues received in U.S. dollars to pay
interest on the 11 3/8% senior notes due 2004 without first converting them into
pesos.
On April 27, 2001, the Private Market Rate was RD$16.86 per
U.S. dollar.
FOREIGN INVESTMENT
The Dominican Republic once restricted the repatriation of foreign
direct investments in certain sectors of the economy, including the
telecommunications sector. In December 1995, the Dominican government enacted
Law No.
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16-95 on foreign investment, which, among other things, permitted foreigners
to make direct investments in the telecommunications sector and to repatriate
funds from such investments. The foreign investment law requires that
foreigners register their investment with the Central Bank in order to
exchange Dominican pesos for foreign currency.
The foreign investment law expanded the definition of direct foreign
investment to include investments in debt instruments. Prior to the enactment of
the foreign investment law, the Dominican government only treated equity
investments as direct foreign investments. As a result, the principal of and
interest on debt instruments could be repatriated so long as the obligor adhered
to the requirements of the Law on the International Transfer of Funds and the
regulations and resolutions promulgated under the law. The foreign investment
law brings "financial instruments" within its purview, establishing that foreign
investments could take the form of those financial instruments that the Monetary
Board categorizes as foreign investments. However, the Monetary Board has yet to
identify which "financial instruments" could become registered as a foreign
investment. We have been advised by our Dominican counsel, Pellerano & Herrera,
that "financial instruments" as contemplated by the foreign investment law are
Dominican peso-dominated instruments issued to foreign investors in the
Dominican Republic. As such, U.S. dollar-denominated instruments, including the
11 3/8% senior notes due 2004, must be registered as foreign debt obligations
under the foreign currency transfer law.
TAXATION
The following discussion summarizes the principal Dominican Republic
income tax consequences of an investment in the ADRs, ADSs or shares of Class A
common stock by a person who is neither domiciled in nor a resident of the
Dominican Republic for tax purposes and who holds such ADRs, ADSs or shares of
Class A common stock for investment purposes and not for purposes of a trade or
business. In the opinion of the Dominican law firm, Pellerano & Herrera, the
discussion sets forth the material Dominican Republic consequences of such an
investment. The discussion is not intended as tax advice to any particular
investor.
Under our 1996 concession agreement with the Dominican government which
grants us our right to operate as a telecommunications provider, dividends and
interest paid to any of our shareholders, bondholders or other investors are
exempt from Dominican income tax. Under Dominican tax law, the term "dividends"
refers to any distribution of profits of a company to its shareholders. Thus,
under the 1996 concession agreement, any dividend or distribution paid by us
with respect to the class A common stock will not be subject to Dominican income
tax.
Our 1996 concession agreement has not yet been approved by the
Dominican Congress, but was duly executed by the Dominican Executive Branch,
making the concession itself valid and binding on the Dominican government under
our laws. Provisions in our concession agreement providing preferential tax
treatment for Tricom and its shareholders still need to be submitted to and
approved by the Dominican Congress to be binding under the Dominican
Constitution. At the time our concession agreement was executed, it was not
submitted to the Dominican Congress for approval for political reasons. Our
concession agreement, along with the concession agreements of most of Tricom's
competitors in the telecommunications business, was not submitted to the
Dominican Congress because the Dominican Congress was greatly divided at that
time and the Dominican Executive Branch did not control a majority of the
Congress. However, the tax provisions contained in these concession agreements,
along with other concession agreements in other areas, have been completely
followed and complied with by our Dominican Tax Administration.
Until our 1996 concession agreement is approved by the Dominican
Congress, cash dividends and other distributions paid by us with respect to ADSs
or shares of Class A common stock held by any holder could be subject to a 25C
withholding tax, which would be required to be withheld by us and paid to the
Dominican tax administration at the time a cash dividend or other distribution
is paid. Such tax withheld may not be a creditable foreign tax in determining
the U.S. tax liability of such holder. We are not aware of any plans of the
Dominican government to submit our 1996 concession agreement for approval to the
Dominican Congress.
Our 1996 concession agreement does not specifically address whether
capital gains taxes will apply to sales of ADSs in the Dominican Republic.
However, it states that the transfer or sale of our shares of any type will be
exempt from Dominican income tax. Under the principles of territoriality
underlying the Dominican constitution, gain from the sale or exchange of ADRs
evidencing the ADSs by a foreign holder outside of the Dominican Republic would
not be
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subject to taxation by the Dominican tax authority even if our 1996
concession agreement were not applicable to gains on the transfer or sale of
ADSs.
Until our 1996 concession agreement is approved by the Dominican
Congress, the Dominican government could require payment of capital gains tax on
gain recognized on the sale or exchange in the Dominican Republic of shares of
Class A common stock (as distinguished from sales or exchanges of ADSs). The
capital gains tax was instituted in the Dominican Republic only in 1992 and was
later modified by regulations in 1998 as part of major tax reform legislation.
Under present law, the capital gains tax rate is identical to the regular income
tax rate of the person or entity that earned such gain; there is no preferential
rate. Thus, a corporation selling shares of Class A common stock in the
Dominican Republic would be required to pay the corporate income tax of 25% on
any gain from a sale or exchange of such shares. An individual, whether also
would have to pay income tax at the applicable individual rate, as set forth
below, on gain from the sale of shares of Class A common stock in the Dominican
Republic. The individual income tax rates applicable, in the Dominican Republic
since January 1, 2001 are as follows:
IF TAXABLE INCOME IS: THE TAX IS:
--------------------- -----------
Not over RD$120,000.00 0
Over RD$120,000.01
but not over RD$200,000.00 15% of taxable income over RD$120,000.01
Over RD$200,000.01
but not over RD$300,000.01 RD$10,278.00 plus 20% of the excess over RD$171,309.01
Over RD$300,000.01 RD$32,000 plus 25% of the excess over RD$300,000.01
The amount of gain on which the capital gains tax is assessed is equal
to the sale or transfer price (i.e., amount realized on the sale or transfer)
minus the acquisition price, adjusted for inflation. Regulations for the
application of the Dominican Tax Code clarify how the tax basis is to be
calculated and also provide how the inflation adjustment is to be applied.
There is no income tax treaty in force between the Dominican Republic
and the United States.
There are no Dominican inheritance or succession taxes applicable to
the ownership, transfer or disposition of ADSs by a foreign holder not domiciled
in the Dominican Republic at the moment of death. It is unclear whether
Dominican gift taxes would apply to the transfer or other disposition by gift of
shares of Class A common stock by a non-resident foreign holder; however, ADSs
or ADRs are not subject to Dominican gift taxes. There are no Dominican stamp,
issue, registration or similar taxes or duties payable by holders of ADSs or
shares of Class A common stock.
ITEM 11. QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about market risks to certain financial
instruments includes "forward-looking" statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.
We are exposed to market risks from adverse changes in interest rates
and foreign exchange rates. We do not hold or issue financial instruments for
trading purposes.
INTEREST RATE RISKS
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Our interest expense is sensitive to changes in the general level of
interest rates in the United States and in the Dominican Republic. At
December 31, 2000, we had outstanding $200 million aggregate principal amount
of senior notes. The senior notes bear interest at fixed rate of 11 3/8% per
annum and mature in the year 2004. The fair value of the senior notes was
approximately $186 million at December 31, 2000. The senior notes are U.S.
dollar denominated.
Our primary exposure to market risk for changes in interest rates
relates to our short-term borrowings from Dominican banks. Primary exposure is
based on the potential of short-term interest rate variation, not on exposure to
changes in fair market value of our long-term debt. At December 31, 2000, we had
$198.8 million outstanding of short-term and long-term borrowings, other than
our senior notes due 2004 but including trade finance, of which $189.1 million
was U.S. dollar denominated, and the remaining $9.7 million was Dominican peso
denominated. Of the $189.1 million of U.S. dollar dominated debt, $55.8 million
was borrowed from Dominican banks, while the remaining $133.3 million was
borrowed from international banks. Of the total $198.8 million outstanding,
$137.2 million had fixed interest rates, while the remaining $61.6 million had
variable interest rates. During 2000, our short-term and long-term U.S. dollar
denominated borrowings bore interest at rates ranging from 9.5% per annum to
12.9% per annum. During 2000, our short-term and long-term Dominican peso
denominated borrowings bore interest at rates ranging from 24% per annum to 26%
per annum. A 10% increase in the average rate for our variable rate debt would
have increased our loss for 2000 by approximately $1.7 million.
FOREIGN EXCHANGE RISKS
We are subject to currency exchange risks. During 2000, we generated
revenues of $84.2 million in U.S. dollars and $140.1 million in Dominican pesos.
In addition, at December 31, 2000, we had $189.1 million of U.S.
dollar-denominated debt outstanding, excluding the $200.0 million principal
amount of the 11 3/8% senior notes due 2004.
The impact of changes in foreign exchange rates is determined by
measuring the effect of percentage changes in the range of rates during the year
for our Dominican peso denominated assets and liabilities. The model reflects
the weighted average change in exchange rates as resulting in the same
percentage change in foreign exchange gains or losses.
Dominican foreign exchange regulations require us and other
telecommunications companies to convert all U.S. dollar revenues into Dominican
pesos at the official exchange rate, and to purchase US dollars at the private
market exchange rate. Although the official exchange rate now fluctuates and is
tied to the private market rate, the official exchange rate tends to be lower
than the private market rate. During 2000, the average official exchange rate
was RD$16.18 per $1.00 while the average private market rate was RD$16.37 per
$1.00.
Our functional currency is the U.S. dollar and, as a result, we must
translate the value of Dominican peso-denominated assets into U.S. dollars when
compiling our financial statements. This translation can create foreign exchange
gains or losses depending upon fluctuations in the relative value of the
Dominican peso against the U.S. dollar. During 2000, we recognized an
approximate $303,000 foreign exchange loss. If the Dominican peso had devalued
by an additional 10% against the U.S. dollar on average in 2000, then we would
have realized an additional foreign exchange loss of approximately $30,300.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDED ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable.
ITEM 15. [RESERVED]
ITEM 16. [RESERVED]
PART III
ITEM 17. FINANCIAL STATEMENTS
Not Applicable.
ITEM 18. FINANCIAL STATEMENTS
The following consolidated financial statements are filed as part of
this Annual Report on Form 20-F
Independent Auditors' Report.
Consolidated Balance Sheets as of December 31, 1999 and 2000.
Consolidated Statements of Operations for the Years Ended
December 31, 1998, 1999 and 2000.
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1998, 1999 and 2000.
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1999 and 2000.
Notes to Consolidated Financial Statements.
ITEM 19. EXHIBITS
Exhibit
Number
1.1 Amended and Restated By-laws of the Company with English
translation thereof.*
2.1 Indenture, dated August 21, 1997, between The Bank of
New York, as trustee, and the Company.**
4.1 iDEN(R) Infrastructure Supply Agreement, dated July 31, 2000,
between Motorola, Inc. and Tricon Latinoamerica, S.A.***
--------------------------------------------------------------------------------
* Incorporated by Reference to Exhibit 3 to Amendment No. 1 to the
Registration Statement on Form F-1, registration number 333-8574,
filed May 1, 1998.
** Incorporated by Reference to Exhibit 4.1 to the Company's
Registration Statement on Form F-4, registration number 333-8150,
filed December 29, 1997.
*** The Company has requested that certain portions of this
document be given confidential treatment. The entire document,
including the redacted portions, has been filed separately
with the Securities and Exchange Commission.
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(This page has been left blank intentionally.)
-71-
TRICOM, S.A. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report.................................................................................. F-2
Consolidated Balance Sheets as of December 31, 1999 and 2000.................................................. F-3
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1999 and 2000.................... F-5
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1998, 1999 and 2000........................................................................... F-6
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1999 and 2000............................................................................ F-8
Notes to Consolidated Financial Statements.................................................................... F-11
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of TRICOM, S.A.:
We have audited the accompanying consolidated balance sheets of TRICOM, S.A. and
subsidiaries as of December 31, 1999 and 2000 and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
years in the three year-period ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TRICOM, S.A. and
subsidiaries as of December 31, 1999 and 2000 and the results of their
operations and their cash flows for each of the years in the three year-period
ended December 31, 2000, in conformity with generally accepted accounting
principles in the United States of America.
As explained in note 12 to the consolidated financial statements, effective
January 1, 2000, the Company changed its method of accounting for installation
and activation revenues.
As explained in note 26 to the consolidated financial statements, effective
January 1, 1999, the Company changed its method of accounting for organization
costs.
Santo Domingo, Dominican Republic KPMG
February 9, 2001 ---------------------------------
Member Firm of KPMG International
F-2
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 2000
1999 2000
----------------- ------------
ASSETS
Current assets:
Cash on hand and in banks (note 6) $ 13,459,566 18,199,552
Accounts receivable (notes 5,6, 11 and 20):
Customers 22,821,951 21,970,677
Carriers 6,467,016 8,729,886
Related parties 40,412 1,663,396
Officers and employees 415,702 556,577
Current portion of long-term accounts receivable 66,369 -
Other 624,846 1,601,119
----------------- ------------
30,436,296 34,521,655
Allowance for doubtful accounts (4,307,563) (2,394,903)
----------------- ------------
Accounts receivable, net 26,128,733 32,126,752
Inventories, net:
Equipment and accessories 9,429,905 8,889,385
Other 271,350 651,708
----------------- ------------
9,701,255 9,541,093
Prepaid expenses (notes 6 and 16) 6,637,067 7,947,531
Deferred income taxes (note 17) 949,190 801,008
----------------- ------------
Total current assets 56,875,811 68,615,936
----------------- ------------
Long-term accounts receivable (note 6) 22,619 -
Investments (note 7) 2,710,572 3,289,459
Property and equipment, net (notes 4, 6, 10 and 14) 455,045,191 586,223,900
Other assets at cost, net of amortization (notes 8 and 19) 16,824,268 24,310,564
----------------- ------------
$ 531,478,461 682,439,859
================= ============
See accompanying notes to the consolidated financial statements.
F-3
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 1999 AND 2000
1999 2000
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (notes 6, 9 and 14):
Borrowed funds - banks $ 63,602,022 82,131,865
Borrowed funds - related parties 17,895,946 31,410,612
Current portion of long-term debt 315,216 3,213,939
----------------- ------------
81,813,184 116,756,416
----------------- ------------
Current portion of capital leases (notes 6 and 10) 14,242,056 5,308,310
Accounts payable (notes 6 and 12):
Carriers 2,987,379 13,835,276
Related parties 10,035,066 2,093,385
Suppliers 12,043,787 21,653,727
Other 329,309 242,582
----------------- ------------
25,395,541 37,824,970
Other liabilities (note 12) 3,789,707 19,990,490
Accrued expenses (note 13) 15,293,910 14,035,182
----------------- ------------
Total current liabilities 140,534,398 193,915,368
----------------- ------------
Reserve for severance indemnities 31,414 9,727
Deferred income tax (note 17) 631,159 974,867
Capital leases, excluding current portion (notes 6 and 10) 11,640,652 15,520,965
Long-term debt, excluding current portion (note 14) 228,772,011 261,222,759
----------------- ------------
Total liabilities 381,609,634 471,643,686
----------------- ------------
Shareholders' equity (notes 15 and 21):
Class A common stock at par value RD$10: Authorized
55,000,000 shares; 5,700,000 shares issued at December 31,
1999 and 9,700,000 at December 31, 2000 3,750,000 6,210,025
Class B stock at par value RD$10: Authorized 25,000,000
shares at December 31, 1999 and 2000; 19,144,544 issued at
December 31, 1999 and December 31, 2000 12,595,095 12,595,095
Additional paid-in-capital 94,288,852 159,981,808
Retained earnings 41,258,637 34,033,002
Other comprehensive income-foreign currency translation
(note 2.2) (2,023,757) (2,023,757)
----------------- ------------
Shareholders equity, net 149,868,827 210,796,173
----------------- ------------
$ 531,478,461 682,439,859
================= ============
See accompanying notes to the consolidated financial statements.
F-4
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1998 AND 2000
1998 1999 2000
---- ---- ----
Operating revenues (note 6):
Toll revenues $ 17,644,573 23,118,149 28,666,107
International revenues 50,332,088 60,592,134 84,187,050
Local service 12,941,983 33,858,620 54,770,706
Cellular and PCS 20,363,647 26,473,985 35,796,234
Paging 4,527,579 2,695,531 1,703,963
Sale of equipment 4,114,513 7,689,534 5,263,137
Installation and activation fees 12,936,817 15,501,847 13,748,906
Other 2,640,192 889,141 161,552
---------------- ------------ ------------
Total operating revenues 125,501,392 170,818,941 224,297,655
Operating costs:
Satellite connections and carrier (note 19) 32,308,880 43,687,794 68,607,640
Network depreciation 11,382,446 15,982,827 29,341,705
Expense in lieu of income taxes (note 16) 9,561,710 12,763,565 10,173,983
General and administrative expenses, including
depreciation charges of $3,239,714, $4,854,653 and
$6,823,574 in 1998, 1999 and 2000, respectively
(notes 6, 18, 19 and 22) 39,379,388 51,501,272 70,690,895
Cost of equipment sold 2,249,268 3,988,446 2,911,386
Other 1,142,079 1,432,957 1,550,161
Total operating costs 96,023,771 129,356,861 183,275,770
Operating income 29,477,621 41,462,080 41,021,885
Other income (expenses):
Interest expense (note 6) (18,006,286) (22,430,031) (34,037,053)
Interest income (note 6) 5,133,348 2,389,329 3,301,031
Foreign currency exchange gain (loss) 104,414 (202,724) (303,078)
Gain on sale of land (note 6) - 897,833 -
Gain on sale of equipment - - 29,874
Other, net (note 6) 844,801 179,409 (197,118)
---------------- ------------ ------------
Other expenses, net (11,923,723) (19,166,184) (31,206,344)
---------------- ------------ ------------
Earnings before income taxes and cumulative effect
of accounting change 17,553,898 22,295,896 9,815,541
Income taxes (note 17) 351,691 (141,660) (588,377)
---------------- ------------ ------------
Earnings before cumulative effect of accounting
change 17,905,589 22,154,236 9,227,164
Cumulative effect of change in accounting change:
Organization costs (note 26) - (119,711) -
Installations and activations revenues (note 12) - - (16,452,799)
---------------- ------------ ------------
Net earnings (loss) $ 17,905,589 22,034,525 (7,225,635)
================ ============ ============
Earnings (loss) per common share - basic and diluted:
Earnings before cumulative effect of accounting
change 0.78 0.89 0.33
Cumulative effect of change in accounting - - (0.59)
---------------- ------------ ------------
Net earnings (loss) per common share - basic and
diluted $ 0.78 0.89 (0.26)
================ ============ ============
Proforma amounts assuming the change in accounting
principle for installation and activation
fees retroactively:
Net earnings $ 11,049,546 17,183,884 9,227,164
================ ============ ============
Earnings per common share - basic and diluted $ 0.48 0.69 0.33
================ ============ ============
Basic 22,944,544 24,844,544 27,723,665
Diluted 22,944,569 24,888,709 27,896,666
See accompanying notes to the consolidated financial statements.
F-5
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
Retained Earnings
----------------------------
Number of Common Additional Appropriate
Shares Issued Common Stock Paid in Legal Un-
Class A Class B Class A Class B Capital Reserved appropriated
------- ------- ------- ------- ---------- ----------- ------------
Balance at December 31, 1997 - 19,390,529 $ - 43,357,343 - 600,233 718,290
Issuance of common shares,
Net of issuance cost of
$6,537,345 (note 15) 5,700,000 - 3,750,000 - 63,812,655 - -
Effect of change from no par
value to RD$10 par value
(note 15) - - - (30,203,197) 30,203,197 - -
Retirement of treasury stock
as a result of initial
public offering - (245,985) - (559,051) - - -
Transfer to legal reserve
(note 21) - - - - - 571,955 (571,955)
Net earnings - - - - - - 17,905,589
--------- ---------- ---------- ----------- ----------- --------- ----------
Balance at December 31, 1998 5,700,000 19,144,544 3,750,000 12,595,095 94,015,852 1,172,188 18,051,924
Stock - based compensation
to non-employees (note 22) - - - - 273,000 - -
Transfer to legal reserve
(note 21) - - - - - 480,819 (480,819)
Net earnings - - - - - - 22,034,525
--------- ---------- ---------- ----------- ----------- --------- ----------
Balance at December 31, 1999 5,700,000 19,144,544 3,750,000 12,595,095 94,288,852 1,653,007 39,605,630
Issuance of common shares,
Net of issuance cost of
$6,852,774 (note 15) 4,000,000 - 2,460,025 - 64,687,201 - -
Stock - based compensation
to non-employees (note 22) - - - - 1,005,755 - -
Net loss - - - - - - (7,225,635)
--------- ---------- ---------- ----------- ----------- --------- ----------
Balance at December 31, 2000 9,700,000 19,144,544 $6,210,025 12,595,095 159,981,808 1,653,007 32,379,995
========= ========== ========== =========== =========== ========= ==========
See accompanying notes to the consolidated financial statements.
F-6
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
Other
Comprehensive
Income-Foreign
Currency Treasury Shareholders'
Translation Stock Equity, Net
-------------- -------- -------------
Balance at December 31, 1997 (2,023,757) (559,051) 42,093,058
Issuance of common shares, Net
of issuance cost of $6,537,345
(note 15) - - 67,562,655
Effect of change from no par
value to RD$10 par value (note
15) - - -
Retirement of treasury stock as
a result of initial public
offering - 559,051 -
Transfer to legal reserve (note
21) - - -
Net earnings - - 17,905,589
----------- -------- -----------
Balance at December 31, 1998 (2,023,757) - 127,561,302
Stock - based compensation to
non-employees (note 22) - - 273,000
Transfer to legal reserve (note
21) - - -
Net earnings - - 22,034,525
----------- -------- -----------
Balance at December 31, 1999 (2,023,757) - 149,868,827
Issuance of common shares, Net
of issuance cost of $6,852,774
(note 15) - - 67,147,226
Stock - based compensation to
non-employees (note 22) - - 1,005,755
Net loss - - (7,225,635)
----------- -------- -----------
Balance at December 31, 2000 (2,023,757) - 210,796,173
=========== ======== ===========
See accompanying notes to the consolidated financial statements
F-7
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
1998 1999 2000
---- ---- ----
Cash flows provided by operating activities:
Net earnings (loss) $17,905,589 22,034,525 (7,225,635)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Allowance for doubtful accounts 1,665,349 5,420,717 3,499,893
Amortization of debt issue cost 1,381,361 1,499,497 1,958,610
Amortization of radio frequency right - 198,333 320,186
Cumulative effect of accounting change in
installations and activations revenues - - 16,452,799
Cumulative effect of accounting change in
organizations costs - 119,711 -
Deferred income tax, net (351,691) 33,660 491,890
Depreciation 14,622,160 20,837,480 36,165,279
Expense for severance indemnities 257,690 328,807 760,740
Foreign exchange gains 31,106 101,835 -
Gain on sale of fixed assets, net - - (836,054)
Gain on sale of land - (897,833) -
Value of consulting services received in
exchange for stock warrants - 273,000 1,005,755
Net changes in assets and liabilities: -
Accounts payable (4,471,048) 9,005,096 12,429,429
Accounts receivable (3,681,109) (13,407,676) (9,497,912)
Accrued expenses 3,857,953 1,563,855 (1,258,728)
Inventories (3,053,879) (4,213,002) 160,162
Long-term accounts receivable 866,997 68,937 22,619
Other assets (5,542,150) (3,944,266) (9,765,092)
Other liabilities 4,387,282 (3,624,114) (252,016)
Prepaid expenses (403,628) (3,532,125) (1,310,464)
Reserve for severance indemnities (355,445) (340,279) (782,427)
Unearned interest (204,576) - -
----------- ----------- -----------
Total adjustments 9,006,372 9,491,633 49,564,669
----------- ----------- -----------
Net cash provided by operating activities 26,911,961 31,526,158 42,339,034
=========== =========== ===========
See accompanying notes to the consolidated financial statements
F-9
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
1998 1999 2000
---- ---- ----
Cash flows from investing activities:
Acquisition of investments (367,866) (546,185) (578,887)
Acquisition of land - (1,826,625) -
Acquisition of property and equipment (142,101,012) (119,182,223) (151,221,583)
Proceeds from maturity of US Treasury
Bonds and irrevocable restricted funds 21,297,912 54,470,478 -
Proceeds from sale of fixed assets - - 2,405,494
Proceeds from sale of land - 2,724,458 -
-------------- ------------- -------------
Net cash used in investing activities (121,170,966) (64,360,097) (149,394,976)
-------------- ------------- -------------
Cash flows from financing activities:
Borrowed funds from banks 23,234,625 111,580,042 226,440,816
Borrowed funds from related parties 57,019,761 62,233,725 71,727,978
Re-payment of Carifa Bonds - (32,000,000) -
Capital lease payments - (361,292) (22,745,278)
Issuance of common stock 67,562,655 - 67,147,226
Payments of long-term debt - - (10,315,216)
Principal payments to banks (7,474,114) (69,643,536) (207,910,973)
Principal payments to related parties (36,277,664) (69,929,694) (58,213,312)
Proceeds from issuance of long term debt - 29,087,227 45,664,687
-------------- ------------- -------------
Net cash provided by financing activities 104,065,263 30,966,472 111,795,928
Effect of exchange rate changes on cash (161,353) (50,377) -
-------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents 9,644,905 (1,917,844) 4,739,986
Cash and cash equivalents at beginning of
the period 5,732,505 15,377,410 13,459,566
-------------- ------------- -------------
Cash and cash equivalents at end of period $ 15,377,410 13,459,566 18,199,552
============== ============= =============
Supplementary information:
Interest paid (net of capitalization) (17,601,409) (23,373,038) (33,785,503)
Capital lease obligation incurred - 26,244,000 17,691,845
============== ============= =============
See accompanying notes to the consolidated financial statements
F-10
TRICOM, S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
1 ORGANIZATION AND NATURE OF BUSINESS
The consolidated financial statements of TRICOM, S.A. include operations of the
following companies in the communications industry, which are identified as and
operate in the Dominican Republic and New York, U.S.A. under the commercial name
TRICOM:
TRICOM, S.A. (Parent Company)
GFN Comunicaciones, S.A.
Bay Tel Communication, S.A.
Call Tel Corporation
TRICOM USA, Inc. and Subsidiaries
TRICOM LATINOAMERICA, S.A. and Subsidiaries
TRICOM, S.A. ("TRICOM" or the "Company") is a diversified telecommunications
company, which provides international and domestic long distance, basic local
service, mobile, Internet and broadband services in the Dominican Republic and
long distance service through subsidiaries in the United States.
The Company's operations in the Dominican Republic are governed by the
Telecommunications Law (Law No.153-98) and by a Concession Agreement signed
with the Dominican Government and confirmed by the National Congress on April
30, 1990. This agreement is for a 20-year term through June 30, 2010, subject
to renewal for an additional 20-year term. Law No. 153-98 establishes a basic
framework to regulate the installation, maintenance and operation of
telecommunications networks and the provision of telecommunications services
and equipment. The law adopted the "Universal Services Principle" by
guaranteeing access to telecommunications services at affordable prices in
low-income rural and urban areas. The law creates a fund for the development
of the telecommunications sectors that is supported by a 2% tax on industry
participants' billings of all telecommunication services.
The Company was formed by GFN Corporation, Ltd. ("GFN"), one of the Dominican
Republic's largest private holding companies, with equity interests in
insurance, finance and publishing companies. At December 31, 2000, GFN holds
a 39.8% interest in the Company, and Motorola, Inc. holds a 26.5% interest.
TRICOM USA, Inc. ("TRICOM USA") was formed on January 15, 1992 under the
General Corporation Law of Delaware. In September 1995, the United States
Federal Communications Commission ("FCC") authorized TRICOM USA, to operate
as a facilities-based carrier in the United States.
TRICOM LATINOAMERICA, S.A. is a company organized under the Corporation Law
of the Cayman Islands, on May 12 2000. The activities of this company are to
control the telecommunication operations in Central America and the Caribbean.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
TRICOM, S.A. and its wholly owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated in consolidation.
F-11
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States
of America. Preparation of consolidated financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, as well as
the reported amounts of revenues and expenses. Actual results could differ
from those estimates and assumptions.
2.2 FOREIGN CURRENCIES
The functional currency of the Company has been the U. S. dollar since
January 1, 1997.
Translation adjustments resulting from the conversion of the consolidated
financial statements to the reporting currency were accumulated and presented
as a separate component of equity in the accompanying consolidated balance
sheets for years prior to January 1, 1997.
Commencing January 1, 1997 the Company has recognized in the statements of
operations gains and losses arising from the translation of foreign currency
transactions other than the U.S. dollar. As of December 31, 1999 and 2000, the
rates used by the Company to translate Dominican peso denominated accounts at
year-end were RD$16.05 and RD$16.69 per one U.S. dollar, respectively.
Panamanian Balboas (B/.) are at par with the U.S. dollar.
2.3 CASH AND CASH EQUIVALENTS
For the purpose of the statements of cash flows, the Company considers as cash
and cash equivalents cash on hand, banks, time deposits and highly liquid debt
instruments with original maturities, at the time of purchase of three months or
less.
2.4 ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful account receivable is established through a charge to
an expense account.
2.5 INVENTORIES
Inventories are valued at the lower of average cost or market.
2.6 PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Construction costs and equipment
installations in process are maintained as construction projects until they are
completed and/or equipment is placed in service. Depreciation is calculated and
recorded starting with the first full month that the assets are placed in
service.
2.7 DEPRECIATION
The depreciation method used by the Company is the straight-line method, that
is, the uniform distribution of cost over the estimated useful lives of the
corresponding assets.
The estimated useful lives of assets are as follows:
YEARS
------
Buildings and improvements 50
Furniture, equipment and transportation equipment 4-10
Equipment for lease 3-6
Operation and communication equipment 15
Cellular phones 3
Computer equipment 6.67
F-12
2.8 OTHER ASSETS
Other assets consist principally of deferred debt issue costs and radio
frequency rights (see note 8). Deferred debt issue costs are amortized over the
debt service period of the related debt. For the years ended December 31, 1998,
1999 and 2000, amortization expense of deferred debt issue amounted to
$1,381,361, $1,499,497 and $1,958,610, respectively.
The radio frequency rights are amortized on a straight-line basis over the
useful lives, which range from 15 to 20 years. For the year ended at December
31, 1999 and 2000, the amortization expense amounted to $198,333 and $320,186,
respectively.
Deferred commissions on prepaid calling cards are recognized when the deferred
revenues are recorded. On sales of calling cards outside of the Dominican
Republic, the commission expense is recognized as revenues are recognized based
upon minutes used. On sales of calling cards within the Dominican Republic,
where collection of sales proceeds has been assessed by the company to be less
assured, commission expense is recorded when the collections of outstanding
invoices to distributors and/or wholesalers are made.
2.9 SEVERANCE INDEMNITIES
According to the Labor Code of the Dominican Republic, employers are required to
pay severance indemnities to those workers whose labor contracts are terminated
without just cause. Just cause is defined in the Labor Code as including
misstatements by an employee in his job application, termination of an employee
within three months of his hire for poor performance, dishonesty, threats of
violence, willful or negligent destruction of property, unexcused absence or
termination of the job for which the employee was hired. The Company maintains a
minimal reserve to cover severance indemnities based on its experience in this
area.
2.10 REVENUE RECOGNITION
TOLL REVENUES
Toll revenues are amounts received by the Company from customers in the
Dominican Republic for international and domestic long distance calls. These
revenues are recognized as the calls are made.
INTERNATIONAL SETTLEMENT REVENUES
International settlement revenues represent amounts due from telecommunications
carriers for call (based on minutes) originated outside the Dominican Republic
which terminate into the Company's Dominican network. as per operating
agreements between the Company and each such carrier. These revenues are
recognized as the minutes are provided.
PREPAID CALLING CARD REVENUES
The Company recognizes revenue from prepaid calling cards based on card usage.
The Company accounts for cash received or credit extended from the sale of the
prepaid calling cards as deferred revenues, which are then recognized as the
cards are used. This revenue may be part of the toll or international revenues
depending on the call destination.
LOCAL SERVICE REVENUE
Local service revenue consists of wireline rent, local measured service, which
represents minutes used by local customers which are billed on established rates
or tariffs per actual minutes of call duration, as well as charges for "Custom
local access signaling services" or CLASS. CLASS represents value-added services
which include which include call forwarding, three-way calling, call waiting and
voicemail. It also features vertical services such as incoming-call
identification, call trace, call blocking, automatic return of the most
F-13
recent incoming call, call redial, and selective forwarding and programming
to permit for distinctive ringing for incoming calls requested for local
customers which are billed in addition to rent. Local service revenues also
includes collect call revenues and revenues from other miscellaneous wireline
services. These revenues are recognized as the services are rendered.
CELLULAR AND PCS REVENUES
Represents fees received for mobile cellular and PCS services, including
interconnection charges for incoming calls to the Company's cellular and PCS
subscribers (these revenues do not include international and domestic long
distance calls generated by cellular or PCS units). Cellular and PCS fees
consist of fixed monthly access fees and per-minute usage charges, as well as
additional charges for custom or vertical features, which include call waiting,
call forwarding, three-way calling and voicemail, and for other miscellaneous
cellular and PCS services. These revenues are recognized as the services are
rendered.
PAGING
Paging revenues consist of fixed monthly charges for nationwide service and the
use of paging equipment and activation fees. These revenues are recognized as
these services are rendered.
SALES OF EQUIPMENT
These revenues consist of sales and rental fee charges to customers for
communication equipment, including private branch exchanges, key telephone
systems, residential telephones, cellular handsets and paging units. These
revenues are recognized upon sale to the customer.
INSTALLATION AND ACTIVATION FEES
Revenues from installations consist of amounts charged by the Company to its
clients for the installation of local access lines, private interchange, central
telephone systems, as well as charges for the activation of cellular phones and
PCS. Effective January 1, 2000, the Company adopted Staff Accounting Bulletin
(SAB 101), issued by the Securities and Exchange Commission (SEC), which
establishes certain criteria regarding revenue from installation and activation.
As a consequence of this adoption, these revenues are recognized over the
estimated average service life based on the Company's experience (35 months). In
previous years, these revenues were recognized when they were generated. Direct
incremental cost incurred to provide installations and activations are accounted
for as they are incurred.
OTHER
Other revenues represent revenues that are not generated from the Company's core
business activities, including commissions and revenues from the sale of
miscellaneous products. These revenues are recognized when earned.
2.11 CAPITALIZATION OF INTEREST
Interest is capitalized on qualified projects and included as part of project
costs during the period necessary for installation.
During the years ended December 31, 1998, 1999 and 2000, interest capitalized as
part of construction projects amounted to approximately $10,200,000, $11,900,000
and $11,300,000, respectively.
2.12 FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments classified as current
assets or current liabilities approximates their book value due to the relative
short maturities of these financial instruments. See note 14 for the estimated
fair values of the Company's long - term debt.
F-14
2.13 EXPENSE IN LIEU OF INCOME TAX
The parent company TRICOM, S.A. pays a tax, which is based on a percentage of
the Company's domestic gross revenues (less deductions for access to the local
network) plus a percentage of the Company's net international settlement
revenues. An accrual is made for any difference between the dates when these
items are reported to the tax authorities and when they are reported in the
accompanying consolidated statements of operations.
2.14 INCOME TAXES
In the case of the subsidiary, TRICOM USA, income taxes are accounted for under
the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
2.15 EARNINGS PER COMMON SHARE
Basic earnings per share have been computed based on the average number of
common shares outstanding. Diluted earnings per share reflects the increase in
average common shares outstanding that would result from the assumed exercise of
outstanding stock options, calculated using the treasury stock method.
2.16 PENSION PLAN
Prior to September 1, 2000, the Company had a contributory defined benefit
pension and retirement plan that included all personnel. The cost of the plan
had been determined based on actuarial studies and includes amortization of past
service costs over the estimated average life of its employees. From September
1, 2000 a pension management company has managed the Company's plan, which was
converted to a defined contribution plan. Under this arrangement, both the
Company and the employee make fixed contributions to the employees account. The
contributions made by the Company are recognized as expense monthly.
2.17 IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." This Statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to undiscounted future net cash flows before
interest projected to be generated by the asset. If the carrying value of the
assets exceeds these cash flows, such assets are considered to be impaired and
the impairment to be recognized is the amount by which the carrying amount of
the assets exceeds the fair value of the assets. Fair value will be measured as
appropriate depending on the intended use of the asset, which may be based upon
the projected cash flows, discounted using a market rate of return. Assets to be
disposed of are reported at the lower of the carrying amount or fair value fewer
costs to sell.
2.18 ADVERTISING COSTS
F-15
Advertising costs are expensed as incurred. For the years ended December 31,
1998, 1999 and 2000 these costs amounted to $4,461,123, $5,431,834 and
$4,204,391, respectively, and are included as part of general and
administrative expenses in the accompanying consolidated statements of
operations.
2.19 STOCK OPTION PLAN
The Company applies the intrinsic value-based method of accounting prescribed
by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations, including FASB
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25" issued in March 2000,
in accounting for its fixed plan stock options. As such, compensation expense
is recorded on the date of grant only if the market price of the underlying
stock exceeded the exercise price. SFAS No. 123, "Accounting for Stock-Based
Compensation," established accounting and disclosure requirements using a
fair value-based method of accounting for stock-based employee compensation
plans. As allowed by SFAS No. 123, the Company has elected to continue to
apply the intrinsic value-based method of accounting described above, and has
adopted the disclosure requirements of SFAS No. 123.
3 LIQUIDITY
As of December 31, 2000, the Company's current liabilities exceed its current
assets by $125.3 million. This reflects the Company's short-term borrowings
in the Dominican Republic with related companies, and mostly with local
banks. Dominican banks lend on a short-term basis, in order to renegotiate
interest rates should market conditions change, without necessarily demanding
the repayment of credit facilities. Additionally, the Company is involved in
negotiations to obtain medium term financing to refinance its short-term
debt. It is the Company's belief that the existence of a negative working
capital will not affect the continuity of its business due to the nature of
its operations.
4 PROPERTY AND EQUIPMENT
A detail of property and equipment at December 31, 1999 and 2000 is as
follows:
1999 2000
-------- ---------
Operations and communications:
Land $ 5,288,164 7,118,634
Buildings and improvements 12,730,864 15,861,346
Furniture and equipment 6,868,212 10,324,397
Communications equipment 125,790,885 184,484,503
Transmission equipment 172,738,824 283,120,786
Other equipment 1,668,162 4,098,949
---------------- -------------
325,085,111 505,008,615
Less accumulated depreciation 41,774,980 70,891,750
---------------- -------------
Sub-total, operations and communications 283,310,131 434,116,865
Property and equipment:
Buildings 6,372,566 9,037,820
Furniture and office equipment 13,965,777 20,133,420
Transpiration equipment 4,435,443 4,636,530
Leasehold improvements 3,879,221 4,807,139
Data processing equipment 23,037,601 33,590,043
---------------- -------------
51,690,608 72,204,952
Less accumulated depreciation 14,289,015 21,157,407
---------------- -------------
Sub-total, property and equipment 37,401,593 51,047,545
---------------- -------------
Communication equipment pending installation 31,141,978 16,872,746
Equipment in transit (a) 2,506,092 5,789,586
Construction in process (b) 100,685,397 78,397,158
---------------- -------------
Property and equipment, net $ 455,045,191 586,223,900
================ =============
F-16
(a) Equipment in transit represents accumulated costs of equipment
imported by TRICOM, for which additional import related costs
are still to be incurred. At December 31, 1999 and 2000, this
amount includes mainly transmission equipment and accessories.
(b) A detail of construction in process at December 31, 1999 and
2000 is as follows:
1999 2000
---------------- -------------
Operation and communications:
Buildings $ 3,816,556 3,104,105
Transmission equipment (i) 87,642,687 48,302,135
Cells 8,502,529 17,075,909
Submarine cable 723,625 -
Property and equipment:
Other - 9,915,009
---------------- -------------
$ 100,685,397 78,397,158
================ =============
(i) At December 31, 1999 and 2000, construction in process of
transmission equipment relates to the development of a wireless
local loop (WLL) network in the Dominican Republic, as well as
cellular and PCS cells, fiber optic and other network
improvements.
5 ACCOUNTS RECEIVABLE
Changes in the allowance for doubtful accounts were as follows:
1998 1999 2000
------------- ----------- -----------
Allowance at beginning of year $ 668,827 740,687 4,307,563
Increase for the year, net 1,665,349 5,420,717 3,499,893
Write-off during the year (1,593,489) (1,853,841) (5,412,553)
------------- ----------- -----------
Allowance at end of year $ 740,687 4,307,563 2,394,903
============= =========== ===========
A detail of account receivable - others at December 1999 and 2000 is as follows:
1999 2000
------------- ---------
Interest receivable $ 235,016 1,248,804
Miscellaneous 389,830 352,315
------------- ---------
Allowance at end of year $ 624,846 1,601,119
============= ===========
6 TRANSACTIONS WITH RELATED PARTIES
During the years ended December 31, 1998, 1999 and 2000, the Company made
payments to several related parties for leased premises and equipment, public
relations, systems and procedures, legal services and personnel management.
F-17
The majority of these charges are for services received by the Company from
Grupo Financiero Nacional, S.A., ("Grupo Financiero") a subsidiary of GFN. Grupo
Financiero allocates administrative charges based on the time invested by its
employees providing administrative support services to each of its subsidiaries.
A detail of balances with related companies at December 31, 1999 and 2000 is as
follows:
1999 2000
----------- ----------
Assets:
Cash in banks $ 4,194,306 3,677,466
Deposits (a) 7,251,319 13,054,686
Account receivable (b) 40,412 1,663,396
Current portion and long-term accounts
receivable 53,820 -
Prepaid expenses - insurance 3,548,458 4,472,055
Other assets - deposits 86,580 86,580
Liabilities:
Borrowed funds (c) 17,895,946 31,410,612
Accounts payable - letters of credit (d) 985,187 -
Accounts payable (e) 10,035,066 2,093,385
Capital leases 25,882,708 20,829,276
(a) As of December 31, 1999 and 2000, includes $2,185,005 in a non-interest
bearing time deposit and $5,066,314 and $10,198,900, respectively, in
interest bearing deposits, which earn interest at rates between 9% and
11%. Additionally, as of December 31, 2000, includes RD$11,195,335
($670,781) in certificates of deposit, which earn interest rates of 20%
per annum.
(b) The Company contracts services from a related party dedicated to
managing the collection of past due accounts. This related party also
provides these services to other related companies. During the year
ended December 31, 2000, the Company recognized collection recoveries
from customer accounts previously written off for $3,087,728. This
amount is presented, net of increase in the allowance for doubtful
accounts in general and administrative expenses in the accompanying
consolidated statements of operations. At December 31, 2000, the
Company had amounts receivable from the related party of $1,566,447,
which was collected in January 2001.
(c) Correspond to financing of letters of credit and open accounts at
interest rates of 10% to 11% in 1999 and 10% to 11.50% in 2000.
At December 31, 2000, the Company has unsecured, short term lines of
credit available for approximately $13,100,000.
(d) These letters of credit accrue annual interest at rates ranging from
10% to 11.5%, payable at maturity.
(e) At of December 31, 1999 this account includes $7,775,892 representing a
7.94% financing facility from Motorola for the acquisition of
transmission and communications equipment.
A detail of transactions with related parties during the years ended December
31, 1998, 1999 and 2000 is as follows:
1998 1999 2000
----------- ---------- ----------
Operating revenues - communications
services revenue $ 828,316 1,970,646 1,948,321
General and administrating expenses:
F-18
Insurance premiums 1,520,171 2,000,473 4,071,713
Leased premises and equipment 44,610 108,578 157,600
Security services 111,460 77,382 227,001
Pension plan contributions 433,998 586,921 738,058
Advertising services 134,830 74,104 250,232
Professional services 494,125 167,470 234,348
Other income (expenses):
Interest incurred on loans (880,281) (710,537) (5,713,690)
Interest earned 270,352 265,423 1,805,780
Gain on sale of land (a) - 897,833 -
Other (b) - - 806,180
Bank charges (45,916) (135,640) (151,600)
Equipment purchased (Motorola) 2,258,028 23,097,157 20,279,706
(a) During 1999, the Company bought from an unaffiliated third party a
parcel of land that was subsequently sold to a related party. The sale
price was $2,724,458 (RD$44,000,000) and the acquisition cost was
$1,826,625 (RD$29,500,000). This transaction generated a gain on sale
of land of $897,833, which is presented as gain on sale of land in
other income (expenses) in the consolidated statements of operations.
(b) During the month of July 2000 the Company sold all operational assets
related to the operations of the Internet business portal to a related
company in the Dominican Republic for $2,315,412 in cash. The gain on
the sale of this asset was $806,180, and is included as part of other,
net in other income (expenses) in the accompanying consolidated
statements of operations.
7 INVESTMENTS
At December 31, 1999 and 2000, investments consist of mortgage participation
contracts, which have been purchased from savings and loan associations in
the Dominican Republic. These contracts earn interest at rates between 9% and
12% per annum. These investments are maintained as compensating balances for
mortgage loans made by these saving and loan associations to certain officers
and employees of the Company.
8 OTHER ASSETS
Other assets at December 31, 1999 and 2000 consisted of the following:
1999 2000
----------- ----------
Deferred debt issue costs, net (a) $ 8,864,074 7,303,063
Deposits with international carriers (b) 202,850 214,340
Deposits 668,432 1,976,585
Radio frequency rights (c) 4,561,667 10,766,390
Other (d) 2,527,245 4,050,186
----------- ----------
$16,824,268 24,310,564
----------- ----------
----------- ----------
(a) Represent commissions paid to brokers and other expenses incurred at
the time of, and directly related to, the issuance of the Senior Notes
and bank debt. As of December 31, 1999 and 2000 accumulated
amortization amounted to $3,365,089 and $5,323,699, respectively.
(b) At December 31, 1999 and 2000 deposits with international carriers
represent security deposits made by TRICOM for the installation of
international circuits. These deposits will be recovered at the
termination of the agreements. These agreements mature each year and
are automatically renewed unless otherwise terminated by the parties.
F-19
(c) Represent payments made for frequency usage rights to expand the
cellular and PCS capacity of the Company in the Dominican Republic,
as well as payments made for the acquisition of frequencies in
El Salvador and Guatemala for approximately $6,500,000. This amount
was paid during 2000 as part of the expansion plans to Central America
and the Caribbean. These amounts are being amortized over the life of
the licenses, which range from 15 to 20 years. As of December 31, 1999
and 2000, accumulated amortization amounted to $198,333 and $518,519,
respectively.
(d) At December 31, 1999 and 2000 includes deferred commissions related to
prepaid calling cards of $2,276,012 and $3,591,760, respectively.
9 BORROWED FUNDS - BANKS
Funds borrowed by the Company consist of:
1999 2000
----------- ----------
Funds denominated in U.S. dollars (a) $56,000,776 78,656,730
Funds denominated in R.D. pesos (b) 7,601,246 3,475,135
----------- ----------
$63,602,022 82,131,865
=========== ==========
(a) At December 31, 1999 and 2000, these amounts are due to local and
international banks and accrue interest at rates ranging from 9.5%
to 12% per annum in 1999 and 9.8% to 12% in 2000.
(b) At December 31, 1999, these loans were RD$122,000,000 with maturities
ranging from 60 to 90 days, bearing interest at rates ranging from 21%
to 30% per annum. At December 31, 2000 these loans were RD$58,000,000
bearing interest at 26% per annum.
At December 31, 2000 the Company has undrawn lines of credit available with
local and international banks of approximately $32,900,000.
10 CAPITAL LEASES
Since December 1999, the Company has entered into various capital lease
contracts with a related party. These contracts mature at various dates during
the next four years. Assets recorded under these leases consist of:
1999 2000
----------- ----------
Communications equipment $17,248,429 42,488,488
Communications equipment pending
installation 7,548,214 -
Transportation 1,176,001 1,176,001
Machinery and equipment 271,356 271,356
----------- ----------
26,244,000 43,935,845
Less accumulated depreciation - 2,350,834
----------- ----------
$26,244,000 41,585,011
=========== ==========
A schedule of the future lease payments under these capital leases is as
follows:
Year ending December 31,
2001 $ 8,523,816
2002 8,523,816
2003 7,939,101
2004 3,783,337
-----------
Total lease payments 28,770,070
F-20
Less related taxes 3114,639
-----------
Minimum lease payments 25,655,431
Less amount representing interest
(12% to 12.875%) 4,826,156
-----------
Present value of net minimum capital
lease payments 20,829,275
Less current maturities of capital
lease obligations 5,308,310
-----------
Capital lease obligations $15,520,965
===========
11 TRANSACTIONS WITH CARRIERS
Accounts receivable from carriers arise from the interconnection services of
inbound calls, while accounts payable result from interconnection services of
outbound calls. These charges are based on minutes billed. Amounts paid to
carriers constitute one of the main operating costs of the Company.
Net amounts receivable and payable for these activities at December 31, 1999 and
2000 were as follow:
1999 2000
--------------------------- --------------------------
RECEIVABLE PAYABLE RECEIVABLE PAYABLE
----------- --------- ---------- ----------
Inbound $12,406,384 - 13,699,020 -
Outbound (5,939,368) 1,785,132 (4,969,134) 12,323,898
Payable accounts interconnection
operations - CODETEL - 1,202,247 - 1,511,378
----------- --------- ---------- ----------
$ 6,467,016 2,987,379 8,729,886 13,835,276
=========== ========= ========== ==========
12 OTHER LIABILITIES
Other liabilities at December 31, 1999 and 2000 consisted of the following:
1999 2000
---------- ----------
Customer advances $1,203,764 1,256,345
Deferred revenues:
Calling cards 2,130,985 3,622,686
Installations and activations - 14,654,886
OOther 454,958 456,573
---------- ----------
$3,789,707 19,990,490
========== ==========
Effective January 1 2000, the Company adopted the Staff Accounting Bulletin (SAB
101) "Revenue Recognition" issued by the Securities and Exchange Commission
(SEC). The adoption of SAB 101 resulted in a change in the revenue recognition
policy regarding installation and activation revenues. Such change required the
Company to recognize net revenues from installation and activation over the
average service life based on the experience of the Company (35 months). This
change in the revenue recognition method required the Company to recognize a
cumulative effect of accounting change in net revenues from installations and
activations for $16,452,799, which is presented as a separate item in the
accompanying consolidated statements of operations. The adoption of this
bulletin did not affect the cash flows of the Company.
F-21
13 ACCRUED EXPENSES
A summary of accrued expenses at December 31, 1999 and 2000 is as follows:
1999 2000
----------- ----------
Expenses in lieu of income tax payable $ 3,085,766 627,543
Interest payable 8,783,221 9,854,165
Other 3,424,923 3,553,474
----------- ----------
$15,293,910 14,035,182
=========== ==========
14 LONG-TERM DEBT
Long-term debt is summarized as follows:
1999 2000
------------ -----------
Senior notes (a) $200,000,000 200,000,000
Bank loans:
Four loans with Dominican banks for a total amount of RD$65,600,000 in 1999 and
six loans for a total amount of RD$103,586,975 in 2000; with interest ranging
from 20% to 24% per annum in 1999 and 24% to 26% per annum in 2000. These loans
are due in monthly installments of RD$2,812,682 (approximately US$168,525)
including principal and interest, starting January, 2000 through December, 2007;
five of these loans are secured by communications equipment
with a carrying value of $7,283,201, the remainder is unsecured. 4,087,227 6,206,529
Loan from Export-Import Bank through International Bank of Miami for equipment
purchases for a total approved amount of $36,002,530, which includes $2,267,026
of interest paid in advance, which amount is allocated proportionately to
individual amounts drawn. Interest is payable semi-annually at a rate of 30-day
LIBOR plus 2.25% (annually) until May 15, 2001. The principal amount is payable
in 10 semi-annual installments of approximately $2,023,017 each, from June 15,
2002 to December 15, 2006. The latest date to draw against the loan is May 15,
2001. After such date, this loan will bear interest at a rate equal to that of 3
year US Treasuries plus 2%. This loan is guaranteed by TRICOM USA. - 20,230,169
Loan with Banco Popular de Puerto Rico for a total amount of $15,000,000, with
monthly interest payments at LIBOR plus 4%. The principal amount will be paid in
3 installments of $3,000,000 in June 2003, $4,000,000 in December 2003 and
$8,000,000 in June 2004. This loan is guaranteed by TRICOM USA. - 15,000,000
Loan with General Electric Capital Corporation of Puerto Rico for $8,000,000.
This loan bears interest at 30 day LIBOR plus 2.75%. The principal amount is
payable in 36 monthly installments of $222,222 starting in January 2001. This
loan is collateralized by transmission and communication equipment at a cost
of $15,864,000. - 8,000,000
10% unsecured line of credit with Citibank, N. A. for $10,000,000. 10,000,000 -
$15,000,000 revolving line of credit with Hamilton Bank, N. A. due in 2002.
This loan bears interest at Citibank, N. A. prime rate (9% at December 31,
1999 and 10% at December 31, 2000) plus 0.05%. This line of credit is
guaranteed by TRICOM, S.A. an affiliate Banco Nacional de Credito, S.A. 15,000,000 15,000,000
------------ -----------
Total bank loans 29,087,227 64,436,698
------------ -----------
Total long-term debt 229,087,227 264,436,698
Less current portion of long-term debt 315,216 3,213,939
------------ -----------
Long-term debt excluding current portion $228,772,011 261,222,759
------------ -----------
------------ -----------
F-22
The aggregate principal amounts due on these long-term debt obligations are as
follow:
Year ending December 31,
2001 $ 3,213,939
2002 22,410,643
2003 14,602,812
2004 213,181,348
2005 5,418,810
2006 and thereafter 5,609,146
(a) Senior Notes
On August 15, 1997, the Company issued $200,000,000 aggregate principal amount
of 11 3/8% Senior Notes due in 2004 (the "Senior Notes"). Interest on the Senior
Notes is payable in semi-annual installments on March 1st and September 1st of
each year.
The Senior Notes may be redeemed at any time at the option of the Company, in
whole or in part, after September 1, 2001, at a premium declining to par after
September 1, 2003, plus accrued and unpaid interest, and additional amounts, if
any, through the redemption date. The Senior Notes are senior unsecured
obligations of the Company ranking pari passu in right of payment with all other
existing and future senior debt, and will rank senior to any future subordinated
indebtedness.
The indenture for the Senior Notes contains certain covenants that, among other
things, limit the ability of the Company and its Restricted Subsidiaries, as
defined in the indenture, to incur additional indebtedness and issue preferred
stock, pay dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company or its Restricted Subsidiaries, engage in any business other than
the telecommunications business, issue or sell equity interests of the Company's
Restricted Subsidiaries or enter into certain mergers and consolidations.
The fair value of this long term debt at December 31, 2000 is estimated in the
amount of $186,000,000 determined through a combination of management estimates
and information obtained from independent third parties, using market data
available on the last business day of the year.
The Senior Notes are guaranteed fully, unconditionally and jointly and severally
by some of the Company's subsidiaries, each of which is wholly owned by the
Company. Separate financial statements of each of the guarantor subsidiaries
have not been presented herein because management has determined that such
separate financial statements would not be material to the holders of the Senior
Notes.
Summarized condensed consolidated financial information of TRICOM, S.A. (Parent
Company), the subsidiaries guarantors on a combined basis ( Comunicaciones,
Tricom Latinoamerica, S.A. (previously Bay Tel), Call Tel and TRICOM USA and
Subsidiaries) and the subsidiaries not guarantors on a combined basis at
December 31, 1999 and 2000 and for the years ended December 31, 1998, 1999 and
2000 is as follows (see note 1):
BALANCE SHEET DATA AS OF DECEMBER 31, 1999:
OTHERS CONSOLIDATION AND
F-23
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
------------ ------------ ------------- ----------- ------------
Assets
Current assets:
Cash and cash equivalents $ 12,844,764 614,802 - - 13,459,566
Accounts receivable, net 29,561,365 17,050,832 (20,483,464) 26,128,733
Other current liabilities 16,132,885 1,154,627 - - 17,287,512
------------ ------------ ------------- ----------- ------------
Total current assets 58,539,014 18,820,261 (20,483,464) 56,875,811
Property and equipment, net 446,964,891 8,080,300 - - 455,045,191
Other non-current assets 23,548,421 1,243,774 - (5,234,736) 19,557,459
------------ ------------ ------------- ----------- ------------
$529,052,326 28,144,335 - (25,718,200) 531,478,461
------------ ------------ ------------- ----------- ------------
------------ ------------ ------------- ----------- ------------
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable $ 81,813,184 - - - 81,813,184
Current portion of capital
leasing 14,242,056 - - - 14,242,056
Accounts payable 41,691,399 4,187,606 - (20,483,464) 25,395,541
Other current liabilities 16,047,376 3,036,241 - - 19,083,617
------------ ------------ ------------- ----------- ------------
Total current
liabilities 153,794,015 7,223,847 - (20,483,464) 140,534,398
Other non-current liabilities 225,389,484 15,685,752 - - 241,075,236
------------ ------------ ------------- ----------- ------------
Total liabilities 379,183,499 22,909,599 - (20,483,464) 381,609,634
Stockholders' equity: 149,868,827 5,234,736 - (5,234,736) 149,868,827
------------ ------------ ------------- ----------- ------------
$529,052,326 28,144,335 - (25,718,200) 531,478,461
------------ ------------ ------------- ----------- ------------
------------ ------------ ------------- ----------- ------------
BALANCE SHEET DATA AT DECEMBER 31, 2000:
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
------------ ------------ -------------- ------------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 17,241,951 919,185 38,416 - 18,199,552
Accounts receivable, net 42,620,337 13,590,450 25,870,144 (49,954,179) 32,126,752
Other current assets 17,049,765 1,239,867 - - 18,289,632
------------ ------------ ------------- ------------------ ------------
Total current assets 76,912,053 15,749,502 25,908,560 (49,954,179) 68,615,936
Property and equipment, net 557,465,684 26,726,431 2,031,785 - 586,223,900
Other non-current assets 58,932,766 2,765,051 6,442,682 (40,540,476) 27,600,023
F-24
------------ ------------ ------------- ------------------ ------------
$693,310,503 45,240,984 34,383,027 (90,494,655) 682,439,859
------------ ------------ ------------- ------------------ ------------
------------ ------------ ------------- ------------------ ------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Notes payable $116,756,416 - - - 116,756,416
Current portion of capital
leasing 5,308,310 - - - 5,308,310
Accounts payable 68,895,750 18,692,598 190,801 (49,954,179) 37,824,970
Other current liabilities 29,800,403 4,225,269 - 34,025,672
------------ ------------ ------------- ------------------ ------------
Total current
liabilities 220,760,879 22,917,867 190,801 (49,954,179) 193,915,368
Other non-current liabilities 261,753,451 15,974,867 - - 277,728,318
------------ ------------ ------------- ------------------ ------------
Total liabilities 482,514,330 38,892,734 190,801 (49,954,179) 471,643,686
Stockholders' equity 210,796,173 6,348,250 34,192,226 (40,540,476) 210,796,173
------------ ------------ ------------- ------------------ ------------
$693,310,503 45,240,984 34,383,027 (90,494,655) 682,439,859
------------ ------------ ------------- ------------------ ------------
------------ ------------ ------------- ------------------ ------------
STATEMENTS OF OPERATIONS DATA FOR THE YEAR ENDED DECEMBER 31, 1998
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
------------- ------------ ------------- ----------------- ------------
Operating revenues $116,270,423 27,919,654 - (18,688,685) 125,501,392
Operating costs (85,850,736) (28,861,720) - 18,688,685 (96,023,771)
------------- ------------ ------------- ----------------- ------------
Operating income 30,419,687 (942,066) - - 29,477,621
Other income (expenses), net (12,514,098) 21,685 - 568,690 (11,923,723)
------------- ------------ ------------- ----------------- ------------
Earnings before income taxes 17,905,589 (920,381) - 568,690 17,553,898
Income taxes - 351,691 - - 351,691
------------- ------------ ------------- ----------------- ------------
Net earning (loss) $ 17,905,589 (568,690) - 568,690 17,905,589
------------- ------------ ------------- ----------------- ------------
------------- ------------ ------------- ----------------- ------------
STATEMENTS OF OPERATIONS DATA FOR THE YEAR ENDED DECEMBER 31, 1999:
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
-------------- ------------ ------------- ----------------- ------------
Operating revenues $ 155,895,506 36,179,982 - (21,256,547) 170,818,941
Operating costs (115,133,014) (35,480,394) - 21,256,547 (129,356,861)
-------------- ------------ ------------- ----------------- ------------
Operating income 40,762,492 699,588 - - 41,462,080
Other expenses, net (18,608,256) (868,817) - 310,889 (19,166,184)
-------------- ------------ ------------- ----------------- ------------
Earnings before income taxes and
Cumulative effect of accounting
Change 22,154,236 (169,229) - 310,889 22,295,896
Income taxes - (141,660) - - (141,660)
-------------- ------------ ------------- ----------------- ------------
Earnings(loss) before cumulative effect
F-25
of accounting change 22,154,236 (310,889) - 310,889 22,154,236
Cumulative effect of accounting change in
Organizations costs (119,711) - - - (119,711)
-------------- ------------ ------------- ----------------- ------------
Net earning (loss) $ 22,034,525 (310,889) - 310,889 22,034,525
-------------- ------------ ------------- ----------------- ------------
-------------- ------------ ------------- ----------------- ------------
STATEMENTS OF OPERATIONS DATA FOR THE YEAR ENDED DECEMBER 31, 2000:
TRICOM, OTHER CONSOLIDATION AND
S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
-------------- ------------ ------------- ----------------- ------------
Operating revenues $ 188,897,636 65,697,691 - (30,297,672) 224,297,655
Operating costs (150,954,070) (62,537,158) (82,214) 30,297,672 (183,275,770)
-------------- ------------ ------------- ----------------- ------------
Operating income 37,943,566 3,160,533 (82,214) - 41,021,885
Other expenses, net (28,716,402) (1,458,642) 185,241 (1,216,541) (31,206,344)
-------------- ------------ ------------- ----------------- ------------
Earnings before income taxes
and cumulative effect of accounting
Change 9,227,164 1,701,891 103,027 (1,216,541) 9,815,541
Income taxes - (588,377) - - (588,377)
-------------- ------------ ------------- ----------------- ------------
Earnings before cumulative
effect of accounting change 9,227,164 1,113,514 103,027 (1,216,541) 9,227,164
Cumulative effect of change in
accounting for installations
and activation revenues (16,452,799) - - - (16,452,799)
-------------- ------------ ------------- ----------------- ------------
Net earning (loss) $ (7,225,635) 1,113,514 103,027 (1,216,541) (7,225,635)
-------------- ------------ ------------- ----------------- ------------
-------------- ------------ ------------- ----------------- ------------
CASH FLOW DATA FOR THE YEAR ENDED DECEMBER 31, 1998:
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
-------------- ------------ ------------- ----------------- ------------
Net cash provided by operating activities
$ 26,828,900 83,061 - - 26,911,961
Net cash used in investing activities (120,928,618) (3,241,348) - 2,999,000 (121,170,966)
Net cash provided by financing activities 104,065,263 2,999,000 - (2,999,000) 104,065,263
Effect in exchange rate changes on cash (161,441) 88 - - (161,353)
-------------- ------------ ------------- ----------------- ------------
Net increase (decrease) in cash and cash equivalents 9,804,104 (159,199) - - 9,644,905
Cash and cash equivalents at beginning of the year 5,310,138 422,367 - - 5,732,505
-------------- ------------ ------------- ----------------- ------------
Cash and cash equivalents at the end of the year $ 15,114,242 263,168 - - 15,377,410
-------------- ------------ ------------- ----------------- ------------
-------------- ------------ ------------- ----------------- ------------
CASH FLOW DATA FOR THE YEAR ENDED DECEMBER 31, 1999:
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
------------ ------------ ------------- ----------------- ------------
F-26
Net cash provided by (used in) operating activities $ 38,455,777 (6,929,619) - - 31,526,158
Net cash used in investing activities (62,214,283) (2,145,814) - - (64,360,097)
Net cash provided by financing activities 21,539,440 9,427,032 - - 30,966,472
Effect in exchange rate changes on cash (50,412) 35 - - (50,377)
------------ ------------ ------------- ----------------- ------------
Net increase (decrease) in cash and cash equivalents (2,269,478) 351,634 - - (1,917,844)
Cash and cash equivalents at beginning of the year 15,114,242 263,168 - - 15,377,410
------------ ------------ ------------- ----------------- ------------
Cash and cash equivalents at the end of the year $ 12,844,764 614,802 - - 13,459,566
------------ ------------ ------------- ----------------- ------------
------------ ------------ ------------- ----------------- ------------
CASH FLOW DATA FOR THE YEAR ENDED DECEMBER 31, 2000:
OTHERS CONSOLIDATION AND
TRICOM, S.A. SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
PARENT CO. GUARANTORS NO GUARANTORS ADJUSTMENTS CONSOLIDATED
------------- ------------ ------------- ----------------- ------------
Net cash provided by (used in) operating activities $ 54,506,114 20,042,719 (32,209,799) - 42,339,034
Net cash used in investing activities (161,904,855) (19,738,336) (2,031,785) 34,280,000 (149,394,976)
Net cash provided by financing activities 111,795,928 - 34,280,000 (34,280,000) 111,795,928
------------- ------------ ------------- ----------------- ------------
Net increase in cash and cash equivalents 4,397,187 304,383 38,416 - 4,739,986
Cash and cash equivalents at beginning of the year 12,844,764 614,802 - - 13,459,566
------------- ------------ ------------- ----------------- ------------
Cash and cash equivalents at the end of the year $ 17,241,951 919,185 38,416 - 18,199,552
------------- ------------ ------------- ----------------- ------------
------------- ------------ ------------- ----------------- ------------
F-27
15 STOCKHOLDERS' EQUITY
The authorized capital stock of the Company consists of 55,000,000 shares of
Class A common stock and 25,000,000 shares of Class B common stock.
All of the Company's outstanding shares are duly authorized, validly issued and
fully paid. Both classes of capital stock vote together as a single class,
except on any matter that would adversely affect the rights of either class. The
Class A common stock has one vote per share and the Class B has ten votes per
share. The economic rights of each class of capital stock are identical.
In the second quarter of 1998, the Company sold 5,700,000 Class A common shares
in a public offering for US$74.1 million, net of issuance costs of $6,346,545.
The proceeds of this issuance were used to expand the Company's local service,
cellular and PCS networks and its international switching and circuit capacity.
As well as paying short-term debt primarily incurred to fund equipment
purchases.
All share and per share data set forth in the financial statements reflect the
reclassification of the Company's shares of common stock that were outstanding
prior to TRICOM's initial 1998 public offering of American Depository Shares
into shares of Class B stock and give effect to an approximate 3.3132-for-one
stock split at that time.
During the second quarter of 2000, the Company sold 4,000,000 Class A common
shares in a public offering for US$74.0 million, net of issuance costs of
$6,852,774. The proceeds of this issuance were used for capital expenditures
associated with increasing the capacity and coverage of local access, mobile and
data networks and to expand international facilities to support increased
traffic volume and to fund working capital.
16 EXPENSE IN LIEU OF INCOME TAXES
In accordance with the terms of the Concession Agreement signed with the
Dominican Government, as revised on February 20, 1996 TRICOM, S.A. had an
exemption from income tax but had to pay a fixed tax equal to 10% of gross
domestic revenues, after deducting charges for access to the local network, plus
10% of net international settlement revenues. This tax will never be less than
RD$18,000,000 ($1,078,500) annually.
In addition, since July 1998, expense in lieu of income taxes also includes a
tax of 2% on international settlement revenues collected. For December 31, 1998,
1999 and 2000, the cost of this additional tax was $315,801, $566,549 and
$364,434, respectively, which is included as part of expense in lieu of income
taxes in the accompanying consolidated statements of operations.
During the year ended December 31, 2000 the Company paid RD$7,500,000 ($449,371)
as an advance deposit against the fixed tax 10%. As of December 31, 2000, there
is RD$6,120,000 (equivalent to $366,687) included in prepaid expenses in the
accompanying consolidated balance sheets.
At December 31, 1999 the Company paid as an advance of RD$30,000,000
($1,869,159), which is included in prepaid expenses in the accompanying
consolidated balance sheet. This prepayment was used to offset taxes for the
year 2000.
F-28
17 INCOME TAX
The Company is subject to income taxes in the United States. The components of
income taxes follow:
1998 1999 2000
---- ---- ----
Current tax provision $ - (108,000) (96,487)
Deferred tax 351,691 (33,660) (491,890)
---------------- --------- ---------
$ 351,691 (141,660) (588,377)
================ ========= =========
The provision for current income taxes is
composed of the following:
Federal - Alternative minimum tax $ - (71,701) (96,487)
State income tax, net of federal benefit - (36,299) -
---------------- --------- ---------
$ - (108,000) (96,487)
================ ========= =========
The components of deferred income taxes in the United States follow:
Deferred revenues $ 483,011 737,410 211,304
Net operating loss carry forward 209,001 45,856 195,064
Tax credit carry forward - 100,825 132,961
Other 43,361 65,099 261,679
---------------- --------- ---------
735,373 949,190 801,008
Deferred tax liabilities - property and
equipment 383,682 631,159 974,867
---------------- --------- ---------
$ 351,691 318,031 (173,859)
================ ========= =========
The Company has not recorded a valuation allowance for the deferred tax assets
because it believes that sufficient book and taxable income will be generated to
realize the benefit of these tax assets.
At December 31, 2000, the Company had net operating loss carryforwards ("NOLS")
aggregating approximately $586,472 expiring in the year 2019. In addition, the
Company has alternative minimum tax credit carryforwards aggregating
approximately $132,961.
Subsidiaries operating in the Republic of Panama and the Cayman Islands are
exempt from income taxes as long as they operate outside the Republic of Panama
and Cayman Islands.
18 PENSION BENEFITS
Beginning September 1, 2000, AFP Siembra, S.A. a related pension management
company, has managed the Company's pension plan as individual defined
contribution accounts (similar to the United States 401K plan). The plan
management company maintains the investments on behalf of the plan participants
and reports changes in the value of the individual accounts on a unit investment
system. Under this arrangement, the Company contributes 5% of the employee's
salary and the employee contributes 4%. Since September 1, 2000, the Company's
expense for this plan was approximately $207,000, and is included as part of
general and administrative expenses in the accompanying consolidated statements
of operations.
The pension management company guarantees a minimum return of 1.5% over the mean
of the average bid interest rate offered by certificates of deposit from
Dominican commercial and multiple services banks reported by the Central Bank of
the Dominican Republic, determined monthly, considering the date in which the
funds entered the individual account.
The pension management company commits to permanently maintain on deposit with
banks 90% of the instruments that comprise the total amount of the portfolio of
funds being managed. The cost of this service
F-29
is RD$50 (approximately $3) per employee per month, which will is deducted
monthly from the contributions that the employer (the Company) makes. The
pension management company earns performance bonus of 1% annually on the
cumulative balance of each account under its management.
Prior to September 1, 2000, substantially all of the employees of the Company
were included in a defined benefit plan that was established by Grupo
Financiero. The benefits were based on the years of service and the employees'
compensation during the last years before retirement. This plan was administered
by the Plan de Pensiones y Jubilaciones del Grupo Financiero Nacional, S.A.
The Company made annual contributions to the Plan based on contribution levels
determined by independent actuaries. The Company's pension expense was
approximately $433,000, $587,000 and $531,000 in the years ended December 31,
1998, 1999 and 2000, respectively, and is included as part of general and
administrative expenses in the accompanying consolidated statements of
operations.
The following summarizes pension obligation information and estimated plan asset
information for the Company individually, which were administered by the Plan de
Pensiones as of November 30, 1999 is as follows:
CHANGES IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 2,234,367
Change in exchange rate (61,253)
---------------
Benefit obligation at beginning of year, as
adjusted 2,173,114
Service cost 940,622
Interest cost 186,824
Actuarial gain 271,744
Benefits paid (88,392)
Adjustments 72,260
---------------
Benefit obligation at end of year 3,556,172
---------------
CHANGES IN PLAN ASSETS
Fair value of plan assets at beginning (a) 2,513,478
Change in exchange rate (68,906)
---------------
Fair value of plan assets at beginning of
year, adjusted 2,444,572
Actual return in plan assets 419,038
Employer contribution 586,887
Plan participants' contributions 359,072
Benefits paid (88,392)
Expenses and other adjustments (65,001)
---------------
Fair value of plan assets at end of year (a) 3,656,176
---------------
Funded status of the plan $ 100,004
===============
RATE ASSUMPTIONS
Discount rates 6.00%
Rate of return on plan assets 14.39%
===============
(a) Corresponds to an estimate of the assets allocable to the Company. This
estimate was based on the ratio of total obligations of TRICOM to the
total obligation of Grupo Financiero applied to the total plan assets.
However, there is no formal segregation of assets applicable to the
employees of the Company.
19 COMMITMENTS AND CONTINGENCIES
Since 1995, TRICOM has entered into operating leases with related companies. The
total expense under these leases in 1998, 1999 and 2000 was $72,582, $108,578,
and $157,600 respectively.
F-30
TRICOM maintains contracts with foreign entities for the traffic of overseas
calls. Such contracts require each entity to obtain the necessary facilities to
establish, maintain and operate its respective terminals. The costs of each
contract are based upon negotiation rates, which are computed based on the
amount of traffic each month. For the years ended December 31, 1998, 1999 and
2000 this cost was $4,273,617, $3,706,683 and $4,916,317, respectively, and is
included in the cost of satellite connections in the accompanying consolidated
statements of operations.
The Company has commitments for the purchase of transmission and communication
equipment with Motorola, Inc. for $14,540,747. This equipment will be installed
in Panama, in accordance with the Company's expansion plans.
On May 8, 1997, the Federal Communications Commission ("FCC") issued an order to
implement the provisions of the Telecommunications Act of 1996 relating to the
preservation and advancement of universal telephone service (the "Universal
Service Fund"). The Universal Service Order requires all telecommunications
carriers providing interstate telecommunications services to contribute to
universal service by contribution to a fund (the "Universal Service Fund").
Universal Service Fund contributions were assessed based upon intrastate,
interstate and international end-user gross telecommunications revenue effective
January 1 through December 31.
At December 31, 1999 and 2000 the Company contributed $141,141 and $251,386,
respectively, to the "Universal Service Fund" on end-user telecommunications
revenue of $4,756,792 in 1999 and $3,585,572 in 2000. The contribution paid is
included as part of general and administrative expenses in the accompanying
statements of operations.
OTHER LEASE OBLIGATIONS
The Company maintains operating leases for the use of office space,
telecommunication centers, commercial offices, warehouse, an automobile, an
aircraft and others. The operating leases are renewable at the end of the lease
period, which is usually one year. Expenses for these leases in 1998, 1999 and
2000 were approximately $405,000, $476,000 and $1,754,000, and are included in
general and administrative expenses in the consolidated statements of
operations. The lease payments for the next five years are as follows:
Year Amount
---- ------
2001 $ 2,598,151
2002 2,651,370
2003 2,740,499
2004 2,864,819
2005 and future 12,374,241
===============
LEGAL PROCEEDINGS
In August 1999, a Dominican company and two individual plaintiffs sued the
Company before Dominican courts for alleged losses and damages of up to
approximately RD$200,000,000 (approximately $12,000,000) resulting from the
imprisonment by Dominican authorities of two of the individuals for 15 days. The
plaintiffs alleged that their imprisonment was the result of an investigation by
the local district attorney and the police that the Company instigated following
an irregular increase in telephonic traffic at a certain telephone number. The
case is pending decision from the Judge. After consulting with legal counsel,
the Company believes that this matter will not have a material adverse effect on
results of operations or financial position.
The Company is involved in other lawsuits and legal actions that have resulted
from its ordinary business activities, under which claims amount to
approximately US$6,800,000 (RD$113,000,000). Management has evaluated these
claims and believes that the final outcome of these matters will not have an
adverse effect on the results of the operations or the financial position of the
Company.
F-31
No amounts have been recorded in the accompanying financial statements related
to these legal proceedings.
SEVERANCE INDEMNITIES
Companies based in the Dominican Republic maintain reserves under the provisions
of U.S. Statement of Financial Accounting Standards "SFAS" 112 to cover the
ultimate payment of severance indemnities. Severance expense amounted to
$257,690, $328,807 and $760,740 in the years ended December 31, 1998, 1999 and
2000 and are included as part of general and administrative expenses in the
accompanying consolidated statement of operations.
20 BUSINESS AND CREDIT CONCENTRATION
In the normal course of business, the Company has accounts receivable from
carriers. Although the Company's exposure to credit risk associated with
non-payment by these carriers is affected by conditions or occurrences within
the industry, most of these receivables are due from large, well-established
companies. The Company does not believe that this concentration of credit risk
represents a material risk of loss.
21 LEGAL RESERVE
Article 58 of the Code of Commerce of the Dominican Republic requires all
companies to segregate at least 5% of net earnings as a legal reserve until such
reserve reaches 10% of paid- in capital. This reserve is not available for
dividend distribution, except in case of dissolution of the corporation.
22 STOCK OPTION PLAN
At May 4, 1998, the Company initiated a Long-term Incentive Plan, in which
certain employees could be granted options to purchase shares of the Company's
common stock. The Plan is administered by the Board of Directors of the Company
and has the authority to determine which employees will participate in the Plan.
The Plan authorizes grants of options to purchase up to 750,000 shares of
authorized but unissued common stock. Stock options are granted with an exercise
price equal to the stock's fair market value at the date of grant. All stock
options have ten-year terms and vest and become exercisable after three years
from the date of grant.
At December 31, 1999 and 2000, there were 436,580 and 230,370 additional shares
available for grant under the Plan, respectively.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Company's net income would have been reduced to the pro-forma amounts indicated
below.
1999 2000
---- ----
Net earnings (loss) - as reported $ 22,034,525 (7,225,635)
Net earnings (loss) - proforma 21,648,100 (7,929,562)
=============== ===========
Net earnings (loss) per share:
As reported - basic and diluted 0.89 (0.26)
=============== ===========
Pro-forma - basic and diluted 0.87 (0.28)
=============== ===========
Weighted
Average
Exercise
Options Price
-------- --------
Balance, December 31, 1997 - -
Granted 477,664 12.95
-------- -----
F-32
Balance, December 31, 1998 477,664 12.95
Granted (a) 251,420 8.06
Cancelled (a) (415,664) 13.00
-------- -----
Balance, December 31, 1999 313,420 8.96
Granted 207,245 20.45
Surrendered (1,035) 8.06
-------- -----
Balance, December 31, 2000 519,630 13.53
======== =====
(a) Corresponds to the reduction in the exercise price from $13.00
to $8.06 of options granted in 1998. The number of options was
also reduced proportionately. All other conditions were
unchanged. Effective July 1, 2000, the FASB issued Financial
Interpretation No. 44 (FIN 44) which amended APB 25 and requires
"variable" accounting for all stock option repricing retroactive
to December 15, 1998. As a result, these options will require
variable accounting until they are exercised, cancelled,
forfeited or expired. Under variable accounting, compensation
expense must be measured by the difference between the exercise
price and the market price of the Company's stock at each
reporting period amortized over the vesting period. The effect
of the application of FIN 44 during 2000 was not significant.
Exercise prices of options outstanding as of December 31, 2000 ranged from $6.63
to $23.75. The following table provides certain information with respect to
stock options outstanding at December 31, 2000:
Weighted
Stock Average Weighted Average
options Exercise Remaining
Range of exercise prices outstanding Price Contractual Life
------------------------ ----------- -------- ----------------
Under $7.00 4,000 6.63 7.92
$7.00 - $10.00 251,815 8.05 7.48
$10.01 - $13.00 62,435 12.88 7.52
$13.01 - $16.00 72,420 15.51 9.65
$16.01 - $19.00 - - -
$19.01 - $22.00 5,000 20.90 9.25
$22.00 - $23.75 123,960 23.75 9.25
------- ----- ----
519,630 13.53 8.23
======= ===== ====
The weighted-average fair value at date of grant for options granted during 1999
and 2000 were $8.06 and $20.45, respectively and was estimated using the
Black-Scholes option valuation model with the following weighted-average
assumptions.
1999 2000
---- ----
Expected life in years 7.50 7.50
Interest rate 6.33 5.10
Volatility 73.22 79.94
Expected dividends - -
===== =====
Warrants:
In October, 1999 the Company entered into an agreement with a third party to
provide investor relations service for a period of two years. The Company
granted warrants to purchase 300,000 Class A common shares of the Company at an
exercise price of $8.875 per share. At December 31, 1999 and 2000 the Company
had 150,000 and 250,000 shares vested for this contract, while the remaining
50,000 share will vested in April 28, 2001.
The Company is recognizing an expense for the fair value of these options using
the Black-Scholes options pricing model as follow:
F-33
The 150,000 shares vested in 1999 were valued at the fair value of the shares at
the date of grant and the 100,000 shares vested in the year 2000 were valued at
the fair value of the shares at the date they were vested. The Company has
50,000 shares that are not vested at December 31, 2000, that are valued at the
fair value at December 31, 2000.
For the years ended December 31, 1999 and 2000 the Company recognized an expense
of $273,000 and $1,005,755, respectively, which is included as part of general
and administrative expense in the accompanying consolidated statements of
operations.
23 QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tables contain selected unaudited consolidated quarterly financial
data for the Company:
1999
-------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
Total operating revenues $ 34,823,199 40,901,880 44,968,825 50,125,037
Operating costs, including depreciation
charges of $4,494,884; $5,141,925;
$5,158,482 and $6,042,189 for each
quarter, respectively 26,495,328 32,149,080 32,719,085 37,993,368
--------------- -------------- ------------- --------------
Operating income 8,327,871 8,752,800 12,249,740 12,131,669
Other expenses, net (3,745,609) (3,547,369) (6,534,080) (5,339,126)
--------------- -------------- ------------- --------------
Earnings before income taxes and
cumulative effect of accounting change 4,582,262 5,205,431 5,715,660 6,792,543
Income tax benefit (expense) 56,203 - - (197,863)
--------------- -------------- ------------- --------------
Earnings before cumulative effect of
accounting change 4,638,465 5,205,431 5,715,660 6,594,680
Cumulative effect of accounting change
for organization expenses - - - (119,711)
--------------- -------------- ------------- --------------
Net earnings $ 4,638,465 5,205,431 5,715,660 6,474,969
--------------- -------------- ------------- --------------
--------------- -------------- ------------- --------------
Earnings per share $ 0.19 0.21 0.23 0.26
--------------- -------------- ------------- --------------
--------------- -------------- ------------- --------------
Number of common shares used in
calculation 24,844,544 24,844,544 24,844,544 24,844,544
--------------- -------------- ------------- --------------
--------------- -------------- ------------- --------------
2000
-------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
Total operating revenues $ 50,229,735 53,081,404 57,919,395 63,067,121
Operating costs, including depreciation
charges of $7,552,734; $8,390,173;
$9,168,662 and $11,053,710 for each
quarter, respectively 39,401,870 44,406,622 47,125,015 52,342,263
-------------- -------------- ------------- --------------
Operating income 10,827,865 8,674,782 10,794,380 10,724,858
Other expenses, net (8,172,126) (6,818,441) (7,297,368) (8,918,409)
-------------- -------------- ------------- --------------
F-34
Earnings before income taxes and
cumulative effect of accounting change 2,655,739 1,856,341 3,497,012 1,806,449
Income tax benefit (expense) (130,250) (140,568) (160,210) (157,349)
-------------- -------------- ------------- --------------
Earnings before cumulative effect of
accounting change 2,525,489 1,715,773 3,336,802 1,649,100
Cumulative effect of accounting change
for installation and activation revenues (16,452,799) - - -
-------------- -------------- ------------- --------------
Net earnings $ (13,927,310) 1,715,773 3,336,802 1,649,100
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
Earnings per share $ (0.56) 0.06 0.12 0.06
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
Number of common shares used in
calculation 24,844,544 28,361,028 28,844,544 28,844,544
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
24 SEGMENT INFORMATION
In the fourth quarter of 1998, the Company adopted Financial Accounting
Standards Board Statement No. 131, "Disclosures about Segment of an Enterprise
and Related Information", which establishes standards for reporting information
about a company's operating segments. The Company has divided its operations
into four reportable segments: Wireline, Cellular, International, and Others
based upon similarities in revenue generation, cost recognition, marketing and
management of its businesses.
The reporting segments follow the same accounting policies used for the
Company's consolidated financial statements as described in the summary of
significant accounting policies. Management evaluates a segment's performance
based upon profit or loss from operations before income taxes.
The segments and a description of their business is as follows: Wireline which
includes local access lines. Cellular which includes prepaid and postpaid mobile
communication products and services. International which includes long distance
carrier services and Other which includes services such as paging, internet,
local prepaid calling cards and customers contact services.
Following is a tabulation of business segment information for each of
the past three years..
GEOGRAPHIC
1998
----------------------------------------------------------------------
DOMINICAN
UNITED STATES REPUBLIC ELIMINATIONS CONSOLIDATED
------------- --------- ------------ ------------
International settlement revenues $ 24,208,283 44,812,490 (18,688,685) 50,332,088
Other 2,857,215 72,312,089 - 75,169,304
-------------- ------------ ------------ -------------
Total operating revenues 27,065,498 117,124,579 (18,688,685) 125,501,392
Operating costs 27,818,364 86,894,092 (18,688,685) 96,023,771
-------------- ------------ ------------ -------------
Operating income (loss) $ (752,866) 30,230,487 - 29,477,621
-------------- ------------ ------------ -------------
-------------- ------------ ------------ -------------
Identifiable assets $ 8,603,748 436,763,531 (552,676) 444,814,603
-------------- ------------ ------------ -------------
-------------- ------------ ------------ -------------
1999
----------------------------------------------------------------------
UNITED STATES DOMINICAN REPUBLIC ELIMINATIONS CONSOLIDATED
------------- ------------------ ------------ ------------
International settlement revenues $ 35,510,406 46,338,275 (21,256,547) 60,592,134
Other 490,836 109,735,971 - 110,226,807
-------------- ------------------ ------------ ------------
Total operating revenues 36,001,242 156,074,246 (21,256,547) 170,818,941
Operating costs 35,007,605 115,605,803 (21,256,547) 129,356,861
-------------- ------------------ ------------ ------------
F-35
Operating income (loss) $ 993,637 40,468,443 - 41,462,080
-------------- ------------------ ------------ ------------
-------------- ------------------ ------------ ------------
Identifiable assets $ 25,525,617 514,417,693 (8,464,849) 531,478,461
-------------- ------------------ ------------ ------------
-------------- ------------------ ------------ ------------
2000
-------------------------------------------------------------------------
UNITED DOMINICAN
STATES REPUBLIC OTHER ELIMINATIONS CONSOLIDATED
------ --------- ----- ------------ ------------
International settlement revenues $ 65,667,150 48,817,572 - (30,297,672) 84,187,050
Other 29,768 140,080,837 - - 140,110,605
---------- ----------- ---------- ------------ ------------
Total operating revenues 65,696,918 188,898,409 - (30,297,672) 224,297,655
-
Operating costs 62,056,005 151,435,223 82,214 (30,297,672) 183,275,770
---------- ----------- ---------- ------------ ------------
Operating income (loss) $ 3,640,913 37,463,186 (82,214) - 41,021,885
---------- ----------- ---------- ------------ ------------
---------- ----------- ---------- ------------ ------------
-
Identifiable assets $ 38,107,771 697,291,056 34,383,027 (87,341,995) 682,439,859
---------- ----------- ---------- ------------ ------------
---------- ----------- ---------- ------------ ------------
PRODUCTS AND SERVICES
1998
------------------------------------------------------------------------------------------
ELIMINATION
WIRELINE CELLULAR INTERNATIONAL OTHERS(A) (B) CONSOLIDATED
-------- -------- ------------- --------- ----------- ------------
Revenue $ 35,658,595 26,604,945 69,020,773 12,905,764 (18,688,685) 125,501,392
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
Operational income 8,943,886 9,069,722 10,221,879 1,242,134 - 29,477,621
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
Proforma
operational income
assuming the
change in
accounting
principle for
installation and
activation
retroactively 3,424,771 7,732,794 10,221,879 1,242,134 - 22,621,578
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
Identifiable assets 88,372,739 66,747,297 22,510,041 267,184,526 - 444,814,603
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
Depreciation -
expense 7,924,465 3,222,774 1,509,691 1,965,230 14,622,160
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
Capital -
expenditures $ 69,663,693 31,777,625 6,980,783 33,678,911 142,101,012
--------- ---------- ------------ ---------- ----------- ------------
--------- ---------- ------------ ---------- ----------- ------------
1999
------------------------------------------------------------------------------------------
WIRELINE CELLULAR INTERNATIONAL OTHERS(A) ELIMINATION(B) CONSOLIDATED
-------- -------- ------------- --------- -------------- ------------
Revenue $ 62,572,264 35,346,554 81,848,681 12,307,989 (21,256,547) 170,818,941
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
Operational income 21,085,005 9,846,875 10,185,960 344,240 - 41,462,080
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
Proforma
operational income
assuming the
change for
accounting
principle in
installation and
activation
retroactively 17,193,219 8,768,309 10,185,960 344,240 - 36,491,728
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
Identifiable assets 177,806,707 110,876,334 25,590,381 217,205,039 - 531,478,461
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
Depreciation -
expense 11,080,231 5,605,645 2,928,174 1,223,430 20,837,480
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
Capital -
expenditures $ 79,065,923 42,573,958 7,602,493 16,183,849 145,426,223
---------- ---------- ------------- ---------- -------------- ------------
---------- ---------- ------------- ---------- -------------- ------------
2000
------------------------------------------------------------------------------------------
WIRELINE CELLULAR INTERNATIONAL OTHERS(A) ELIMINATION(B) CONSOLIDATED
-------- -------- ------------- --------- -------------- ------------
Revenue $ 83,491,208 42,450,018 114,484,722 14,169,379 (30,297,672) 224,297,655
---------- ---------- ----------- ---------- ------------- -----------
---------- ---------- ----------- ---------- ------------- -----------
Operational income 22,558,963 12,273,329 2,932,170 3,257,423 - 41,021,885
---------- ---------- ----------- ---------- ------------- -----------
---------- ---------- ----------- ---------- ------------- -----------
Identifiable assets 155,520,757 267,580,351 38,341,447 220,997,304 - 682,439,859
---------- ---------- ----------- ---------- ------------- -----------
---------- ---------- ----------- ---------- ------------- -----------
Depreciation -
expense 24,425,105 7,870,113 1,953,356 1,916,705 36,165,279
---------- ---------- ----------- ---------- ------------- -----------
---------- ---------- ----------- ---------- ------------- -----------
F-36
Capital
expenditures $ 42,975,001 90,751,943 9,476,159 25,710,325 - 168,913,428
---------- ---------- ----------- -------- ------------- -----------
---------- ---------- ----------- -------- ------------- -----------
(a)Other (identifiable assets) include administrative/corporate
assets which are not revenue-generating. Also includes
construction in process and communication equipment pending
installation, which at December 31, had not been placed in
service and were not specifically associated with any business
segment. Other remaining assets do not meet any quantifiable
test for determining reportable segments.
(b)Corresponds to elimination of the gross revenues between
subsidiaries and the Parent Company in international revenues.
25 NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). As amended, the statement
becomes effective for fiscal years beginning after June 15, 2000 and will not be
applied retroactively. The statement establishes accounting and reporting
standards for derivative instruments and hedging activity. The Company has
determined that this statement will not have any effect on its financial
position or results of operations.
26 CUMULATIVE EFFECT OF ACCOUNTING CHANGE OF ORGANIZATIONS COSTS
During 1999, the Company changed its method of accounting for organization
expenses in order to comply with Statement of Position No. 98-5, issued by the
American Institute of Certified Public Accountants. The change involved
expensing these costs as incurred, rather than capitalizing and subsequently
amortizing such costs. The change resulted in the write-off of costs capitalized
as of January 1, 1999. The cumulative effect of the change of $119,711 has been
expensed and reflected as a separate line in the 1999 consolidated statements of
operations.
F-37
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing Form 20-F and has duly caused this amendment to the annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TRICOM, S.A.
Dated: October 8, 2001 By: /s/ Carl H. Carlson
-------------------------------------
Carl H. Carlson,
Executive Vice President and
Member of the Office of the President
S-1
EX-4.1
3
a2060683zex-4_1.txt
EXHIBIT 4.1
Exhibit 4.1
iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
TRICOM LATINOAMERICA, S.A.
AND
MOTOROLA, INC.
This iDEN(R) Infrastructure Supply Agreement ("Agreement" or "Supply Agreement")
is between Motorola, Inc., a Delaware corporation, by and through its Network
Solutions Sector, Customer Solutions Group with offices at 1301 East Algonquin
Road, Schaumburg, Illinois 60196 ("Motorola", which term shall also mean, where
the context requires, Motorola subsidiaries or subcontractors involved in
providing services or materials for this Agreement) and Tricom Latinoamerica,
S. A., a Cayman Islands corporation, with offices at Campbell Corporate Services
Limited, The Bank of Nova Scotia Building, P.O. Box 268, George Town, Grand
Cayman ("Customer" or "Tricom").
RECITALS:
Customer has or will obtain certain rights to use certain electromagnetic radio
frequencies licensed by the "Spectrum Regulatory Agency" and employs or intends
to employ such frequencies to operate iDEN Systems in the "Area" defined below
in Section 1.
Customer desires to purchase and Motorola desires to sell, and where required by
the Customer, Motorola would install and integrate iDEN Systems, as set forth in
this Agreement and in the attached Exhibits, which are incorporated herein by
reference.
Customer is a wholly owned subsidiary of Tricom S.A., a Dominican Republic
company.
AGREEMENT:
Now therefore, in consideration of the mutual obligations herein contained, the
parties agree as follows:
1.0 DEFINITIONS
Capitalized terms used in this Agreement and the Exhibits shall have
the following meanings:
-----------
(R) Registered U.S. Patent & Trademark Office.
1
ACCEPTANCE TEST PLAN
The Acceptance Test Plan (ATP) means the tests of a System, or portion
thereof, mutually agreed upon by Motorola and the Customer and selected
from the Generic Acceptance Test Plan (GATP) provided in Exhibit "C."
AFFILIATE
A company owned by or under common ownership or effective control by
another company.
AREA
Customer's market(s) in Panama, El Salvador, Guatemala, Nicaragua,
Honduras and Costa Rica.
CHANGE ORDER
Any change agreed to in writing, by Customer and Motorola, that
modifies the type or quantity of Equipment, Software or Services set
forth in a Purchase Order.
COMMERCIAL SERVICE
The point at which the System or any portion thereof has one or more
Subscribers and is functional and operative, that is, the capability of
successful completion of calls between Subscribers or between
Subscribers and subscribers of any other telephone system, such as a
local telephone system.
CONDITIONAL ACCEPTANCE AND FINAL ACCEPTANCE
Conditional Acceptance of a System shall occur as follows:
With respect to Initial Systems, and in the event Customer purchases
installation and integration services, Conditional Acceptance shall
occur at the earliest of the point in time of: (1) commencement of
Commercial Service of the product purchased, or (2) satisfactory
completion of the ATP. Final Acceptance shall occur and be evidenced by
a notice signed by Customer when all Punchlist items, over which
Motorola has control, have been resolved.
With respect to Expansion Product purchased with installation and
integration services, Conditional and Final Acceptance shall occur in
the same manner as provided in the "Conditional Acceptance and Final
Acceptance" definition above with respect to the System.
2
For Expansion Product, Equipment or Software purchased without
installation and integration services, the Conditional Acceptance and
Final Acceptance provisions in this Section will not apply.
CONFIDENTIAL INFORMATION
Confidential Information means that information which is marked
appropriately as confidential or, if orally disclosed, is identified as
confidential at the time of disclosure and confirmed in writing within
thirty (30) days of such disclosure, which may be exchanged pursuant to
this Agreement and shall include, without implied limitation, formulas,
processes, designs, photographs, plans, samples, performance reports,
Subscriber lists, pricing information, studies, findings, inventions,
ideas, drawings, schematics, sketches, specifications, parts lists,
technical data, data bases, Software in any form, flow charts,
algorithms (as therein specified), business technical information,
business plans, strategic alliances, market analysis, and quotation and
price information. Excluded from Confidential Information is
information: (i) which the recipient had in its possession without
confidential limitation prior to disclosure (for which the recipient
shall have the burden of demonstrating by clear and convincing
evidence); (ii) which is independently developed by either party: (iii)
which is known or becomes known to the general public without breach of
this Agreement; or (iv) which is received rightfully and without
confidential limitation from a third party.
CONSULTANT
The term consultant means the third party consultant, or group of
consultants, hired from time to time by the Customer to advise the
Customer in connection with all aspects of this Agreement, including,
without limitation, the selection, revision and supervision of the
tests of the ATP.
DOCUMENTATION
The documentation described in Exhibit "H".
EQUIPMENT
Goods, hardware, and products (other than Software and Subscriber
units) which are supplied by or through Motorola to Customer to be used
in conjunction with and as part of an iDEN System.
EXPANSION PRODUCT
All Equipment, Software, and other products and services purchased from
Motorola to add to or expand an existing System.
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FCA
When used herein shall be as defined in Incoterms 2000. Motorola shall
deliver to Customer's carrier at a manufacturing site or Motorola
facility.
FIXED NETWORK EQUIPMENT - FNE
"FNE" shall mean Motorola supplied Equipment integral to the iDEN
System, such as the switch, radio subsystems, dispatch systems, packet,
data and intelligent network components. Equipment which is not
integral to the Sites, such as antennas, transmission line and
combining equipment, is excluded from FNE, as are Subscriber Units.
HARMONY SYSTEM
The Harmony System is a wireless communication system that offers the
latest in digital communications services including two-way dispatch
and wireless telephone interconnect, for about five thousand (5,000)
subscribers utilizing eight (8) cell sites.
iDEN
iDEN is the trademark for Motorola's advanced integrated
radio-telephone and dispatch communications system that is described in
Exhibit "B".
IMPLEMENTATION
Implementation consists of the services of installing, integrating,
optimizing, management and system engineering as listed in Exhibit "A"
and performed as described in Exhibit "D".
IMPLEMENTATION SCHEDULE
The schedule set forth in Exhibit "D" or other agreement for the
Initial System or System expansion. The current Implementation Schedule
will be modified upon the change of Exhibit A for Panama.
INITIAL PROGRAM LOAD (IPL)
The Initial Program Load (IPL) Software is that Software delivered with
the Initial System or Expansion Product, and shall be the most current
version of iDEN Software that is in general release.
INITIAL SYSTEM
The minimum required System to operate as a digital mobile network to
provide mobile integrated services for a country in the Area utilizing
the iDEN technology platform. The
4
Initial System for each country of the Area will consist of at least
the number of sites indicated below, as shown in phase I of each of the
requests of quotation attached hereto as Exhibit "L"
------------------------------------------ -----------------------------
Country Number of Sites
------------------------------------------ -----------------------------
Costa Rica 20
------------------------------------------ -----------------------------
El Salvador 13
------------------------------------------ -----------------------------
Guatemala 22
------------------------------------------ -----------------------------
Honduras 5
------------------------------------------ -----------------------------
Nicaragua 10
------------------------------------------ -----------------------------
For Panama the Initial System will be that described in the budgetary
proposal attached hereto as current Exhibit "A1".
INITIAL SYSTEM'S FIRM QUOTE
The Initial System's Firm Quote is the quote prepared by Motorola for
each Initial System based on a firm and final request for quotation of
an Initial System for a particular country in the Area prepared by
Customer and submitted to Motorola at least 5 weeks prior to the date
Customer expects to receive such quote. The Initial System's Firm Quote
for each of the countries in the Area will become part of this
Agreement in the form of Exhibit "A," as follows:
---------------------------------------- -------------------------------
Country Exhibit "A"
---------------------------------------- -------------------------------
Panama A1
---------------------------------------- -------------------------------
Costa Rica A2
---------------------------------------- -------------------------------
El Salvador A3
---------------------------------------- -------------------------------
Guatemala A4
---------------------------------------- -------------------------------
Honduras A5
---------------------------------------- -------------------------------
Nicaragua A6
---------------------------------------- -------------------------------
5
For Panama, the quote described in the attached Exhibit "A1" is a
budgetary quote that will be changed for the final Panamanian Initial
System's Firm Quote.
INTERCONNECT CARRIER
Any local carrier, long distance carrier, or reseller of local or long
distance communicating service that is connected to the System.
INTERCONNECT FACILITIES
The medium connecting the iDEN Network Interconnect Switch to the
public switched telephone network or long distance carrier network of
any Interconnect Carrier including termination facilities such as
protected termination blocks, end office termination repeaters and
channel service units to permit direct connection to the System.
MOTOROLA QUOTATION
Quotations issued by Motorola for Equipment or Services that are not in
the Price Book or require customization or deviate in any respect from
standard product or service offering detailed in the Price Book.
OPERATION AND MAINTENANCE SERVICE
Operation and Maintenance Service shall have the meaning set forth in
section 4.19.
PRICE BOOK
Motorola's iDEN(R) INFRASTRUCTURE PRICE BOOK, which is kept by Motorola
on the iDEN web site for use in the United States and worldwide, as
appropriate, and updated periodically by Motorola.
PUNCHLIST
The list, prepared during and after the ATP and finalized no later than
14 days subsequent to the date of Conditional Acceptance, which sets
forth those items, if any, identified by Customer in good faith and
agreed to by Motorola (which agreement Motorola shall not unreasonably
withhold or delay) where the Initial System or System Expansion or
Expansion Product fail to comply with the applicable specifications and
performance standards set forth in Exhibit "B" and the ATP.
PURCHASE ORDER
A "Purchase Order" is a form whereby Customer places an order for
Equipment, Software, and/or other goods and services upon Motorola for
the System on a form
6
provided either by Customer or by Motorola, provided that a Purchase
Order in proper form and executed by Customer becomes effective upon
acceptance by Motorola.
RF
Radio Frequency.
SITE
Each of the physical locations comprising the System, which contains
FNE, including the geographic location that houses the iDEN mobile
switching office equipment.
SMP
The Software Maintenance Program defined in Exhibit "E-2".
SOFTWARE
Software means the object-code computer programs furnished by Motorola
to Customer for use solely in conjunction with the FNE under the terms
of the Software License attached hereto as Exhibit F. A further
definition of Software is contained in Exhibit "F". Any reference
herein to Software being "sold" or "purchased" shall in fact be deemed
to be a reference to Software being "licensed."
SPECTRUM REGULATORY AGENCY
"Spectrum Regulatory Agency" shall mean the agency of the Government of
each of the countries of the Area responsible for radio communications
administration and regulation.
SUBSCRIBER
A person who uses the System entitling the System operator to revenue,
other than those using the System during the Customer Performance Test
described in Section 5.9 of Exhibit C.
SUBSCRIBER UNIT
Any manufactured and assembled, mobile or portable, iDEN
telecommunications unit intended for use by any Subscriber.
SYSTEM
A "System" shall be defined as a specified grouping of Equipment,
Software and related services supplied by or through Motorola, which
operates as a digital mobile network to
7
provide mobile integrated services for a country in the Area utilizing
the iDEN technology platform.
TECHNICAL DEFINITIONS
The definitions set forth in Exhibit "B" shall have the same meaning
herein.
2.0 SCOPE OF AGREEMENT: PROVISION, TERM, PURCHASE ORDERS
2.1.1 [Confidential portions omitted and filed separately with the
Securities and Exchange Commission pursuant to an
application for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.]
2.1.2 [Confidential portions omitted and filed separately with the
Securities and Exchange Commission pursuant to an
application for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.]
2.2 Sole Supplier
In consideration of the benefits and other consideration
granted Customer herein, Motorola will be the sole supplier of
FNE, Software and services for Customer's iDEN System(s). At
any time, if Motorola is no longer the sole supplier, the
parties shall renegotiate all pricing hereunder.
2.3 Term
The initial term of this Agreement shall commence on the date
of its execution and shall continue until five (5) years after
such date. Thereafter, the Agreement may be extended for
additional terms of three (3) years upon a party providing
written notice to the other party at least ninety (90) days
prior to the expiration of the then-current term or any
renewal thereof.
2.4 Customer shall order Equipment, Software, Services, and System
or Expansion Product on Purchase Order(s), provided, however,
that Customer agrees that any such documents incorporates this
Agreement by reference and that this Agreement supersedes all
terms and conditions of such document. Purchase Orders shall
identify quantities of goods and/or services ordered and shall
include shipping dates and/or shipping locations. All prices
shall be as set forth in the then current Price Book or as
specifically provided by Motorola in a referenced Motorola
Quotation.
Standard Equipment order lead times and installation period
shall be as set forth in the Price Book, as modified by
Motorola from time to time. If a Purchase Order makes
reference to a valid Motorola Quotation, such Motorola
Quotation shall become incorporated into such Purchase Order
when the latter becomes effective.
2.5 Order Process
8
Purchase Orders for Price Book items may be completed by
Customer without the need for input from Motorola. Receipt of
Purchase Orders will be acknowledged by Motorola. Non-Price
Book items require a Motorola Quotation.
Customer shall review all documents of a Motorola Quotation
and indicate its acceptance by signing and returning an
executed copy to Motorola or shall work with Motorola to
achieve mutually acceptable revisions to the proposal, after
which both parties shall execute such revised proposal.
2.6 Changes in Purchase Orders
(a) Purchase Order Modification. Any modification after such
Purchase Order has been accepted by Motorola other than
cancellation shall be made only by written mutual
agreement accompanied by a revised or replacement Purchase
Order executed by Customer, except for the type of changes
set forth below ("Purchase Order Adjustments"):
(i) Changes to Customer requested ship dates,
not to exceed ninety (90) days extension;
(ii) Changes to shipping locations to an
alternate authorized Customer location.
(iii) Changes to the initial Purchase Order for
Panama to adjust it to the Panamanian
Initial System's Firm Quote.
Purchase Order Adjustments may be made by agreement of the
parties, provided that such agreement is confirmed via
contemporaneous faxed or emailed confirmations exchanged
between the parties.
(b) Purchase Order Cancellation. Customer may cancel a
Purchase Order, without charge up to thirty (30) days
after the date of the Purchase Order, provided that
shipment has not occurred. In other cases and unless
otherwise specified in a Motorola Quotation, cancellation
fees shall apply. For the MSO/switch, within the forty
five (45) days following the Customer's cancellation
notice, Motorola will offer for sale the MSO/switch to
other customers. In the event no third party is interested
in purchasing the MSO/Switch, a cancellation fee of one
hundred percent (100%) of the price of the MSO/Switch
shall apply. For EBTS Equipment, within the forty five
(45) days following the Customer's cancellation notice,
Motorola will offer for sale the EBTS Equipment to other
customers. In the event no third party is interested in
purchasing the EBTS Equipment, a cancellation fee of
ninety percent (90%) of the price of the EBTS Equipment
shall apply.
9
2.7 Motorola and Customer shall each appoint a Program Manager for
each System. Each such System Program Manager shall have the
responsibility to make good faith efforts to resolve problems
and disputes prior to initiating the dispute resolution
procedures set forth in Section 29.0 Disputes, Dispute
Resolution and Arbitration. Other responsibilities are as
follows:
2.7.1 The responsibilities of the Motorola Program Manager
shall include:
a. Serve as the primary Customer contact for
the System.
b. Serve as the focal point for all Motorola
internal plant and field issues.
c. Deliveries, subcontracts, installation,
System testing and integration,
documentation, training and all duties
required to coordinate any work of the
various Motorola team members required by
the Customer.
d. Clarify the final definition of all Customer
and project requirements.
e. Establish a detailed project schedule and
oversee accomplishment of project
milestones.
f. Establish the project team structure and
staffing.
g. Establish and maintain project reporting and
measurement procedures.
h. Meet regularly with Customer's Program
Manager to review progress and project
issues.
i. Facilitate within Motorola Customer's order
placement and order acceptance procedures.
2.7.2 The responsibilities of the Customer Program Manager
shall include:
a. Serve as primary Motorola contact for the
System.
b. Serve as the focal point for all Customer
internal and field issues.
c. Schedule and oversee accomplishment of
project milestones.
d. Review and approve accomplishment of project
milestones.
e. Disseminate project reports and measurement
procedures within Customer's organization.
f. Approve all modifications to specifications.
10
g. Approve and acquire all Sites, notify the
Motorola Program Manager of Site
availability, and coordinate Motorola's
access to the Sites.
h. Meet regularly with the Motorola Program
Manager to review progress and project
issues.
2.8 Additional Operating Entities
Customer intends to deploy iDEN in specific countries of the
Area, either directly or through operating companies,
subsidiaries or partnerships in which it holds at least 51%
interest ("Additional Operating Entity" or "AOE"). Motorola
and Customer agree that an Additional Operating Entity may
take advantage of the rights, and be responsible for the
representations, duties and obligations, of the Customer for a
particular country of the Area under this Agreement once an
amendment to this Agreement in the form of Exhibit "I",
attached hereto, is executed between Motorola, Customer and
the Additional Operating Entity. The Panamanian AOE will sign
Exhibit "I" by November 15, 2000; other AOEs will sign Exhibit
"I" within 90 days from the placement of its country's Initial
System Purchase Order. Not complying with this requirement
will terminate the Preferred Deployment or Headstart benefit
described in Section 2.9.
2.9 Preferred Deployment
2.9.1. "Preferred Deployment" means that, in a specific
country in the Area, Motorola guarantees Customer
priority production, manufacturing and delivery of
the totality of its Initial System Purchase Order
related to iDEN Systems before initiation of work for
any purchase orders in such specific country in the
Area of any other interested party related to iDEN
Systems, including Harmony System.
2.9.2 The purpose of Preferred Deployment is to maximize
the deployment and operation of the iDEN System by
establishing an adequate contractual balance between
the parties to assure Customer's development of such
System in the most efficient and expeditious manner
in order to extend to end users the benefits of the
iDEN technology.
2.9.3. "Headstart" means that in a specific country in the
Area, and for a certain period of time, Motorola
agrees not to put into Commercial Service an iDEN
System, other than Customer's, or a Harmony System.
11
2.9.4. The Sale, by Motorola, of iDEN System for private or
governmental use is not limited under the Preferred
Deployment or under the Headstart term.
2.9.5. The Preferred Deployment and the Headstart for the
Area (i) are contingent upon the approval, by August
22, 2000, of the resolution of the Board of Directors
of Tricom, S.A. whereby an iDEN project for the Area
and funding to initiate such project are confirmed,
and (ii) are subject to relevant laws of the
countries where the Preferred Deployment or the
Headstart is granted. Certified copy of the
resolution shall be delivered to Motorola by August
30, 2000.
2.9.6. The Preferred Deployment for Panama starts from the
date of the Purchase Order of the Initial System for
Panama but is contingent upon (i) the execution of
this Agreement, (ii) the execution of Exhibit "I" by
the Panamanian AOE, by November 15, 2000, and (iii)
the placement, concurrent with this Agreement, of a
firm Purchase Order for all the Equipment, Software
and Services for the Initial System of Panama as set
forth in Exhibit "A1", and the Purchase Order
resulting from the Purchase Order Adjustment
submitted by Customer to Motorola in the terms
indicated in Section 2.6.a.(iii), all, except for
(ii), by September 15, 2000. Cancellation of such
Purchase Order resulting from the Purchase Order
Adjustment, or its reduction to less than 75% of the
value of the budgetary quote included herein as
Exhibit "A1" will immediately terminate the Preferred
Deployment. Further, the Preferred Deployment will
terminate upon the earlier of (i) commencement by
Customer of Commercial Service in Panama, or (ii)
twenty four (24) months from the execution of this
Agreement.
2.9.7. The Preferred Deployment for Costa Rica starts from
the date of the Purchase Order of the Initial System
for Costa Rica but is contingent upon (i) the
execution of this Agreement, (ii) the execution of
Exhibit "I" by the Costa Rican AOE, within ninety
(90) days from the date of the Purchase Order
mentioned in (iii) below, and (iii) the placement of
a firm Purchase Order for all the Equipment, Software
and Services for the Initial System of Costa Rica as
set forth in Exhibit "A2", all within the following
nine (9) months from the Effective Date. Cancellation
of such Purchase Order, or its reduction to less than
75% of its initial value will immediately terminate
the Preferred Deployment. Additionally, the Preferred
Deployment will terminate upon the earlier of (i)
commencement by Customer of Commercial Service in
Costa Rica, or (ii) 24 months from the date of the
Purchase Order of the Initial System for Costa Rica.
Further, the sale of Harmony Systems in Costa Rica to
Motorola's affiliates is not subject to this
Preferred Deployment.
12
2.9.8. With respect to each of Guatemala, El Salvador,
Nicaragua and Honduras, Motorola grants a Headstart
until 24 months from the date of the Purchase Order
of the Initial System for each country, for any other
customer in each of those countries other than Tricom
or any corresponding AOE, which Headstart is
contingent upon the following conditions being met:
(i) the execution of this Agreement, (ii) the
execution of Exhibit I by the corresponding AOE,
within ninety (90) days from the date of the Purchase
Order mentioned in (iii) below, (iii) the placement
of a firm Purchase Order for all the Equipment,
Software and Services for the Initial System of the
corresponding country as set forth in the
corresponding Exhibit "A", all within the following
nine months from the Effective Date. Cancellation of
such Purchase Order, or its reduction to less than
75% of its initial value will immediately release
Motorola from the obligation set forth in this
Section.
2.9.9. The above benefits are subject to Section 12.2 below.
However, the parties understand and agree that, if
required, the information related to Preferred
Deployment and Headstart will be disclosed to
financial institutions and potential Tricom's
investors and partners. Customer shall inform any
such third party of the confidential nature of the
information being disclosed.
3.0 OBLIGATIONS OF CUSTOMER
Customer shall:
3.1 Design the RF coverage plan and frequency plan for each
country in the Area including but not limited to Site
location, frequencies at each Site, RF coverage from each
Site, co-channel interference caused from one Site to another
Site, co-channel interference from non-Customer sites.
3.2 Procure necessary Spectrum Regulatory Agency radio station
licenses together with such other authorizations as may be
required to construct and operate the System, including
without implied limitation, Site building permits, zoning
variances, and any other required approval or authorizations
from appropriate government and other authorities, and any
required authorizations from any local agencies.
3.3 Make all legal arrangements and pay all expenses, that may be
required, to Site owners or to others, to construct and
operate each Site in accordance with the provisions of this
Agreement.
3.4 Bear the costs of its own legal fees, as well as provisional
charges for Site acquisition, Interconnect Facilities,
telephone and utility charges and other services and items
being supplied by Customer under this Agreement. To the
13
extent possible, provide unrestricted ingress and egress to
Sites, as requested by Motorola, and have Sites available for
timely installation of System Equipment.
3.5 Negotiate in good faith the Implementation Schedule and adhere
to the schedule for performance of the responsibilities set
forth therein.
3.6 Negotiate in good faith the Punchlist for the System or System
Expansion and Expansion Product prior to the expiration of the
fourteen (14) day period following the date of Conditional
Acceptance.
3.7 Not unreasonably withhold either Conditional or Final
Acceptance or any other approvals required under this
Agreement.
3.8 Assume responsibility for diagnosis, analysis, isolation, and
remedy of problems in the Interconnect Facilities or at the
Interconnect Carrier side of the interface with the System.
3.9 Furnish necessary databases to Motorola in accordance with the
Implementation Schedule.
3.10 Make payments according to the schedule set forth in Section
6.0 of this Agreement.
3.11 Assume responsibility for lawful operation of the System.
3.12 Be responsible for the provisional exercise of timely
transportation of all Equipment from the FCA shipment point to
covered storage areas at the sites.
3.13 Provide and assume all associated costs for warehousing,
storage, inventory, and staging of Equipment prior to
transport to the installation sites.
3.14 Within 30 days after the execution date of any Motorola
Quotation, or at such time as may be agreed by the parties,
make available the technical details of any and all
Customer-supplied equipment to which the System must be
interfaced. Also provide technical liaison personnel on a
full-time basis with the knowledge of Customer-supplied
equipment. Furnish and install suitable environmental control
facilities in each building. Provide telephone company network
configuration including dial plan and design.
3.15 Provide any outside cable support bridges required, coaxial,
and transmission line access ports into the buildings, inside
conduit or cable ducts, any necessary inside floor trenches
and cable raceways required for installation.
3.16 Provide insurance coverage for all Equipment from FCA point.
14
3.17 In response to Motorola's reasonable request, provide Motorola
with information as reasonably known to the Customer which may
be required to enable Motorola to comply with all applicable
laws and regulations.
3.18 As required purchase or provide the services set forth in
Exhibit "D". Provide all Site development services and
engineering drawings as set forth in Exhibit "D", in order to
enable Motorola to install and integrate the System in
accordance with the agreed upon schedule set forth in the
Implementation Schedule.
3.19 Provide capable technical personnel in order to be trained in
the operation and maintenance of the System and to interface
with Motorola with regard to operational and maintenance
issues.
3.20 Perform all other obligations set forth in this Agreement and
any other agreement delivered in connection herewith.
3.21 In its discretion, periodically provide forecasts in good
faith for Equipment and Services.
3.22 Provide Motorola with reasonable notice of any anticipated
delay in Customer's performance hereunder.
4.0 OBLIGATIONS OF MOTOROLA
Motorola shall:
4.1 Determine the required material, effort, and services
necessary for installation and integration. Negotiate in good
faith Implementation Schedules and perform according to such
Schedules.
4.2 Negotiate in good faith the Punchlist for the System or System
Expansion and Expansion Product prior to the expiration of the
fourteen (14) day period following the date of each respective
Conditional Acceptance.
4.3 Install the switching Equipment and adjust the System or
Expansion Product to the standards set out in Exhibits "B" and
"C" and in compliance with Exhibit "D".
4.4 Keep Customer advised of modifications required, as soon as
such modifications are determined to be required by Motorola.
4.5 Provide, at a reasonable cost to Customer, a retrofit package
for any change in standards subsequently put into effect by
the industry, the government, regulatory agencies, as well as
those promulgated by Motorola.
15
4.6 Continue to develop operability and reliability improvements
to iDEN technology over time and continue to develop and
implement new feature functionalities agreed to by the parties
throughout the term of the Agreement.
4.7 Make spares and replacement parts available for seven (7)
years from the date of this Agreement. Motorola reserves the
right to substitute equivalent products. Spare and replacement
parts prices shall be at the then current Motorola prices.
4.8 Install and integrate the System or System Expansion and
Expansion Product in compliance with all applicable federal,
state and local laws and all rules and regulations promulgated
pursuant thereto including all Spectrum Regulatory Agency
approvals and certifications.
4.9 To accept properly documented Customer's orders, to make
timely delivery and to install and integrate the System or
System Expansion according to the Schedule set forth in the
Implementation Schedule.
4.10 To remedy all Punchlist items, defects and problems during the
warranty and maintenance periods.
4.11 In response to Customer's reasonable request, provide Customer
with information as reasonably known to Motorola which may be
required to enable Customer to comply with all applicable laws
and regulations.
4.12 Use skilled personnel, competent to perform assigned tasks and
take all actions necessary to avoid the turn-over of the
Project Manager and key skilled personnel.
4.13 Perform all other obligations set forth in this Agreement and
any other agreement delivered in connection herewith.
4.14 Upon Motorola's determination of any delay, provide Customer
with verbal notice, with written confirmation, of any
anticipated delay in Motorola's performance hereunder.
4.15 Prior to shipment Motorola will obtain type approval for any
Equipment sold herein that requires type approval in the Area.
4.16 For any new product development Motorola shall propose special
terms and conditions associated with the purchase of such new
product for the parties' approval.
4.17 All equipment sold to Customer hereunder is new and Motorola
will provide any documents which may be reasonably requested
by Customer evidencing this fact.
16
4.18 At the time or times contemplated herein for the transfer of
title to any equipment included in the System, Motorola shall
convey to Customer all right in and good title, free and clear
of any encumbrances of any type, to such equipment by
appropriate title documents. Title to Software shall not be
conveyed to Customer at any time.
4.19 Upon Customer's request, provide the operation and maintenance
service. Customer agrees to receive and Motorola agrees to
perform operation and maintenance services ("Operation and
Maintenance Services") consisting of local engineering support
to Customer in addition to the selected MSO warranty for a
period of sixteen (16) months from Conditional Acceptance for
the price set forth in the corresponding Exhibit A. Operation
and Maintenance Service shall include, without limitation, (i)
aid in troubleshooting switch and EBTS issues, (ii) at least
one monthly meeting between Motorola's operation and
maintenance personnel and Customer's technical administration,
(iii) ongoing evaluation of Customer's personnel and
indication of Motorola's view of whether Customer's technical
staff have the knowledge and skill level to operate the
System(s) after the term of these Operation and Maintenance
Services expires, (iv) telephone support to troubleshoot
issues for the Panamanian MSO and EBTS sites, (v) Motorola's
operation and maintenance personnel availability on MSO site
during Customer's normal working hours (the equivalent of 8:00
am to 5:00 pm, USA Eastern Standard time), Monday through
Friday, (vi) Motorola's operation and maintenance personnel
emergency availability on MSO site after working hours, seven
days a week, including holidays. It is understood by the
parties that in the event Customer's personnel cannot solve a
problem in an EBTS site, Motorola's operation and maintenance
personnel will be available seven (7) days a week, including
holidays, to accompany Customer's personnel to the EBTS site.
Any cost associated with the rendering of this service will be
covered by Customer, including without limitation, the
transportation to the sites, hotel, meals, etc., and (vii) any
other operation and maintenance services mutually agreed upon
by the parties.
Customer may, at its option, purchase Operation and
Maintenance Services on a quarterly basis after the twelve
(12) month period specified in the paragraph above expires and
Motorola agrees to provide a quote for such additional
quarterly services upon Customer's written request.
4.20 Motorola shall provide Customer with written guidance with
respect to an organizational chart of the technical
organization required to operate the iDEN System, the profile
of the personnel required, and a short job description.
17
5.0 SITE CONFIGURATIONS
This Agreement, and the prices provided in the Price Book or Motorola
Quotation, are predicated on the use of certain Site configurations
provided by Customer. Customer is free to alter Site configurations
during the course of performance of this Agreement. However, changes in
site configurations may result in either increased or decreased costs
for RF equipment and/or other related FNE.
6.0 GENERAL PRICING PROVISIONS; EXHIBITS
6.1 The Price Book contains standard lead times (which are updated
as market conditions change) and expedite fees which are
incorporated by reference herein. Motorola does not warrant
that lead times can be moved in. At times Motorola can move in
such lead times by paying Motorola's suppliers expedite fees,
paying for overtime or other methods. If Motorola is requested
to perform in such times Customer shall pay the expedite fees
set forth in the Price Book. The lead times set forth in the
Price Book will be shown for both cases where the product is
forecasted and when it is not forecasted.
6.2 Motorola, from time to time, may set account credit limits for
the Customer and notify Customer of such limits.
6.3 Changes in Exhibit "A"
Notwithstanding the fact that Customer has made firm
orders for Equipment and Service, the parties agree
that Customer may without charge or penalty modify,
pursuant to a Change Order, the specific Equipment
and Services ordered herenunder subject to the below:
a. All changes must be made thirteen (13) weeks
in advance of the ship date shown in the
agreed upon project schedule, as modified
hereafter; and
b. The total dollar value of Equipment and
Services (excluding RF ancillary items) set
forth in Exhibit "A" may not be reduced to
less than 75% of such dollar amount.
Motorola shall notify Customer's bank of any
reduction for purposes of Letter of Credit
adjustment.
c. The decision to delete categories of RF
ancillary products must be made within
ninety (90) days of the execution of this
Agreement.
6.4 The licensing fee for Software is set forth in the Price Book
and included in the Software prices set forth in Exhibit "A".
Subsequent purchases of Equipment, increases to capacity, SMP
renewals or new features may require new license fees,
18
as set forth in the Price Book or as specifically proposed by
Motorola. The software IPL pricing offered Customer is valid
only for the purchase of Hardware and Software as a package
from Motorola. If any Motorola iDEN FNE hardware is purchased
directly from a third party source, the IPL fee set forth in
the Price Book shall be charged in addition to any applicable
fees.
6.5 Customer shall pay for any training ordered by the Customer
per the Price Book and other appropriate agreements. A three
(3) year training price will be included in the Panamanian
Initial System's Firm Quote.
6.6 Subject to the conditions contained in Section 4, any costs
required to modify the System in order to comply with local
codes or regulations shall be Customer's responsibility.
6.7 For any amount due hereunder which remains unpaid, the
Customer shall pay Motorola a service fee at the rate of one
percent (1%) of the amount due for each month, or portion
thereof, that the amount remains unpaid.
6.8 Customer shall be responsible for the payment of all
applicable sales, use, retailer's occupation, excise, property
and other assessments in the nature of taxes, however,
designated, on the Deliverables and Services provided to
Customer pursuant to this Agreement, exclusive, however, of
any taxes measured by Seller's net income or based on Seller's
franchise. Personal property taxes assessable on the
Deliverables shall be the responsibility of Customer. To the
extent Motorola is required by law to collect such taxes
(state or local), one hundred percent (100%) thereof shall be
added to invoices as separately stated charges and paid in
full by customer, unless the Customer is exempt from such
taxes and furnishes Motorola with a certificate of exemption
in a form reasonably acceptable to Motorola. In the event
Customer claims exemption from sales, use or other such taxes
under this Agreement, Customer agrees to hold Motorola
harmless from any and all subsequent assessments levied by a
proper taxing authority for such taxes, including interest,
penalties and late charges.
6.9 Customer agrees to pay all freight costs from point of
shipment and all applicable duties, customs charges, tasa
aeroportuaria and other costs associated with nationalization
of the equipment on a "prepay and add" basis.
7.0 PAYMENT
Customer shall pay to Motorola the price of the Initial System and
related services, as set forth in the applicable Exhibit "A" or
Purchase Order in U.S. dollars, and according to the following terms
and payment schedules:
7.1 General Payment Terms
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Payment for Equipment and Services to Motorola shall be made
in U.S. dollars either by wire/telegraphic transfer or through
the medium of a confirmed and irrevocable Letter of Credit,
permitting partial and transshipments no later than thirty
(30) days after the date of invoice.
7.1.1 Letter of Credit
At the placement of the Purchase Order for the
corresponding Initial System, Customer shall issue
one (1) or two (2) confirmed and irrevocable Letters
of Credit made out in favor of Motorola, Inc., 1301
East Algonquin Road Schaumburg, Illinois 60196 USA,
and payable at the counters of BankOne Chicago.
Drafts are to be drawn upon BankOne Chicago, Chicago,
Illinois, USA and full reimbursement instructions
must be provided to the U.S. bank by the opening bank
at the time the Letter(s) of Credit is(are) opened.
In the event one Letter of Credit is opened, such
Letter of Credit shall be in the amount of one ninety
percent (90%) of the value of the corresponding
Initial System as described in appropriate Exhibit
"A" or Purchase Order amount, as applicable, and its
validity shall be as follows:
a) 70% for a period of one (1) year from the
date of issuance; and
b) 20% for a period of two (2) years from the
date of issuance.
This Letter of Credit shall be issued at latest
seventy two (72) business hours from the placement of
the Initial System's Purchase Order. It is understood
that Motorola will not accept this Purchase Order
until this Letter of Credit is issued.
Further, this Letter of Credit shall be drawn down as
follows:
a) Seventy percent (70%) of the commercial invoice
gross value of the Equipment shipped is payable
after each shipment, from the portion that is
valid for one (1) year;
b) Fifteen percent (15%) of commercial invoice
gross value is payable after presentation of
the Conditional Acceptance Certificate, from
the portion that is valid for two (2) years;
c) Five percent (5%) of the commercial invoice
gross value is payable after presentation of
the Final Acceptance Certificate, from the
portion that is valid for two (2) years.
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In the event two (2) Letters of Credit are opened,
one Letter of Credit shall be in the amount of
seventy percent (70%) of the value of the
corresponding Initial System as described in the
appropriate Exhibit "A" or Purchase Order amount, as
applicable, and shall be valid for a period of one
(1) year from the date of issuance, which shall
occurred at latest seventy two (72) business hours
from the placement of the Initial System's Purchase
Order. It is understood that Motorola will not accept
this Purchase Order until this Letter of Credit is
issued. This Letter of Credit will be drawn down upon
shipments are made and for the amount of each
shipment.
The second Letter of Credit shall be in the amount of
twenty percent (20%) of the value of the
corresponding Initial System as described in the
appropriate Exhibit "A" or Purchase Order amount, as
applicable, and shall be valid for a period of two
(2) years from the date of issuance, which shall
occurred at latest seventy two (72) business hours
from the placement of the Initial System's Purchase
Order. It is understood that Motorola will not accept
this Purchase Order until this Letter of Credit is
issued.
This Letter of Credit shall be drawn down as follows:
a) Fifteen percent (15%) of commercial invoice
gross value is payable after presentation of
the Conditional Acceptance Certificate.
b) Five percent (5%) of the commercial invoice
gross value is payable after presentation of
the Final Acceptance Certificate.
If Motorola is prevented from obtaining Conditional
Acceptance by the scheduled date of Conditional
Acceptance because Customer has not completed its
obligations hereunder (except as provided in Section
18), Motorola shall provide Customer with written
notice of the obligations Customer must fulfill and
allow Customer a twenty (20) day period to cure any
failure to fulfill its obligations (the "Cure
Period"). If such failure continues for ten (10) days
from the end of the Cure Period, Motorola shall be
entitled to receive the final payments, described in
a and b above, as if Conditional Acceptance had
occurred as scheduled.
Banking charges incurred by the opening bank shall be
borne by Customer and those incurred by the U.S. bank
(BankOne) shall be borne by Motorola.
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7.1.2 The licensing fee for Software, licensed as set out
in Exhibit "F" and provided for use with the System,
is set forth in Exhibit "A".
7.1.3 Customs clearance, or related costs pertaining to
import of the proposed equipment and software are the
responsibility of Customer. No such costs have been
included in Motorola's pricing.
7.1.4 Any costs required to modify the System in order to
comply with local codes or regulations shall be
Customer's responsibility.
7.2 Specific Payment Terms
7.2.1 Advance Payment
Customer agrees to remit, a non-refundable advance
payment of 10% of the total amount of each Initial
System's Purchase Order, on the same date such
Purchase Order is placed. The start date for the
Implementation Schedule shall be the date of receipt
of this payment. Each advance payment shall be made
by wire/telegraphic transfer to the following
address:
Citibank, New York
Routing No.: 021000089
Account No.: 38492274
In the event Customer does not proceed with its
obligations set forth in 7.1.1, under this Agreement
(subject to Section 18) in a timely manner, and such
failure continues for thirty (30) days following
written notice by Motorola to Customer that Motorola
intends to proceed under this Section, Motorola shall
promptly document its non-recoverable costs directly
incurred in the performance of this Agreement, such
as, but not limited to staff hours, travel expenses,
equipment re-stocking charges, etc. In the event such
non-recoverable costs exceed the amount of the
advance payment, Customer will pay Motorola the
difference.
7.2.2 Payment of Balance Due
Customer shall be invoiced seventy percent (70%) of
the Commercial invoice gross value of Equipment on
shipment. Fifteen percent (15%) of the commercial
invoice gross value of Equipment is due upon
Conditional Acceptance and the five percent (5%)
balance due upon Final Acceptance. Services and
Training balances are invoiced upon completion.
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7.2.3 Payment for Expansion Product
Customer shall be invoiced one hundred percent (100%)
of the commercial invoice gross value of Expansion
Product on shipment. Customer must pay within thirty
(30) days from the invoice date.
8.0 WARRANTY AND SOFTWARE MAINTENANCE PROGRAM
8.1 Motorola-manufactured Hardware Warranty
8.1.1 FNE manufactured by Motorola is warranted to be free
from defects in material and workmanship at time of
shipment and will be warranted for a period of twelve
(12) months from the date of shipment (for Initial
Systems, twelve (12) months from Initial System
Conditional Acceptance). The Exhibit "A" price of the
EBTS Equipment hardware warranty during the warranty
period shall be Two Percent (2%) of the net EBTS
Equipment price for all shipments that occur during
the effective dates of this Agreement. All other
warranty charges shall be as per the Price Book.
Parts will be repaired at the Motorola repair depot
or replaced at no charge for the full warranty
period, except as outlined herein.
8.1.2 Customer shall be responsible for the initial level
of diagnosis (i.e., for identification and isolation
of FNE hardware problems to the board level), for
hardware, firmware and software removal and
replacement, and for sending the malfunctioning
product, packed in a manner to prevent damage, to the
designated Motorola repair depot. Customer shall be
responsible for associated shipping charges to
Motorola's repair depot. When such products or their
replacements are being returned to Customer, Motorola
shall bear such charges.
8.1.3 Parts and labor at the Motorola repair depot to
repair or replace defective FNE will be provided at
no charge for the full warranty period except as
outlined in 8.1.1 above.
8.1.4 In the event a defect occurs during the warranty
period Motorola, at its option, and as Customer's
sole remedy, will either repair or replace the
product. Any item replaced will be deemed to be on an
exchange basis, and any item retained by Motorola
through replacement will become the property of
Motorola. Repaired or replaced parts shall have a
warranty of the greater of the remainder of this
warranty period or sixty (60) days.
8.2 This Warranty DOES NOT COVER defects, damage, or malfunctions
resulting from:
8.2.1 Use of the products in other than their normal and
customary manner.
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8.2.2 Misuse, accident, neglect, environmental or Site
conditions not conforming to the specifications for
the product as set out in the current Equipment
specifications, or unauthorized access to source or
object code or manipulation of Software elements.
8.2.3 Unauthorized alterations or repairs, use of
un-approved parts in the products or the combination
or interfacing of the products, use of "gray market"
parts or components, in each case in a manner not
approved by Motorola. "Gray market" components or
parts are those components or parts purchased (a)
outside the United States or (b) from unauthorized
sellers of such components or parts.
8.2.4 An event of Force Majeure.
8.2.5 Installation, integration, or movement of products
from their original installation Site that is not in
accordance with Motorola hardware configuration and
datafill guidelines.
8.2.6 Failure of antennas, lines, or any part of the
Interconnect Facilities.
8.2.7 Failure of Customer to maintain or provide
maintenance for the System pursuant to Motorola
Equipment and Software maintenance agreements, or
other maintenance, substantially in accordance with
the Documentation and under the supervision of one or
more individuals who shall have completed appropriate
Motorola training.
8.2.8 Damage which occurs during shipment of the product to
Motorola for warranty repair.
8.3 Except as associated with an agreed-to assignment, this
express warranty is extended by Motorola, Inc. to Customer
only and is valid only in the Area.
8.4 Software Warranty - This warranty shall be applicable to
Software associated with the Motorola-Manufactured Equipment
purchased in connection with the iDEN System.
8.4.1 WARRANTY. Motorola warrants that each Software
Release provided in connection with
Motorola-Manufactured Equipment shall conform to the
specifications set forth in the relevant Exhibit B-1,
as it exists on the warranty commencement date.
Motorola does not warrant that: (i) operation of any
Software shall be uninterrupted or error free; and
(ii) functions contained in the Software shall
operate in the combination which may be selected for
use by Customer or meet Customer's requirements.
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8.4.2 TERM. The warranty set forth in Section 8.4.1 above
shall commence on the date Software Release is loaded
onto the relevant Network Element and shall terminate
the earlier of (i) twelve (12) months from such date;
or (ii) ninety (90) days from General Availability of
the subsequent Software Release for such Network
Element.
8.4.3 CUSTOMER OBLIGATIONS. Customer will be responsible
for the first level of maintenance, including but not
limited to, diagnosis and isolation of reproducible
Software malfunctions, provided, however, that such
first echelon diagnosis shall be required only to the
extent Customer can reasonably be expected to perform
given its Documentation and the training available to
Customer's personnel. Motorola shall provide Customer
with any reasonably requested aid in performing such
diagnosis, provided Motorola may charge for such aid
if it constitutes first echelon diagnosis that is
Customer's responsibility. In the event of Software
malfunction, Customer shall notify Motorola promptly,
followed by written confirmation of such notice.
Motorola will acknowledge receipt of notice of
verified Software malfunctions.
8.4.4 MOTOROLA'S OBLIGATIONS. Motorola's sole obligations
under this warranty and Customer's sole remedy are as
follows: Motorola shall make the required code
changes to the Software Release such that it conforms
to the relevant specifications and is free from
reproducible defects. Such Software code fixes may be
provided as a Point Release, Software Update or Patch
Tape, or as part of a subsequent Software Release.
The inclusion of a Software fix in subsequent
Software Release, however, does not entitle Customer
to receipt of such Software Release for free.
8.4.5 LIMITATION. THIS WARRANTY APPLIES ONLY TO THE
SOFTWARE IN THE FORM PROVIDED BY MOTOROLA.
Modifications, attempted modifications or additions
to such Software by any party other than Motorola
shall void the obligations of Motorola under this
warranty.
8.4.6 OWNERSHIP OF SOFTWARE. Failure by Motorola to provide
support under this warranty shall not be construed as
conveying any rights or ownership in Software.
8.5 Software Maintenance Program (SMP)
8.5.1 Customer commits to purchase SMP on an annual basis
for each year of the term of this Agreement for all
its iDEN Equipment and Software, and Motorola commits
to offer SMP at the prices set forth in the Price
Book for the years set forth therein. Customer shall
pay SMP fees on a quarterly basis. The annual amount
due shall be calculated by taking the total
25
number of subscribers on the Customer System(s) based
on the number of units registered on the DAP/HLR at
the end of the prior year multiplied by the annual
per subscriber rate. The quarterly payment shall be
one-quarter of the calculated annual payment. The
quoted prices are for the services defined in Exhibit
"A". The SMP Agreement shall be evidenced by
Customer's Purchase Order indicating which sections
of said proposal are agreed to by the parties. Any
additional services agreed to by the parties shall
also contain applicable pricing for such services.
8.5.2 Once Motorola's Software Warranty expires for a
Release, all reproducible software defects or bugs
shall be corrected as part of SMP.
8.6 Non-Motorola Manufactured Products
Non-Motorola manufactured products, other than batteries, are
warranted for a period of twelve (12) months from the date of
shipment, except for those non-Motorola manufactured products
that have a longer warranty period, in which case the longer
warranty period shall be extended to Customer, to the extent
provided to Motorola by the manufacturer or supplier of such
product. Motorola does not accept any liability for System
integration or warranty obligation for such separately
purchased hardware or software, and if Motorola is called on
any warranty claim or other service request involving such
hardware or software, Customer shall pay Motorola's standard
service charge for such calls.
8.7 THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE SPECIFICALLY
EXCLUDED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO
EVENT SHALL MOTOROLA BE LIABLE FOR INDIRECT, INCIDENTAL,
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES TO THE FULL EXTENT
SUCH MAY BE DISCLAIMED BY LAW.
MOTOROLA WARRANTS THAT FOR THE TERM OF THIS AGREEMENT THAT THE
INDIVIDUAL FNE PRODUCTS WILL OPERATE TOGETHER AS A SYSTEM
WITHIN GENERAL OPERATING LIMITS SPECIFIED IN EXHIBIT "B", SO
LONG AS THE AVERAGE SUBSCRIBER USAGE CHARACTERISTICS OF THE
INDIVIDUAL FNE PRODUCTS AT BUSY HOUR DO NOT CAUSE THE PEAK
CAPACITY LIMITS OF INDIVIDUAL FNE PRODUCTS TO BE EXCEEDED AND
ANY EQUIPMENT INSTALLED BY THE CUSTOMER WITHOUT MOTOROLA
INTEGRATION AND GATP ASSISTANCE IS INSTALLED IN ACCORDANCE
WITH MOTOROLA HARDWARE CONFIGURATION AND DATAFILL GUIDELINES;
BATTERIES ARE EXCLUDED BUT CARRY THEIR OWN SEPARATE LIMITED
WARRANTY FROM THEIR MANUFACTURER, AS WILL BE
26
DESCRIBED IN EXHIBIT K. MOTOROLA DISCLAIMS LIABILITY FOR RF
COVERAGE UNDER THIS WARRANTY. BATTERY SUPPLIER'S WARRANTY WILL
BECOME EXHIBIT "K."
9.0 PRODUCT CHANGES OR SUBSTITUTIONS
At any time during the performance of this Agreement, Motorola
may implement changes in the products set forth in Exhibit
"B", modify the drawings and specifications relating thereto,
or substitute therefore products of more recent design;
provided, however, that any such changes, modifications or
substitutions, under normal and proper use:
(1) shall not materially or adversely affect
physical or functional interchangeability or
performance (except where there is written
agreement between the parties that the
change can be made after Customer knows the
effect thereof);
(2) shall not detract from the safety of the
product;
(3) shall be acceptable to the Spectrum
Regulatory Agency if required; and
(4) Motorola shall notify Customer of any change
that is not downward compatible.
10.0 DISCLAIMER OF PATENT LICENSE
10.1 Nothing contained in this Agreement shall be deemed to grant,
either directly or by implication, any license under any
patents or patent applications of Motorola, except that
Customer shall have the normal non-exclusive royalty-free
license to use which is implied, or otherwise arises by
operation of law, in the sale of a product.
11.0 INTELLECTUAL PROPERTY INDEMNITY
11.1 Motorola shall defend Customer against a claim that
Motorola-manufactured products or latest unmodified release of
Software supplied hereunder infringe a U.S. patent or
copyright, provided that (i) Customer promptly notifies
Motorola in writing of the claim, (ii) Motorola has sole
control of the defense and all related settlement
negotiations, and (iii) Customer gives Motorola information
and assistance for the defense of all at Motorola's expense
provided, however, that Customer's failure to provide such
notice shall not relieve Motorola of liability under this
Section 11 except to the extent Motorola was prejudiced
thereby. Subject to the conditions and limitations of
liability stated in this Agreement, Motorola shall indemnify
and hold Customer harmless from all payments which
27
by final judgments in such suits may be assessed against
Customer on account of such infringement and shall pay
resulting settlements, costs and damages finally awarded
against Customer by a court of law.
11.2 Customer agrees that if Equipment or Software become, or in
Motorola's opinion are likely to become, the subject of such a
claim, Customer will permit Motorola, at its option and
expense, either to procure the right for Customer to continue
using such Equipment or Software or to replace or modify same
so that they become non-infringing without affecting the
function and capability, and if neither of the foregoing
alternatives is available on terms which are reasonable in
Customer's and Motorola's judgment, Customer can return
Motorola-manufactured products and/or Software for full credit
on the entire unusable portion thereof.
11.3 Motorola has no liability for any claim of patent or copyright
infringement to the extent based upon adherence to
specifications, designs or instructions furnished by Customer,
nor for any claim based upon the combination, operation or use
of any Motorola-manufactured products or Software supplied
hereunder with products, software or data not supplied by
Motorola, nor for any claim to the extent based upon
alteration of the products or modification of any software
supplied by entities other than Motorola.
12.0 CONFIDENTIALITY
12.1 From time to time during the performance of this Agreement,
the parties may deem it necessary to provide each other with
Confidential Information. The parties agree:
12.1.1 To maintain the confidentiality of such Confidential
Information and not disclose same to any third party,
except as authorized by the original disclosing party
in writing, or in connection with a public or private
debt or equity offering of securities, or as required
by law. Such Confidential Information also includes
oral and visual Confidential Information.
12.1.2 To restrict disclosure of Confidential Information to
employees who have a "need to know". Such
Confidential Information shall be handled with the
same degree of care which the receiving party applies
to its own confidential information but in no event
less than reasonable care.
12.1.3 To take precautions necessary and appropriate to
guard the confidentiality of Confidential
Information, including informing its employees and
consultants who handle such Confidential Information
that it is confidential and not to be disclosed to
others and as to all technical consultants obtain a
signed non-disclosure agreement consistent therewith.
28
12.1.4 That Confidential Information is and shall at all
times remain the property of the disclosing party. No
use of any Confidential Information is permitted
except as otherwise provided herein and no grant
under any proprietary rights is hereby given or
intended, including any license implied or otherwise.
12.1.5 To use such Confidential Information only as required
in performance of this Agreement.
12.2 Except as may be required by applicable law, neither party
shall disclose to any third party the contents of this
Agreement, the Exhibits or any amendments hereto or thereto
for a period of two (2) years from the date of execution
hereof without the prior written consent of the other except
as provided for in Section 12.1.1.
13.0 TRADEMARK AND PUBLICITY
Nothing contained in this Agreement shall be construed as conferring
any right to use any name, trademark or other designation of either
party hereto, including any contraction, abbreviation, or simulation of
any of the foregoing, in advertising, publicity or marketing
activities. No publicity, advertising, etc. with regard to this
Agreement or the System which mentions the other party shall be
released without prior written consent of the other party, except as
may be required by law.
14.0 SHIPMENT, DELIVERY AND PACKING
14.1 Motorola may ship products at any time during the "Time Frame"
(the interval between the shipment/implementation date and the
completion date for a particular activity as set forth in the
Implementation Schedule) and may invoice Customer upon
shipment as provided in Section 6 of this Agreement. No
shipment of products during said Time Frame shall be
considered early for purposes of invoicing.
14.2 Customer shall select the carrier and notify Motorola in
writing or instruct Motorola to use the best available carrier
or any carrier as previously used by Customer, unless Customer
notifies Motorola not to use such carrier.
14.3 Motorola shall use all reasonable efforts to ship products
directly to the Site or Customer designated warehouse.
14.4 In the event that the Site or Customer designated warehouse is
not available to receive Equipment because Customer has not
met its obligations hereunder to receive the products when
shipped, Motorola, at its option, may ship said products to a
warehouse in or near the area as designated by Customer, and
Customer shall bear the costs of warehousing, reloading,
transporting, off-loading and moving the products onto the
Site when such Site becomes available.
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14.5 Shipping documentation shall be developed to the mutual
satisfaction of the parties. Shipping terms are FCA
manufacturing site or Motorola facility. The manufacturing
site may be other than a USA facility.
14.6 Motorola shall have the Equipment securely packed so as to
withstand numerous handlings and loading as appropriate for
inland, sea and/or air transportation. Motorola shall take
reasonable protective measures to protect Equipment from
weather and shock, considering the different shapes and
special features of the Equipment.
15.0 TITLE, INDEMNITY, INSURANCE
15.1 Good title, free and clear of all liens or other encumbrances
to the FNE and other Motorola provided products supplied
hereunder and risk of loss for all such products shall pass to
Customer upon delivery FCA point of shipment.
15.2 The above notwithstanding, title to Software and underlying
intellectual property rights (i.e., patents, copyrights,
proprietary and confidential information, and know-how)
belonging to Motorola or any other third party shall remain
with Motorola or such third party. This Agreement only grants
a right to use such Software.
15.3 All Equipment sold to Customer hereunder is new and Motorola
will provide any documents which may be reasonably requested
by Customer evidencing this fact.
15.4 During the term of this Agreement, the parties shall indemnify
and hold harmless each other together with their directors,
officers, agents, employees, affiliates and subsidiaries from
any and all loss, damage, expense, judgment, lien, suit, cause
of action, demand or liability (collectively, "loss") for
personal injury (including death) and tangible property damage
which may be imposed on or incurred by one party arising
directly out of the intentional misconduct or negligent acts
or omissions of the other, its agents, subcontractors, or
employees during the performance of any work hereunder. The
indemnifying party shall, at its sole expense, defend any suit
based upon a claim or cause of action within the foregoing
indemnity provision and satisfy any judgment that may be
rendered against the other resulting therefrom, provided that
the indemnifying party shall be given (i) prompt notice of any
such claim or suit; and (ii) full opportunity to defend such
claim or suit; provided, however, that failure to provide such
notice shall not relieve the indemnifying party of liability
under this Section except to the extent the indemnifying party
was prejudiced thereby. The indemnified party may, at its
election, participate in the defense of any suit, and shall
cooperate fully in defending any claim or suits. The
indemnifying party shall pay all costs, expenses, and
reasonable attorney's fees incurred by the indemnified party
in connection with any such suit or in enforcing this
indemnity provision, provided a valid claim is presented.
30
15.5 Customer and Motorola each shall be named as additional
insured under the other's comprehensive general liability
policy for claims arising out of work performed hereunder
(which includes but is not limited to product and public
liability, property and all risk insurance).
16.0 FORCE MAJEURE - EXCUSABLE DELAY
16.1 Neither party shall be liable for delays in delivery or
performance, or for failure to manufacture, deliver or perform
when caused by any of the following which are beyond the
reasonable control of the delayed party:
16.1.1 Acts of God, acts of the public enemy, acts or
failures to act by the other party, acts of civil or
military authority, governmental priorities and
regulatory actions, strikes or other labor
disturbances, hurricanes, earthquakes, fires, floods,
epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in
transit, or;
16.1.2 Inability on account of causes beyond the reasonable
control of the delayed party or its suppliers to
obtain necessary products, components, services, or
facilities.
16.2 In the event of any such delay, the date of delivery or
performance shall be extended for a period equal to the period
of time lost by reason of the delay. If any such delay lasts
for more than one hundred eighty (180) days, the parties shall
consult with one another for the purpose of agreeing upon the
basis on which the delayed party shall resume work at the end
of the delay. If no reasonable solution to the delay is
available, then either party may, by written notice, cancel
that portion of the Agreement which is delayed, and adjust the
Agreement price appropriately.
17.0 TERMINATION
17.1 Either party may terminate this Agreement without liability by
the giving of notice, in accordance with Section 23, if (i)
the other makes a general assignment for the benefit of
creditors or goes into compulsory or voluntary liquidation,
(ii) if a petition in bankruptcy or under any insolvency law
is filed by or against the other and such petition is not
dismissed within sixty (60) days after it has been filed, or
(iii) the other shall commit any material breach of its
obligations hereunder.
In the case of any material breach, neither party shall
terminate this Agreement unless and until the other shall have
failed to cure such breach within thirty (30)
31
days after it shall have been served with a notice, in
accordance with Section 23, (i) stating the nature of the
breach, (ii) requiring that the breach be cured, and (iii)
stating its intention to terminate the Agreement if compliance
with the notice is not met.
17.2 The termination of this Agreement shall not affect or
prejudice any provisions of this Agreement which are expressly
or by implication provided to continue in effect after such
termination.
17.3 If this Agreement is terminated, Motorola shall have the right
to determine whether any unfilled Purchase Orders, in
existence at the time of such termination shall be completed
under the terms of this Agreement or canceled.
18.0 LIMITATION OF LIABILITY
NEITHER PARTY, WHETHER AS A RESULT OF BREACH OF AGREEMENT, WARRANTY,
TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE), PATENT INFRINGEMENT,
COPYRIGHT INFRINGEMENT, OR OTHERWISE, SHALL HAVE ANY LIABILITY FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO,
LOSS OF PROFIT OR REVENUES, LOSS OF USE OF THE PRODUCTS OR ANY
ASSOCIATED EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE PRODUCTS,
(EXCEPT REPLACEMENT PRODUCTS UNDER SECTIONS 9 AND 11), FACILITIES OR
SERVICE, OR DOWNTIME COSTS OR CLAIMS OF THIRD PARTIES TO THE FULL
EXTENT SUCH MAY BE DISCLAIMED BY LAW.
19.0 ASSIGNMENT - RESALE OF EQUIPMENT
19.1 Any re-sale of Equipment will require a re-licensing of the
Software from Motorola, including potential payment of an IPL
license fee by the new owner.
19.2 The Agreement shall accrue to the benefit of and be binding
upon the parties hereto and any successor entity into which
either party shall have been merged or consolidated or to
which either party shall have sold or transferred all or
substantially all its assets. Specifically, Motorola may
assign this Agreement, provided that Motorola, Inc. shall
remain liable for performance hereunder. This Agreement shall
not be otherwise assigned by either party without the prior
written consent of the other party. In conjunction with any
agreed to assignment of this Agreement, Motorola agrees to
offer a software license the assignee pursuant to the terms
set forth in Exhibit "F". A reasonable new Software License
Fee may be required of any successive owner, other than an
AOE, of iDEN infrastructure Equipment.
32
19.3 Notwithstanding anything to contrary elsewhere in this
Agreement, Customer may pledge, mortgage or otherwise assign
all or any portion of this Agreement or any orders hereunder
(or any combination thereof) to one or more providers of debt
or equity financing (provided any such intended assignee is
not a person or entity listed on the United States Department
of Commerce Denied Parties List or to a person or entity
residing in a country to which export of the iDEN Equipment is
prohibited under United States law) upon terms and conditions
satisfactory to Customer, provided that (i) Customer will
remain liable for all obligations arising out of this
Agreement, (ii) the assignee agrees in writing that the terms
and conditions of this Agreement shall apply to and be binding
upon the assignee to the same extent as Customer, to the
extent that the assignee is exercising any right under this
Agreement, (iii) in addition to any rights conferred on the
assignee, and Customer shall be treated as having placed the
order and paid for purchases for purposes of all rights and
benefits available to Customer under this Agreement.
19.4 Motorola retains the right to subcontract, in whole or in
part, any effort required to fulfill its obligations under
this Agreement, provided Motorola shall remain liable for
performance hereunder.
19.5 Motorola reserves the right to assign the obligations of
rendering the Implementation Services, Training, and the
Operation and Maintenance Service to one of its wholly owned
subsidiaries. In the event the assignment of the obligations
of rendering the Implementation Services, Training, and the
Operation and Maintenance Service is made to any other third
party, a prior approval from Customer will be required, which
will not be unreasonably withheld or delayed.
19.6 Customer understands and agrees that notwithstanding the
assignment of the rights and obligations to an AOE, including
payment for Equipment and/or Services, Customer remains liable
for performance hereunder. Motorola accepts the assignment to
an AOE under the terms of Exhibit I, and Motorola remains
liable for the obligations under this Agreement.
20.0 GOVERNMENT COMPLIANCE
This Agreement is a commercial contract and is governed by the terms
and conditions negotiated by the parties contained herein. Customer
represents and warrants that: (i) it is not a governmental entity; (ii)
it is not owned in whole or in part, directly or indirectly, by any
governmental entity;; and (iii) there is no other basis on which any
regulations, decrees or laws applicable to sales to a governmental
entity could be deemed applicable to this Agreement. The term
"governmental entity," as used herein, shall include agencies and
instrumentalities of U.S. federal, state and local governments as well
as of governments outside of the U.S.
33
In the event the Customer elects to sell Motorola products or services
to any U.S. federal, state or local government agency, to any
government entity outside the U.S., or to a prime contractor selling to
any such government entity, Customer does so solely at its own option
and risk, and agrees not to obligate Motorola as a subcontractor or
otherwise, to the government entity. Customer remains solely and
exclusively responsible for compliance with all statutes and
regulations governing sales to the U.S. federal, state, local or
foreign government agency. Motorola makes no representations,
certifications or warranties whatsoever with respect to the ability of
its goods, services or prices to satisfy any such statutes, regulations
or clauses.
In the event the purchases contemplated under this Agreement are
financed using any funds obtained from OPIC or Eximbank, Motorola
reserves the right to determine, on a case by case basis, whether
representations and other governmental requirements can be provided to
Customer or the aforementioned governmental entities.
21.0 GOVERNING LAW
The validity, performance, and all matters relating to the effect of
this Agreement and any amendment hereto shall be governed by the laws
of State of New York without regard to its conflicts of laws
provisions.
22.0 ORDER OF PRECEDENCE
In the event of an inconsistency in this Agreement, the inconsistency
shall be resolved by giving precedence in the following order:
22.1 This Agreement and duly executed amendments thereto, with the
latest amendment precedence over earlier amendments;
22.2 The Price Book, as may be amended from time to time by
Motorola;
22.3 Purchase Orders and duly executed Change Orders thereto, with
the latest Change Order taking precedence over earlier Change
Orders;
22.4 Exhibit "F" and all duly executed Amendments to Exhibit "F";
22.5 All other Exhibits in alphabetical order and all duly executed
Amendments or Change Orders to said Exhibits.
23.0 NOTICE
23.1 Notices required to be given by one party to another shall be
deemed properly given if reduced to writing and personally
delivered or transmitted by recognized express mail to the
address below, postage prepaid, or by facsimile with a
34
confirmation of transmission printed by sender's facsimile
machine, and shall be effective upon receipt.
23.1.1 Motorola shall send notices as follows:
Tricom Latinoamerica, S.A.
Campbell Corporate Services Limited
The Bank of Nova Scotia Building, P.O. Box 268
George Town, Grand Cayman
Cayman Islands
Attention: Mr. Marcos J. Troncoso
With a copy to:
Tricom, S.A.
Av. Lope de Vega No. 95
Santo Domingo, Dominican Republic
Attention: Mr. Marcos J. Troncoso
Fax: (809) 476-670
e-mail: mtroncoso@tricom.com.do
And to:
Tricom, S.A.
Av. Lope de Vega No. 95
Santo Domingo, Dominican Republic
Attention: Legal Department
Fax: (809) 476-4412
e-mail: mvelazquez@tricom.com.do
23.1.2 Customer shall send notices as follows:
Motorola, Inc.
Network Solutions Sector
Customer Solutions Group
Attention: Vice President, LACR
Fax #: 954-489-2030
e-mail: c17736@email.mot.com
With a copy to:
Motorola, Inc.
Network Solutions Sector
Customer Commercial Relations
35
Attention: Regional Commercial Director
Fax #: 847-435-6290
e-mail: lgamboa1@email.mot.com
23.2 Either party may change the addresses for giving notice from
time to time by writen instructions to the other of such
change of address.
24.0 SURVIVAL OF PROVISIONS
The parties agree that the Sections 8.0, 11.0, 12.0, 15.0, 18.0, 21.0,
23.0, 29.0, 32.0 and any other provision where the context of such
provision indicates an intent that it shall survive the term of this
Agreement, it shall survive.
25.0 WAIVER AND HEADINGS
Failure or delay on the part of Motorola or Customer to exercise any
right, power, or privilege hereunder shall not operate as a waiver.
Section and paragraph headings used in this Agreement are for
convenience only and are not to be used to construe the provisions of
this Agreement.
26.0 AUTHORITY
Each party hereto represents and warrants that:
26.1 It has obtained all necessary approvals, consents and
authorizations of third parties and governmental authorities
to enter into this Agreement and has obtained or will obtain
all necessary approvals, consents and authorizations of third
parties and governmental authorities to perform and carry out
its obligations hereunder;
26.2 The persons executing this Agreement on its behalf have
express authority to do so, and, in so doing, to bind the
party thereto;
26.3 The execution, delivery, and performance of this Agreement
does not violate any provision of any bylaw, charter,
regulation, or any other governing authority of the party;
and;
26.4 The execution, delivery, and performance of this Agreement has
been duly authorized by all necessary partnership or corporate
action and this Agreement is a valid and binding obligation of
such party, enforceable in accordance with its terms.
36
27.0 INCORPORATION OF EXHIBITS
The Exhibits described in the Exhibit List are specifically
incorporated by reference into this Agreement as if fully set forth
herein.
28.0 RE-EXPORTATION OF TECHNICAL DATA OR PRODUCTS
Customer understands that all equipment, proprietary data, know-how,
software, or other data or information obtained by Customer from
Motorola is considered to be United States technology and is licensed
for export and re-export by the United States Government. Customer
therefore agrees that it will not, without the prior written consent of
Motorola and the Office of Export Control, United States Department of
Commerce, Washington, DC 20230, USA, knowingly export, re-export, or
cause to be exported or re-exported, either directly or indirectly, any
such equipment, proprietary data, know-how, software, or other data or
information, or any direct or indirect product thereof, to any
destination prohibited or restricted under United States law. Customer
understands that the list of prohibited or restricted destinations may
be amended from time to time by the United States Department of
Commerce and that all such amendments shall be applicable to this
Agreement.
29.0 DISPUTES, DISPUTE RESOLUTION AND ARBITRATION
Motorola and Customer will attempt to settle any claim or controversy
arising out of this Agreement through consultation and negotiation in
good faith and a spirit of mutual cooperation. If those attempts fail,
then, except for disputes related to alleged patent, copyright, or
trademark infringement, the dispute will be mediated by a mutually
acceptable mediator to be chosen by Motorola and Customer within thirty
(30) days after written notice by the other demanding mediation.
Neither party may unreasonably withhold consent to the selection of a
mediator, and Motorola and Customer will share the costs of the
mediation equally. Venue for mediation shall be the United States of
America. By mutual agreement, however, the parties may postpone
mediation until they have each completed some specified but limited
discovery about the dispute. The parties may also agree to replace
mediation with some other form of alternative dispute resolution (ADR),
such as neutral fact-finding or a mini-trial.
Any dispute which the parties cannot resolve through negotiation,
mediation, or other form of ADR within four (4) months of the date of
the initial demand for it may then be submitted to arbitration as
described below. The use of any ADR procedures will not be construed
under the doctrines of latches, waiver, or estoppel to affect adversely
the rights of either party. And nothing in this section will prevent
either party from resorting to arbitration if good faith efforts to
resolve the dispute under these procedures have been unsuccessful or,
in any case of alleged patent, copyright, trademark or any other
intellectual property right infringement or alleged confidentiality
violation, interim relief
37
from a court is necessary to prevent serious and irreparable injury to
one party or to others.
Except as otherwise described above, and for disputes pertaining to a
party's intellectual property, any dispute arising out of or in
connection with this Agreement shall be submitted for arbitration in
Miami, Florida, USA to be conducted by the American Arbitration
Association in accordance with its substantive and procedural rules.
All such proceedings shall be conducted in English and a daily
transcript shall be prepared in English. In the event that a dispute
arises between Motorola and Customer, three arbitrators shall be
selected as follows: one shall be selected by Customer, one by
Motorola, and the third by the other two selected arbitrator, which
third arbitrator shall concurrently serve as chairman of the
arbitration panel; provided, that if either Motorola or Customer does
not select an arbitrator, then the arbitrator selected by the other
party may select the remaining two arbitrators. All of the arbitrators
shall be fluent in the English and Spanish languages. The English
language text of this Agreement shall be used in any arbitration
proceedings commenced pursuant to this Section. Arbitration awards
shall be final and binding on the parties hereto. The costs of
arbitration shall be reasonably determined by the arbitration panel.
Any award of the arbitrators shall be enforceable by any court having
jurisdiction over the party against which the award has been rendered,
or wherever assets of the party against which the award has been
rendered can be located.
30.0 LANGUAGE
The definitive text of this Agreement and its Exhibits shall be in
English and all communications between the parties in the course of the
present Agreement shall be made in English.
31.0 SEVERABILITY
In the event that any one or more of the provisions contained in the
Agreement or in any of the Exhibits hereto should be determined to be
invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired. The parties shall endeavor in good
faith to replace any invalid, illegal, or unenforceable provision with
a valid provision, the economic effect of which comes as close as
possible to that of the invalid, illegal, or unenforceable provision.
32.0 ENTIRE AGREEMENT
This Agreement and the Exhibits hereto constitute the entire
understanding between the parties concerning the subject matter hereof
and supersede all prior discussions, agreements, and representations,
whether oral or written, and whether or not executed by Motorola and
Customer.
38
No modification, Amendment, Change Order, or other change may be made
to this Agreement or any Exhibit unless reduced to writing and executed
by authorized representatives of both parties.
The terms and conditions of this Agreement shall prevail
notwithstanding any variance with the terms and conditions of any order
submitted by Customer following execution of this Agreement. In no
event shall the preprinted terms and conditions found on any Customer
purchase order, acknowledgment, a Change Order, or other form be
considered an Amendment, or modification of this Agreement, even if
such documents are signed by representatives of both parties. Such
preprinted terms and conditions shall be null and void and of no force
and effect.
39
33.0 COUNTERPARTS AND FACSIMILE SIGNATURES
Facsimile signatures shall be treated as originals and this Agreement
may be executed in multiple counterparts, each of which shall be deemed
an original and all of which taken together shall constitute one and
the same instrument.
34.0 COMMENCEMENT OF WORK
Motorola's obligations to commence work hereunder shall begin upon the
date which Customer satisfies the requirements of Section 7.2.1. All
time periods for completion of Motorola's obligations shall commence on
such date.
This Agreement is effective as of the 31 day of July, 2000 ("Effective Date").
MOTOROLA, INC. TRICOM LATINOAMERICA, S.A.
/s/ Jose Figueroa /s/ Marcus J. Troncoso
------------------------------------- --------------------------------------
Signature Signature
Jose Figueroa Marcus J. Troncoso
------------------------------------- --------------------------------------
Printed/Typed Name Printed/Typed Name
Vice President and General Manager Secretary and Director
------------------------------------- --------------------------------------
Title Title
40
EXHIBIT LIST
EXHIBIT "A" INITIAL SYSTEM'S FIRM QUOTE FOR EACH COUNTRY IN THE AREA.
PLEASE REFER TO INITIAL SYSTEM'S FIRM QUOTE DEFINITION.
EXHIBIT "B" TECHNICAL OVERVIEW: NOTES ON THE IDEN SYSTEM [THE CURRENT
VERSION IS MAINTAINED ON THE IDEN WEB SITE. A HARD COPY OF
VERSION 68P81095E55-D, DATED MAY __, 1999 IS ATTACHED.]
EXHIBIT "C" SYSTEM PERFORMANCE CRITERIA AND ACCEPTANCE TEST PLAN
EXHIBIT "D" IMPLEMENTATION ENGINEERING, SITE PREPARATION, INSTALLATION AND
INTEGRATION
EXHIBIT "E-1" SYSTEM HARDWARE MAINTENANCE
EXHIBIT "E-2" SOFTWARE SYSTEM MAINTENANCE
EXHIBIT "F" SOFTWARE LICENSE
EXHIBIT "G" TRAINING
EXHIBIT "H" DOCUMENTATION
EXHIBIT "I" ADDITIONAL OPERATING ENTITY
EXHIBIT "J" EBTS VOLUME PRICING SCHEDULE
EXHIBIT "K" SUPPLIER'S BATTERY WARRANTY
EXHIBIT "L" Requests for Quotation
42
EXHIBIT "A"
TO THE iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM
[4 pages. Confidential portion omitted and filed separately with the
Securities and Exchange Commission pursuant to an application for
confidential treatment pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.]
EXHIBIT "B"
TO THE iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM
iDEN GENERIC SYSTEM DESCRIPTION
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"B" and to the other Exhibits to that Agreement. All definitions set forth in
the Agreement shall apply hereto.
INTRODUCTION/OVERVIEW:
The technical overview of the System is organized into three major
topic areas:
1. Section 1.0 introduces the general System architecture,
features, and capabilities.
2. Section 2.0 provides a more detailed description of the Fixed
Network Equipment (FNE) and components.
3. Section 3.0 provides information regarding System quality and
reliability.
This document is a general system overview. Please refer to the
associated Section III, Pricing, for specific features and their
associated prices.
1. GENERAL OVERVIEW
The following is an overview of the System and an introduction to the
System architecture. In this section, the general System architecture
and features are described without regard to any specific
implementation. FIGURE 1-1 MOTOROLA iDEN PRODUCT OFFERING shows an
overview of the Motorola iDEN product offering.
1
1.1 iDEN SYSTEM TECHNOLOGY
Motorola's Integrated Dispatch Enhanced Network (iDEN) System is the
second generation, fully digital, integrated radio-telephone and
dispatch system in the trunked SMR land mobile spectrum and contains
the following features:
o Dispatch Communications Features
- Private Call
- Group Call
- Automatic Queuing and Callback
- Recent User Priority
- Accounting Records Collection
o Telephone Interconnect Communications Features
- Full Duplex
- Call Transfer (No Answer Transfer and Busy Transfer)
- Call Forwarding (User Defineable Conditions)
- Call Restrictions (User Defineable Conditions)
- Call Hold
- Call Waiting
- Three Party Conference Calling
- Accounting Records Collection
o Increased capacity, up to six times that of analog trunking through
digital TDMA transmission and VSELP voice compression technologies.
o Handportable Viability
2
[GRAPHIC OMITTED]
FIGURE 1-1 MOTOROLA ESMR PRODUCT OFFERING
3
1.1.1 LINK INTEGRITY
The System architecture incorporates several features which are
designed to maximize the integrity of the communication link.
Considerable emphasis is given to the signaling performance.
Measurements are made both by the MS unit and the base equipment. The
number and types of measured parameters include up-link and down-link
signal levels and down-link signal levels of adjacent cells. Also, a
unique feature of the use of digital communication is the use of the
signal quality coding to estimate the bit error-rate of the channel.
This measurement allows for a characterization of the impact of
co-channel and adjacent channel interference, even when signal levels
are relatively high.
1.1.2 FEATURES
1.1.2.1 MS SERVICES
Several categories of tele-services are available, including basic
speech (duplex telephone interconnect and half-duplex dispatch), short
message service (i.e., paging like service), facsimile, and modem port.
Non-transparent transmission is used with the inherent RF channel error
correction. Data rates of 1200, 2400 and 4800 bits per second are
provided. This error detection/re-transmission scheme provides for much
reduced net error rates but with a non-deterministic throughput rate
dependent on the radio channel quality.
In addition to provisions for voice communication, the System's mobile
units provide a data port interface to connect standard data terminal
equipment. A data IWF (Interworking Function) located at the MSC
(Mobile Switching Center) allows inter-working with the analog-oriented
PSTN (Public Switched Telephone Network). The IWF connects data from
the mobile through a modem and converts the modem audio into PCM format
for connection to a PSTN digital trunk. The call set-up message from
the MS includes a bearer capability information element to indicate
which type of data call is being set-up.
1.1.3 SECURITY FEATURES
Security features of the System protect both users and operators
against vulnerability of the over-the-air interface. This protects
against the misuse of valuable resources.
4
1.1.4 INCREASED CAPACITY
1.1.4.1 USE OF ADVANCED MODULATION TECHNIQUES AND GEOGRAPHIC REUSE
The System provides for increased MS unit capacity. Research in
modulation technology for land mobile radio has resulted in a practical
digital modulation technique, which, when combined with TDMA and a
digital speech coding method, can convey 6 voice/data channels in a
single 25 kHz RF channel at 800 MHz (except for time slots reserved for
control purposes). Optionally, time slots can be combined in offset
pairs to support a higher vocoder rate in interconnect mode. The
digital speech subsystem consists of VSELP speech encoding technique
coupled with a channel error control method. A modified speech coding
modulation subsystem has been incorporated in the System to fit within
the FCC Part 90, 25 kHz bandwidth limitation.
1.1.4.2 HANDPORTABLE VIABILITY
Several considerations have been given by the System architects to
improve the viability of handportables. Most of these relate to
reducing the power consumption of the handportable. Among these key
provisions are:
o Active Power Control
o Discontinuous Transmit
1.1.5 SYSTEM DESCRIPTION
The System will support:
o Network Architecture and Interfaces
o Dispatch Services
o Security Features
o Speech Coding
o Channel Coding
o Radio Channel Structure
o Traffic and Control Channels
o Radio Channel Modulation
5
o MS Power Control
o Discontinuous Transmit is supported for both interconnect and
dispatch MS units.
o Discontinuous Receive is supported for interconnect only MS units due
to the short response time requirement placed upon dispatch MS units.
o Signal Level/Quality Measurement
The following discussion highlights and describes some of these
differences.
1.1.5.1 FUNCTIONAL NETWORK ARCHITECTURE AND PRINCIPAL INTERFACES
The nominal public land mobile network embodied by the System consists
of mobile and portable subscribers in communication with an
infrastructure consisting of a multiplicity of base station Sites
controlled by a MSO (Mobile Switching Office). From the MS unit's point
of view, the System can be thought of as an extension of the modern
PSTN with standard signaling from the base station systems through the
MSO to the PSTN.
The System, distinct from the PSTN, is capable of unique network
functions owing to the special mobile services offered including:
o Basic service provision, telephone interconnect and dispatch
o Call handling:
- queuing (dispatch only)
- off air phone number entry
- security related services
- DTMF capability
o MS authentication
o Supplementary services
o Interconnect operations support:
- location registration
- handover
o Network management
Special call processing functions unique to the System are provided
including:
6
o Authentication
o Dispatch call processing
o Short message service (Message-Mail(TM))
o Traffic channel assignment
o MS paging (for call set-up)
o Power control
o MS timing advance
o Discontinuous transmit and receive
o Call processing procedures include:
- location updating
- call origination; MS unit/network
- call clearing; MS unit/network
o Handover; inter-cell and intra-cell
FIGURE 1-2 SYSTEM NETWORK ENTITIES AND INTERFACES shows the System
network elements and their interfaces to one another.
7
[GRAPHIC OMITTED]
FIGURE 1-2 SYSTEM NETWORK ENTITIES AND INTERFACES
8
1.1.6 SYSTEM NETWORK ENTITIES
The System network entities are:
MS (MOBILE STATION)
The radio equipment and man-machine interface that a subscriber needs
to access System services.
EBTS (ENHANCED BASE TRANSCEIVER SYSTEM)
The set of radio transceivers, controlling equipment, and antennas
which are located at the base Sites to provide radio coverage in a
specific geographic area. The EBTS serves one or more sectors in a cell
and supports multiple RF frequencies if so equipped.
BSC (BASE STATION CONTROLLER)
The intermediate controlling element between the EBTS and the MSC. The
BSC provides control and concentration functions for one or more cells
and their associated MSs.
MSO (MOBILE SWITCHING OFFICE)
The telephone and dispatch switching office for mobile originated or
terminated traffic.
MSC (MOBILE SWITCHING CENTER)
Provides call and signaling control at the MSO Site. The MSC can be
integrated with the HLR, or stand-alone. The MSC provides the interface
from the iDEN system to the PSTN for calls terminating or originating
outside of the iDEN System.
HLR (HOME LOCATION REGISTER)
The database oriented processing network entity that contains the
master database of the subscribers to the System. The HLR can be
integrated with the MSC. The AUC (Authentication Center) is integrated
with the HLR.
VLR (VISITED LOCATION REGISTER)
The database oriented processing network entity that temporarily
contains information for subscribers roaming in a given location area.
The VLR is integrated with the MSC Switch.
9
OMC (OPERATIONS AND MAINTENANCE CENTER)
A central network entity that controls and monitors the DAP, EBTS and
BSC/XCDR. Other network entities such as the MSC and HLR may be
accessed remotely through a terminal emulation connection.
DAP (DISPATCH APPLICATIONS PROCESSOR)
The processing entity for dispatch call functions. This processor
controls the assignment and routing of dispatch call services.
MPS (METRO PACKET SWITCH)
The packet switching engine for dispatch call functions. The MPS
provides voice and control packet switching and distribution between
the cell Sites in response to routes set-up by the DAP for the support
of dispatch call services.
XCDR (SPEECH TRANSCODER)
The digital signal processing equipment (component of the BSC) required
to perform speech encoding and decoding. The speech transcoder converts
the 64 K bit/s PCM in the land network to the compressed vocoder format
used on the air interface.
IWF (INTERWORKING FUNCTION) AND MODEMS
The IWF performs the data rate adaptation between the iDEN System and
the PSTN. The IWF provides the mobile subscribers access to a modem
pool for data transmission so that communication with a PSTN-based
modem is possible.
SMS (SHORT MESSAGE SERVICE)
The Message Mail(TM) Short Message Service provides the user with the
ability to transmit alphanumeric messages visible on the MS units
display.
DCS (DIGITAL CROSSCONNECT SYSTEM)
The DCS may be optionally required depending upon the customers network
configuration, for the System network interfaces listed below. The DCS
provides filling and grooming functions that allow configurable
bandwidth management of backbone transports, thus eliminating
stand-alone multiplexers and manual cross-connects. Control of direct
DSO/timeslot connectivity must be capable under software control for
the interfaces between the:
o MSO and RSOs (Remote Switching Office)
10
o RSO to RSO for dispatch voice traffic
o RSO and its associated EBTS Sites
During the final design stage, Motorola will work with Customer to
provide the required information for Customer to determine the
configuration, sizing, and quantity of DCS needed to support the System
transport interface requirements. Figure 1.2 shows a basic generic DCS
configuration. DCS equipment is not supplied unless included in Section
III, Pricing.
The following sections provide a more detailed description of the key
System network elements:
1.1.6.1 MS (MOBILE STATION)
The MS includes the radio equipment and man-machine interface that a
Subscriber needs to access the services provided by the iDEN system. A
dispatcher position is typically configured as a fixed MS and referred
to as a DS (Dispatch Station). MSs can be installed in vehicles or be
portable or hand held stations. The MS includes provisions for data
communication as well as voice.
Each MS is identified by a unique mobile IMEI (International Mobile
Equipment Identifier) which is permanently stored in the mobile unit.
Upon request, the MS sends this number over the signaling channel to
the MSC. Security functions are provided through authentication. Refer
to sections 1.2.2 and 1.1.6.3 for a description of authentication
during Telephone Interconnect call set-up.
The authentication process is similar for both telephone interconnect
and dispatch operation. The MSC processes the authentication activity
for both operations. Hence, a change in an MS's telephone location area
automatically triggers the re-authentication process. For Telephone
Interconnect: authentication takes place when a MS powers on, initiates
a call, or when it travels from one telephone location area to another
telephone location area. For Dispatch: authentication takes place when
an MS powers on or when it moves from one dispatch location area to
another.
Just as the IMEI identifies the mobile EQUIPMENT, other numbers are
used to identify the MS unit's other characteristics. Different MS unit
identities are used in different phases of call setup. The MS unit's
telephone number (MS-ISDN) is the number a calling party dials to reach
the MS unit. It is used by the land network to route calls toward an
appropriate MSC. The MS unit's identity is the International Mobile
Subscriber Identity IMSI (International Mobile Subscriber Identity)
which is the primary identity of the MS unit within the mobile network
and is permanently assigned to it. The System can also assign a
Temporary Mobile Station Identity (TMSI) number. This number can be
periodically changed by the System and protects the MS unit from being
identified by someone attempting to monitor the radio channel.
11
1.1.6.2 MSC (MOBILE SWITCHING CENTER)
The MSC provides an interface between the PSTN and mobile network. The
MSC is the telephone switching office for mobile originated or
terminated traffic. Each MSC provides service to mobiles located within
a certain geographic coverage area, and the network can contain more
than one MSC. The MSC provides interfaces to the PSTN, and also
interfaces to the terrestrial circuits from the transcoders.
The MSC controls the call setup and routing procedures in a manner
similar to the functions of a land network end office. On the land
network side, the MSC performs call signaling functions. Other types of
land network interfaces can also be provided as options. Other call
control functions include number translations and routing, matrix path
control, and allocation of outgoing trunks. The MSC collects call
billing data, formats the call records, and sends them magnetic tape
and/or an optional billing center. The MSC also collects traffic
statistics for performance management purposes.
In addition to call control functions typical of a land network switch,
the MSC performs other functions unique to the mobile environment. The
MSC also supports the security procedures used to control access to the
radio channels. These procedures include validating the identity of the
mobile station.
In addition to the call setup procedures, the MSC also controls the
location registration and handover procedures. Location registration
(and location update) allows mobiles to report changes in their
locations enabling automatic completion of mobile terminated calls. The
handover procedure preserves call connections as mobiles move from one
radio coverage area to another during an established call. Handovers
within and between cells controlled by a single BSC are controlled by
that BSC. When handovers are between cells controlled by different
BSCs, the primary control is at the MSC.
The Motorola MSC uses Northern Telecom's DMS-MSC(TM) Switch for
telephone interconnect services. The MSC Switch is based on Northern
Telecom's DMS supernode family of switching products.
1.1.6.3 HLR (HOME LOCATION REGISTER)
The System requires Location Register (LR) network entities. These
entities are the HLRs and VLRs. The LRs are database oriented
processing nodes which address the needs of managing MS unit data and
keeping track of a mobile station's location as it moves through the
network.
The HLR is the reference database for MS unit interconnect parameters.
Various identification numbers and addresses are stored as well as
authentication parameters, services subscribed, special routing
information, MS unit status, and associated VLR.
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The HLR contains the master database of the subscribers to the System.
This data is remotely accessed by the MSCs and VLRs in the network. The
System may include more than one HLR, in which case each HLR contains a
portion of the total MS unit database. The MS unit data may be accessed
by either the IMSI or the MS-ISDN. The data can also be referenced by
an MSC or a VLR in another iDEN system to allow inter-system roaming.
The data stored in the HLR indicates which basic and supplementary
interconnect services a given MS unit is allowed to use. This data is
changed only when new subscribers are added or deleted, or the specific
services they subscribe to are changed. The HLR data also includes
temporary information related to supplementary services such as the
current call forwarding number.
A MS unit's HLR entry also includes the address of its current VLR.
This information, in connection with the VLR data explained below,
allows completion of calls to roaming subscribers.
The HLR function also includes the Authentication Center (AUC). The AUC
generates and stores the parameters necessary to authenticate a MS
unit's identity.
1.1.6.4 VLR (VISITED LOCATION REGISTER)
The VLR contains a copy of most of the data stored at the HLR, but this
is a temporary entry which exists only as long as a particular MS unit
is known to be operating within the area controlled by the VLR. The VLR
data base contains some duplicated HLR data as well as more precise
location information and status.
Cells in the System are grouped into geographic areas and each is
assigned at least one Location Area Identity (LAI). Each VLR controls a
certain set of LAIs. When a mobile MS unit roams from one LAI to
another, its current location is automatically updated in its VLR
entry. If the old and new LAIs are under control of two different VLRs,
the entry on the old VLR is deleted and a new entry is created at the
new VLR by copying the basic data from the HLR entry. The MS unit's
current VLR address, stored at the HLR, is also updated. This provides
the information necessary to complete calls to roaming subscribers. The
VLR also controls the assignment of Mobile Station Roaming Number
(MSRN). The call is then forwarded using the MSRN as the called
address. The MSRN causes the call to be routed to the MSC which
controls the base stations in the LA (Location Area) where the MS unit
is currently located.
The VLR also allocates handover numbers for use in inter-MSC handovers.
These handovers require the call to be dynamically re-routed from the
source MSC to the target MSC. The handover number functions similarly
to an MSRN in that it allows the required voice trunk connection to be
set up by routing through the existing land network. Signaling for
inter-MSC handover requires dedicated CCS/C7(CCITT) or CCS/SS7(ANSI)
links between MSCs.
13
The VLR also controls allocation of new TMSI numbers. A MS unit's TMSI
may be periodically changed to secure the MS unit's identity. TMSIs are
changed whenever an MS does a location update.
The database in the VLR can be accessed by TMSI, IMSI, or MSRN.
1.1.6.5 OMC (OPERATIONS AND MAINTENANCE CENTER)
The OMC provides a central point from which to control and monitor the
DAP, EBTS and BSC/XCDR. The MSC and HLR may be accessible via a
terminal emulation window. The OMC is connected to the DAP, EBTS and
BSC/XCDR via an X.25 packet network.
The OMC provides alarm handling functions to report and log alarms
generated by the other network entities.
The fault management functions of the OMC allow network devices to be
manually or automatically removed from or restored to service. The
status of network devices can be checked from the OMC, and tests and
diagnostics on various devices can be invoked.
The performance management functions include collecting traffic
statistics from the iDEN RF network entities (BSC, DAP, EBTS) and
archiving them in disk files or displaying them for analysis.
The OMC provides System change control for the various versions of the
software and configuration databases in the network entities. Software
loads can be downloaded from the OMC to other network entities by the
OMC. The OMC keeps track of which network entities are running which
versions of software. Software upgrades can be coordinated from the
OMC.
The System configuration data bases of the other network entities can
also be downloaded from the OMC. These databases change as the physical
configuration of the network expands to accommodate growth. By using
either network management procedures to manipulate defined managed
objects or by using a remote man-machine interface when objects are not
defined, the data bases on other entities can be changed from the OMC.
The OMC can also perform consistency checks on data bases in the other
entities.
1.1.6.6 BILLING CENTER (PART OF CUSTOMER PROVIDED ADMINISTRATIVE DATA
CENTER (ADC))
The billing center is a system that must be provided by Customer which
collects the billing data from the iDEN network entities and applies
the billing data to subscribers' accounts. Tapes are used to transfer
billing records from the MSC, SMS-SC, and the DAP to the Billing
Center.
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1.1.7 INTERFACES USAGE
For interfaces between the MSC and the PSTN, the MSC is capable of
interfacing to the local Central Office (CO) of the PSTN in MF (Multi
Frequency) in-band signaling. The actual interface will depend on the
capability of the local CO at the time the System is deployed.
Inter-MSC handovers require dedicated CCS/C7(CCITT) circuits between
the two MSCs involved. Details on signaling must be provided by the
customer. Unique requirements may cause the need for additional
equipment and services.
1.1.8 BASE RADIO ARCHITECTURE AND OPERATION
Various configurations of base stations are available to adapt to
different radio network design requirements. The MSC communicates and
passes traffic to the XCDR and BSC which provide the opportunity for
remote switching, distributed control, and traffic concentration. The
introduction of the BSC is a key architectural feature of the System
for providing wide area coverage capability.
The interface between the MSC and the BSC is based on CCS/C7 (CCITT)
(A-Interface). At the application levels, the System uses a special set
of messages, unique to mobile application such as handover control
signaling.
The principal functions of the BSC include managing the radio channels
and transferring signaling information to and from MSs for interconnect
traffic. Many types of call handling signaling do not directly affect
the BSC because the BSC merely serves as a relay point between a MS and
the MSC.
The BSC also includes a digital switching matrix. No fixed circuit
relationship between the radio channels at the BSC/EBTS and the
terrestrial circuits which connect the BSC/EBTS to the MSC exist. While
the EBTS selects the radio channel, the terrestrial circuits are
selected by the MSC. The switching matrix in the BSC is then used to
connect the two together. The switching matrix also allows the BSC to
perform most cell interconnect handovers without involving the MSC.
1.1.9 PROPERTIES OF THE RADIO INTERFACE
The following provides some key radio related technical characteristics
of the System.
1.1.9.1 FREQUENCY BAND
The assigned frequencies between 806-821 MHz are for base receive and
between 851-866 MHz for base transmit. Carriers are spaced every 25 kHz
in 45 MHz channel pairs. Channels offset by 12.5 kHz are supported.
15
1.1.9.2 RADIO CHANNEL ACCESS METHOD
The channel transmission used for the System is time division
multiplex. This physical channel supports a variety of logical
signaling and traffic channels. Three or six traffic channels can be
multiplexed onto a single radio carrier. The speech coder is called
Vector Sum Excited Linear Prediction (VSELP) coding which incorporates
a long term predictor. In addition, there are numerous types of logical
control channels tailored to specific purposes. These include
broadcast, multiple access, and dedicated channels (both stand alone
and or associated with user traffic). Logical control channels are
sub-multiplexed with each other and with other traffic channels in a
multiple tier frame structure over the radio path.
1.1.9.3 PHYSICAL RADIO CHANNEL
The gross radio channel bit rate used in the System is 64 Kbits. The
selected modulation is M16QAM. This technique, which is linear,
provides for a highly desirable combination of modulation efficiency,
sensitivity, acceptable C/I trade-offs, and low adjacent channel
interference.
For the typical environments experienced, the symbol duration is
sufficiently long that no sophisticated equalization techniques are
required to eliminate the effects of inter-symbol interference which
would otherwise cause significant reception complications. Periodic
pilot symbols embedded in every transmitted burst are used so the
receiver can synchronize and obtain an estimate of the radio channel
impulse response. Differential delays up to 24 microseconds are
accommodated.
The coding of the speech traffic information for the radio channel is
accomplished as follows. Blocks of 30 msec (6:1 iDEN) or 15 msec (3:1
iDEN) speech represented by coded samples are speech coded by the VSELP
encoder. Redundancy is added to the most important bits by means of a
trellis code.
The types of channel coding used for the radio path are optimized for
the particular traffic (aside from speech) or control signaling. For
error control over the faded radio channel, a combination of block
coding (providing error detection and correction) and trellis coding is
used.
1.1.10 RADIO SYSTEM ISSUES AND CONTROL FUNCTIONS
1.1.10.1 HANDOVER FOR TELEPHONE INTERCONNECT
Handover allows for maintaining the link quality for user connections,
minimizing interference, and managing traffic distributions. The mobile
assisted technique is accurate and fast.
Measurements which feed the handover decision algorithm are made at
both ends of the radio link. MS unit measurements are signaled to the
base where the determination for handover is ultimately made. EBTS
measurements, which are available to the handover algorithm, involve
only the uplink communication path.
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1.1.10.2 POWER CONTROL
Transmitter power control is employed for the MS. The key purpose is to
control interference, but in the case of handportables, reducing the
power serves further to extend the battery life.
1.1.10.3 DTX (DISCONTINUOUS TRANSMIT)
The System allows use of DTx of speech using a voice activity detector.
1.1.10.4 DRX (DISCONTINUOUS RECEIVE)
Discontinuous receive is a group paging technique whereby the MS is not
required to be in a continuously active receive mode to detect pages
and control signaling information. This feature is only supported when
an MS is configured as an interconnect only unit.
1.1.10.5 LOGICAL CHANNELS AND FUNCTIONAL LAYERING
The functional layering of the System is partially based on the seven
layer model for open systems interconnection suggested by the ISO. Each
layer performs a specific set of functions that are isolated and
enhances those performed by the lower layers. This philosophy
facilitates a modular approach to implementation. The functions
occurring at one layer have only limited interaction with those at
another.
Layer 1 consists of the physical channel layer and is concerned with
transmitting and receiving coded information symbols over the radio
link. Layer 1 provides for the basic TDM frame structure. Layer 2
provides for the multiplexing and de-multiplexing of the multiple and
diverse types of logical channels that are required (e.g. traffic,
signaling, synchronization, control channels, etc.). Finally, Layer 3
provides for the three major management functions - radio resource
management (paging, assignments, handover, measurement reports, etc.),
the mobility management (authorization, location updating, MS unit
attach/detach, periodic registration, identification confidentiality,
etc., and call management (control, supplementary services, DTMF, short
message data, etc.)
1.1.10.6 TIMING ADJUSTMENT
Due to the short duration of the TDMA bursts (15 msec.), a closed loop
mechanism for providing timing correction for the MS unit is provided
to minimize the guard time needed between bursts.
1.1.10.7 SYNCHRONIZATION
Synchronization is a key feature for the System. By design, all
frequencies and times are locked to a high stability reference. The
time reference is locked to a system-wide standard. The frequency
reference is provided with Site standards. MS units lock to a reference
transmitted from the base.
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1.1.11 QUALITY AND MAINTENANCE FEATURES
o Board level self diagnostics.
o A variety of alarms and indicators throughout the equipment.
o The use of self calibrating subsystems, including PA.
o Circuit designs that do not require tuning and are immune to drift
(e.g., direct digital synthesis for the modulation, etc.).
o The use of remotely and software controllable parameters, including
transmitter power.
1.2 CALL PROCESSING "INTERCONNECT"
1.2.1 GENERAL
The iDEN System allows MSs to travel freely throughout the total
service area and originate or receive interconnect calls without regard
to their current location. The System tracks each subscriber unit's
location and can route calls to it.
The subsequent sections will delineate some of the internal (not
visible to a user) steps involved in a typical interconnect call. The
specific MS services are described in subsequent sections.
1.2.2 MS UNIT TO LAND CALL
There are several variations of the call set up process. An example
follows:
An integrated interconnect/dispatch MS initiates a telephone call by
selecting a "phone mode", entering digits and pressing the "send" key.
The EBTS receives the request on a control channel and passes it to the
controlling BSC which then passes it to the MSC. The MSC marks the unit
"busy" and initiates an authentication sequence. The MSC sends a random
number to the MS and requests a result to be produced by the MS unit by
multiplying the number with its internal authentication key. The result
is then compared with the result produced by the HLR using the
authentication key assigned to the unit and stored in the MSC. The MSC
sends a call request to the PSTN which must return a "call proceeding"
indicator. The MSC assigns a terrestrial channel (i.e. trunk), and the
BSC cross-connects the terrestrial channel with a newly assigned RF
traffic channel (i.e., voice channel). Upon receiving an "alerting"
message from the PSTN, the MSC Switch sends (via BSC, EBTS, control
channel) an "alerting" message to the initiating MS. Once an answer
signal is received from the PSTN, the MSC sends a "connect" message to
the MS causing it to switch to the assigned voice channel and enter a
conversation state.
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1.2.3 LAND CALL TO MS UNIT
There are several variations of the call set up process. An example
follows: A land to MS unit call is essentially inverse to the MS unit
to land call process described in the previous section. The principal
difference is that the MSC must locate a mobile MS unit which may be
traveling through the MSC service area or has roamed away to a service
area of another MSC. This is accomplished by the MSC accessing the VLR
to determine the MS unit location and if necessary the HLR. The
location of the MS unit is only known down to a LA. The MSC, which
controls the LA, requests the BSC to distribute "pages" to all the
cells that belong to that LA. Upon receiving a "page" response, the
call proceeds similarly to the MS unit to Land call.
1.2.4 MS UNIT TO MS UNIT
This call is seen by the initiating MS unit as a MS unit to land call
and by the target MS unit as a land to MS call. The FNE can route the
call through the PSTN and would, in that case, also treat this scenario
as two calls. The call may be contained within the MSC. A provision is
made in the system such that mobile to mobile calls both inter and
intra-iDEN System, are not double-transcoded (i.e. not converted from
VSELP to PCM to VSELP). Inter-system calls must be routed via digital
links to maintain this feature.
1.2.5 SYSTEM TO SYSTEM HANDOVER
The System supports handover between cells, between LAs, and between
iDEN systems. For Inter-MSC handovers to occur, additional dedicated
trunks and MSC equipment must be purchased to connect the MSCs. The
inter-system handover is facilitated in the MSC. When it is determined
through RF metrics, that a handover is required and it is determined
that this handover is required across MSC boundaries, the current MSC
and the destination MSC begins a process of negotiating an inter-MSC
call set-up through dedicated trunks that exist between the MSCs.
The following scenario is executed to perform inter-MSC handovers:
o The current MSC (the MSC that is initially handling the call)
establishes a call set-up session with the adjacent MSC by signaling
over dedicated trunks between the MSCs.
o The destination MSC sets up a terrestrial circuit to the appropriate
EBTS which allocates a channel for the MS that requires handover.
o Trunks for speech are set-up between the switches.
o Once a stable path is set-up on the new MSC, the MS is directed to
switch to the new site's frequency, and the call continues
uninterrupted.
19
o The terrestrial path to the original EBTS is broken.
The call now continues through the original PSTN circuit to the
original MSC and through a dedicated trunk to the new MSC.
1.2.6 DISCONNECT
Upon receiving a call disconnect message from either a mobile or land
subscriber unit, the MSC records the disconnect time in the call
record, in addition to the previously recorded answer time, and
initiates a disconnect sequence to release the utilized resources
(e.g., voice channel, trunks). The call record which contains pertinent
information such as called number, call time and duration is saved in a
data base to be used for billing purposes.
1.3 CALL PROCESSING "DISPATCH"
1.3.1 GENERAL
The System allows a MS to travel freely throughout the total service
area and originate or receive dispatch calls without regard to its
current location. The System tracks the unit's location.
The System allows MSs to make calls directed to a single MS unit radio
or calls directed to a group of members. In a multi-cell System a
single time slot will be used in any omni-cell or sector-cell for a
call whether there are one or several members of the group in that
sector-cell. Initially no channel will be used in a cell or sector-cell
unless there are members of the group called present.
The subsequent sections will delineate some of the internal (not
visible to a user) steps involved in a typical dispatch call.
1.3.2 LOCATION AREAS (LA)
A LA is defined by the location area ID (LAI). A LAI determines which
sector-cells are part of the LA. A sector-cell declares to the
monitoring MS units that it is a member of a LA by broadcasting its
support of the indicated LAI. A given sector-cell will generally belong
to multiple LAs, and, therefore, it will broadcast support of multiple
LAIs. A MS registers on a given sector-cell with a LA. The result is
that the MS radio may move freely among the sector-cells supporting the
LAI with which it registered without the need of a new registration.
The Location Area update procedure of a DS is the same as that of a MS.
20
1.3.3 MS TO DS CALLS
An MS unit may contact its base (generally a dispatcher) via a private
call.
To place a private call to the dispatcher, the MS first selects the
Private Call radio mode. If the initiating MS unit radio is capable of
targeting different MSs, the MS unit then selects the base as the
desired target. The MS unit then initiates the call processing by
pressing the PTT. The MS unit radio sends the request to the DAP for
processing via the control channel. The DAP equipment then validates
the requester, the request, and the target. After validation, the DAP
locates the target unit and reserves a channel for the initiator and
target (queue and callback if required). If the initiator and target
happen to be on the same sector-cell, only one channel is reserved.
When the necessary resources are available, the call is granted and the
initiator's audio would be passed to the DS. After the initiator
releases the PTT, the call is held for the call hang time period in
anticipation of a response. Within the hang time, a response from the
DS or further transmission request from the initiating MS unit is
granted using the same resources. The expiration of the call hang time
following the last transmission then triggers the call tear down
procedure. The call hang timer is reset by each new transmission.
1.3.4 DS TO MS CALLS
The procedure for a DS unit to reach another MS unit individually is
similar to that set forth in the previous section. However, the DS is
able to select from more than one potential target. Therefore, the
target selection step is not optional. The process of locating the
target MS in this case is the same as that described above in section
1.1.3.3.
1.3.5 MS TO MS CALLS
This scenario is a duplication of the previous base to MS unit
scenario.
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1.3.6 GROUP CALLS
If authorized, either a DS or MS may place a call to its group.
Assuming the MS radio is in its default operating mode of group call,
the initiating MS starts the call simply by pressing the PTT. The
request will be forwarded to the DAP for processing. The DAP will then
send a location request to each mobile/portable MS radio which is a
member of the target MS group (including the initiator and the assigned
fixed location DS unit). The location requests are targeted to the
respective LA. If there happens to be more than one MS unit registered
to a given LA, only one location request is sent to that LA. Further,
since a sector-cell generally belongs to more than one location area,
only one request is sent to each sector-cell. For reliable delivery, a
request is repeated on the RF channel several times. Upon reception of
the request the targeted MSs would return a location response. The DAP
delays the processing of the call for a short period to allow for these
location responses. The DAP then allocates channel resources, queuing
with Call Back if necessary. When the channel resources for the
initiator and at least one target become available, the DAP continues
the call processing by granting the channels and setting the audio
route from the initiator to those members of the group that have
resources. After PTT release, the DAP maintains the channel for the
duration of the call hang time. A request within that time by any one
of the group members will cause the DAP to adjust the audio routing for
the new transmission. The expiration of the call hang timer then
triggers the call disconnect procedures.
1.4 INTERCONNECT CALL HANDOVER AND DISPATCH CALL RECONNECT
1.4.1 INTERCONNECT CALL HANDOVER
During an interconnect call, there is continuous monitoring of the RF
link quality in order to determine the need and possible target Sites
for handover. Handover is directed by the MSC or BSC, but with the aid
of measurements made by the MS. The MS periodically reports these
measurements to the EBTS.
Prior to being involved in a call, the MS determines the frequencies
being utilized in the adjacent cells. At the initiation of a call the
MS will already have quality metrics for those cells.
Once a call is established, the MS monitors the channel quality for the
assigned cell on the assigned bearer channel. In addition, the MS
monitors the quality metrics for the adjacent cells. The assigned and
best alternates are reported to the BSC. The EBTS equipment will
likewise, and on an ongoing basis, measure the uplink channel quality
of the assigned channel as well as the noise and interference levels of
potential alternative bearer channels. The BSC or MSC will determine
when and to which cell to handover the call. The handover command is
sent to the MS, which then switches to the newly assigned bearer
channel to complete the handover sequence.
MS unit assisted handover does not require the use of scanning
receivers at the base station and offers improved performance over
systems driven by scanning receivers alone.
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1.4.2 DISPATCH CALL RECONNECT
In lieu of the interconnect type of handover, call reconnection is
supported for dispatch traffic. Call reconnection is the dispatch
process which allows an MS to be automatically reconnected to an
ongoing dispatch call (i.e. group and private) after the MS switches to
a new cell (coverage area). The reconnection process is a best effort
attempt assuming that the new cell is within the coverage areas
associated with a Service Area that is part of the call.
1.5 ADVANCED MODULATION TECHNOLOGY AND FCC COMPLIANCE ISSUES
The System design utilizes digital modulation technique which, when
combined with TDMA and VSELP speech coding, conveys six (6) channels in
a single 25 kHz channel in the 800 MHz Land Mobile Band (LMB). (These
channels may be assigned to interconnect calls in pairs). As reflected
by FIGURE 1-3 FCC MASK PICTURE, the modulation technique conforms to
the digital emission mask specified in the FCC rules, Section
90.209(g). Wide band transmitter spurious emissions also meet the
specifications listed in Section 90.
Motorola has done extensive simulation to quantify the effects
interference caused to a digital iDEN by a co-channel analog SMR. It is
Motorola's recommendation that a 55 mile separation is necessary to
theoretically achieve a 19 dB advantage to a 100 watt, 200 foot iDEN
Site that is co-channel with a 500 watt, 500 foot SMR Site.
23
[GRAPHIC OMITTED]
FIGURE 1-3 FCC MASK PICTURE
1.6 ID MANAGEMENT PLAN
Each MS is manufactured with a unique IMEI (International Mobile
Equipment Identity). The MS software can read the IMEI which can be
used to identify the unit uniquely over the RF to the DAP equipment.
Motorola will cooperate with other vendors to coordinate the assignment
of ranges of serial numbers to selected qualified and licensed vendors.
The MS unit will supply this serial number over the air as needed.
Other temporary IDs will be assigned subsequently for various purposes
by the MSC.
To support the authentication process, each MS unit is assigned an
authentication key which is stored only in the MS and at the
authentication center. The HLR generates a random number that is input
to an authentication algorithm along with the authentication key. The
algorithm produces a new number called the signed response. To
authenticate an MS unit, the random number is sent to the MS. The
mobile, if it is a valid one, executes the same authentication
algorithm and produces the same signed response that is sent back on
the signaling channel. Producing the same signed response from the same
random number proves the authenticity of the MS unit.
24
For Telephone Interconnect: authentication takes place when an MS
powers on and initiates a call, or when it travels from one telephone
location area to another telephone location area.
For Dispatch: authentication takes place when an MS powers on or when
it moves from one dispatch location area to another.
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2. FIXED NETWORK EQUIPMENT DESCRIPTION
The System as shown in Figure 2-1 MOTOROLA iDEN PRODUCT below shows a
high-level functional block diagram of the architecture.
Note: Equipment configuration diagrams are provided as examples only.
Actual diagrams will be provided in various equipment manuals and
other documentation.
26
[GRAPHIC OMITTED]
FIGURE 2-1 MOTOROLA ESMR PRODUCT
27
2.1 MSC/HLR PRODUCT OVERVIEW
2.1.1 MSC/VLR
The MSC is a member of the Northern Telecom DMS switching family which
all share the same basic architecture for both hardware and software.
The DMS switching family includes local, trunk and international PSTN
exchanges.
[GRAPHIC OMITTED]
FIGURE 2-2 DMS ARCHITECTURE
2.1.1.1 DMS ARCHITECTURE:
o DMS-CORE is the central computing module of the DMS. It uses Motorola
semiconductor technology and supports up to 240M bytes of memory to
provide a powerful computing module. DMS-Core uses a duplicated
architecture with two planes running in synchronous matched, lock
step operation to provide extremely high reliability levels. The same
computing modules used for DMS-Core are replicated to provide
Application Processors and File Processors.
o DMS-BUS is a duplicated, high capacity, low delay messaging subsystem
(128 MBits/sec for 125,000 messages/second with less than 100
microsecond delay). It provides connectivity between the multiple
computing modules, the signaling interfaces, the switching matrices
and peripherals via fibre links.
28
o AVAILABLE BILLING SERVER in conjunction with the layered software
architecture allows distribution of billing application software to a
file processor.
o LINK PERIPHERAL PROCESSORS (LPPS) provide a platform for support of
up to 400 signaling processors that support protocol intensive
network interfaces such as CCS/SS7(ANSI), CCS/C7(CCITT), 'A'
interface BSSMAP lower layer protocols, and Ethernet.
o The SWITCHING MATRIX within the DMS-MSC is the Enhanced Network
(ENET). This is a single stage, fully non-blocking, n x 64 KBit/s
switching fabric supporting up to 64k channels per cabinet and up to
128k channels maximum.
o DIGITAL TRUNK CONTROLLER (DTCS) are used to interface T1/E1 digital
carriers. Twenty T1 digital or 16 E1 carriers may terminate on each
DTC (480 DS0/timeslots). The DTC provides the physical termination
for the 'A' interfaces, and all voice trunking.
2.1.1.2 MSC FUNCTIONAL ARCHITECTURE
iDEN Mobile Services switching Center (MSC) supports three distinct
interfaces to the host network or other external systems. These
interfaces are:
o The 'A' INTERFACE, providing linkage to Base Site Controller's (BSCs)
for Mobile Stations' interconnect activity.
o The MOBILE APPLICATION PART (MAP) Interface, permitting mobility
information to be transferred between network level components
(Location Registers and MSCs).
o The PSTN INTERFACE, which provides connectivity to the PSTN.
Connectivity with System BSCs, MSCs, PSTN and other PLMNs is via T1/E1
interfaces connected to the DTCs. These peripherals support both the
telephony traffic and the 'A' Interface signaling channel. The
signaling channels are routed through the switching matrix to an 'A'
Interface LIU in a LPP. This signaling processor handles all of the 'A'
Interface protocol processing and communicates with DMS-Core, for
network updates and mobile call processing via the DMS-Bus. Signaling
between the MSC and other MSCs, HLRs and the PSTN for network updates
and telephony call control are via the CCS/C7 (CCITT) LIUs also located
in the LPPs.
2.1.1.3 SOFTWARE STRUCTURE
The DMS-100 family software has a highly modular structure with narrow,
well-defined interfaces among modules. The module interfaces are
designed around basic operating system functions (scheduling tasks or
store allocations), the basic call processing functions, the features
required and the hardware supported.
29
Basic modules, held in a common library, can be classified into several
layers that are used to build up an office. The main layers are the
operating system, the call processing utilities, and the call
processing options. The call processing options do not provide direct
interfaces for other modules to call. They are specifically designed
with no references to them, so that they can be independently selected
as options for any given office. When loaded, they make themselves
known to the rest of the System. The term "agency" is used for these
call processing options. Typically an agency deals with a specific set
of call processing features and the terminals (lines or trunks) to
which they apply.
The modular design concept of the DMS-MSC enables hardware components
to be extended to meet future requirements. In the event of traffic
growth, the processing capability of the MSC can easily be expanded via
faster CPU and memory extensions.
Extensions can be classified as either core or peripheral interface.
Core extensions cover processor, memory and the switching network.
2.1.1.4 VLR (VISITED LOCATION REGISTER)
The VLR is implemented completely in software within its corresponding
MSC, and is currently not separable. This arrangement of having the VLR
co-resident in memory with the MSC permits very quick updates and
access to the subscriber data, thereby reducing the overall processing
load on the System, improving MSC capacity and minimizing call set-up
time.
The VLR queries other network components (VLRs and HLRs) for
information, when necessary to complete its own processing. These
queries include location updates, authentication requests, and other
events where the required data is not immediately available.
The contents of the VLR closely match those of the HLR, but include
additional information specific to the handling of the mobile
subscribers, such as TMSI's, handover numbers and feature status.
While the VLR has an appearance in the DMS table control system for
software upgrade and System recovery purposes, it is not normally
manipulated externally; additions and changes to its contents are
handled by the System itself. Certain sensitive pieces of information,
such as authentication and ciphering data, are not made visible to
ensure security of the data.
Communication between the VLR and other external network components
(HLRs and VLRs) is accomplished through the MAP (Mobile Application
Part) protocol.
30
2.1.2 HOME LOCATION REGISTER (HLR)
The principle function of the HLR is to provide a central repository
for the mobile subscriber information required by the network together
with facilities for communications with the other network entities. On
smaller Systems the HLR may be initially integrated inside the MSC. All
subscribers have the following types of information associated with
them:
o MS Operational Information
Identification, numbering and authentication.
o MS Subscription Information
Indication of the selected basic and supplementary services
available to the subscriber together with any options relating
to those services.
o MS Service Registration and Activation Information
Indication of which services are currently selected by the
subscriber together with qualifying parameters.
o MS Location Information
Indication of the subscribers current location with respect to
the network.
The HLR maintains this information within its database and provides
services through which other network entities may access it.
The HLR is connected to the network through CCS/C7(CCITT) links to the
VLRs and MSCs. The information is transferred as CCS/C7(CCITT)
application layer messages.
The information within the HLR is classified as either permanent data
or temporary data: permanent data is updated by the service provider
through the use of Customer supplied Administrative Data Center (ADC)
functions; temporary data is updated in real-time from the network. MS
operational information and subscription information is an example of
permanent data, whereas location information is an example of temporary
data.
2.1.2.1 HLR ARCHITECTURE
The DMS-HLR is based on the hardware components of the DMS as shown
below. The ADC (Administrative Data Center) is an external component
and not part of the platform.
31
[GRAPHIC OMITTED]
FIGURE 2-3 DMS-HLR HARDWARE
THE BASE is comprised of the DMS-CORE, DMS-BUS, I/O Controller (IOC),
the SLM II disk, the Office Alarms Unit (OAU) and a network module. The
DMS-CORE provides centralized HLR and CCS/C7(CCITT) maintenance; the
DMS-BUS provides the messaging medium between processors (e.g. LIUs and
FPs); the IOC provides the MAP terminals to maintain the DMS-HLR node
and printers for OM log reporting, and the ADC interface; the SLM II
disk provides storage for the DMS-HLR software load and datafill; the
OAU provides the audible and visual alarm reporting; the network module
connects the OAU to the System.
THE CORE holds the HLR application databases, implements the query
processing functions for one or more HLR applications, and provides
access to HLR data for update and administration purposes. Non-volatile
storage of the HLR data is provided via image capture on the SLM II
disk.
LIUS which implement MTP layers 1, 2 and 3 and the SCCP layer of the
CCS/C7(CCITT) protocol. LIUs are also part of the DMS STP product.
LPPS which house the LIUs.
32
2.1.2.2 AUC (AUTHENTICATION CENTER)
The AUC contains subscriber authentication keys (Ki) and generates
security related parameters.
During normal operation, the VLR will interrogate the AUC, via the HLR,
for authentication and ciphering information. When requested, the AUC
generates and sends a set of authentication parameters and ciphering
vectors for forwarding back to the VLR.
The AUC is implemented as a separate entity in software within the HLR,
but it is not deployable separately.
2.1.3 SERVICE DESCRIPTION
The following is a description of interfaces and services of the MSC
and HLR.
2.1.3.1 "A" INTERFACE MODIFICATIONS
Modifications to the GSM A interface are implemented to support the
System radio requirements. These include change in message formatting
and the inclusion of additional parameters in handover messaging.
2.1.3.2 IDEN AUTHENTICATION ALGORITHM
The DMS-HLR contains an AUC, which generates security-related
parameters. These are used to ensure that only authorized mobile
subscribers have access to the network. An iDEN specific authentication
algorithm is implemented in the AUC. The AUC also maintains the
confidentiality of the subscriber authentication key Ki.
The authentication procedure is always initiated and controlled by the
network.
2.1.3.3 THIS SECTION REMOVED INTENTIONALLY.
2.1.3.4 THIS SECTION REMOVED INTENTIONALLY.
2.1.3.5 CALL WAITING
Call Waiting permits a mobile subscriber to be notified of an incoming
call (as per basic call procedures) while the traffic channel is not
available for the incoming call. Subsequently, the subscriber can
either accept, reject, or ignore the incoming call.
33
2.1.3.6 CALL FORWARDING (UNCONDITIONAL)
Call Forward Unconditional allows the called subscriber to have the
network divert all incoming calls addressed to the called mobile
subscriber's directory number (DN) to another DN. Once Call Forwarding
is activated, all incoming calls are forwarded no matter what the
condition of the termination. Unconditional Call Forwarding overrides
all other types of Call Forwarding. Registration of Call Forwarding can
be accomplished either by the service provider or through the use of a
control procedure by the subscriber.
2.1.3.7 NO ANSWER TRANSFER
Allows the called mobile subscriber to have the network divert all
incoming calls addressed to the called mobile subscriber's DN, but
which are not answered, to another DN. The ability of the subscriber to
originate calls is not affected. Once Call Forward No Reply is
activated, all incoming calls that meet Call Forward No Reply criteria
are forwarded.
2.1.3.8 BUSY TRANSFER
Allows the called mobile subscriber to have the network divert all
incoming calls addressed to the called mobile subscriber's DN, which
meet Mobile Subscriber Busy criteria, to another DN. The ability of the
subscriber to originate calls is not affected. Once activated, all
incoming calls that meet Mobile Subscriber Busy criteria are forwarded.
2.1.3.9 CALL HOLD
This allows the mobile subscriber to place an active call on hold or
retrieve a currently held call.
2.1.3.10 INCOMING CALLS ONLY
This is based on barring all outgoing calls. It gives the subscriber
the ability to deny any outgoing call set-up, except emergency calls.
2.1.3.11 CALL BARRING OUTGOING INTERNATIONAL CALLS
Barring All Outgoing International Calls (BOIC) provides the subscriber
with the ability to deny outgoing call set-up to international numbers.
2.1.3.12 SOURCE DIRECTED ROUTING
The ability to translate and route mobile originated calls based on
cell of origination.
34
2.1.3.13 THIS SECTION REMOVED INTENTIONALLY.
2.1.3.14 LEAST COST (TIME OF DAY) ROUTING
The Time of Day (TOD) Routing feature allows or denies route choices
based on time of day. The times can be set according to the rate
schedules of the carriers accessible to the user. The changeovers also
can be varied based on the day of week and day of year, to account for
weekends and holidays.
The TOD system allows for changeovers to be specified for up to 16 time
ranges. Different results can be defined for any day, or set of days on
a weekly basis, or for any specific day of the year.
2.1.3.15 ALTERNATE ROUTING
If no idle trunk is available in a selected trunk group, the System
advances to the next route choice. If the end of the list is reached
and no idle trunk is found, the software controlling the call selects
the appropriate treatment code, and translation proceeds to the
treatment table.
2.1.3.16 THIS SECTION REMOVED INTENTIONALLY.
2.1.3.17 R2 SIGNALING INTO THE PSTN
MFCR2 (Multifrequency Compelled Register) Signaling can be supported,
depending on the specific in-country signaling implementation. Details
on this signaling must be provided by the Customer in order for a firm
switch quote to be provided.
2.1.3.18 VOICE MAIL INTERFACE (R2)
This allows the mobile subscribers to redirect an incoming call using
call forwarding capabilities to an optional voice mail service via an
R2 Interface (trunk). The mobile subscriber can dial the voice mail
service directory number to retrieve the subscriber's voice messages.
Details on the specific signaling must be provided to Motorola for a
firm quote.
2.1.3.19 INTRA-SYSTEM ROAMING (ROAMING WITHIN A SINGLE MSC)
The System tracks a unit's location so that calls can be routed to it.
Interconnect calls require the current location of an MS. The System
utilizes a LA concept. LA consists of a collection of cells. The mobile
issues a location update request whenever there is a change in the LAI.
The location update request is sent to the VLR that holds the current
location of the MS.
35
2.1.3.20 INTER-SYSTEM ROAMING (BETWEEN TWO MSCS ON THE SAME NETWORK)
The ability to travel freely throughout the single service area and
originate or receive calls without regard to its current location can
be extended to allow MS's to travel from one service area to another.
The System will use a service area concept and a VLR in addition to the
LA. The location request update is sent to the VLR that issues a TMSI
for the MS allowing it to originate calls. Then the VLR sends an update
to the HLR associated with the MS. Subsequently, the HLR will route all
MS terminated calls to the current VLR allowing it to receive calls.
2.1.3.21 OVERDIAL (DTMF)
DTMF is an inband, one out of four plus one out of four, signaling
system primarily used from the terminal instruments in
telecommunications networks. The use of DTMF is only permitted during
an active call and is disabled in all other phases.
The MS generated DTMF overdial digits, which arrive from the MS as
signaling messages, must be regenerated by the MSC so that the MS is
capable of accessing the "touch tone" (DTMF) driven services such as
banking, voice mail systems and others. External DTMF overdial devices
are not supported.
2.1.3.22 TRAFFIC DATA (OPERATIONAL MEASUREMENTS)
These measurements/pegs are subject to change with each software
release as new features and System enhancements are added to the
System. Documentation for OMs is provided in the Northern Telecom
Practices (NTPs) in CD ROM.
2.1.3.23 SHORT MESSAGE SERVICE (SMS)
SMS (Message-Mail(TM)) is a feature of the System that facilitates
delivery of short messages of up to 140 characters to an MS from
several sources. These sources, called short message entities, include
operator entry of alpha-numeric messages, numeric messages through
DTMF-IVR digit collection from PSTN, and voice mail indication from a
connected voice mail system.
A distinguishing feature of SMS is the storing and forwarding of
messages to MSs. If the messages cannot be delivered, the SMS-SC stores
the message for delivery when the MS becomes available to the system.
To add SMS to the iDEN system requires the addition of a Short Message
Service Center (SMS-SC) and additional software to the MSC to interface
and interwork with the SMS-SC. These are additional-cost items.
36
2.1.3.24 ROUTING TO PSTN OPERATOR
The capability to route various type calls to a trunk terminating to a
PSTN operator will be via standard translations. The MSC will not have
mobile operator position system capability.
2.1.3.25 AUTO MESSAGE ACCOUNTING
The MSC collects a full set of call record information. This
information can be archived using a standard 9 track magnetic tape
supplied with the MSC. These tapes can then be sent to a separate
billing system. The MSC may optionally provide on-line transfer of
billing information by using a standard FTAM. This eliminates the need
for transferring tapes to the billing center and facilities programmed
periodic automatic transfer of billing information.
2.1.3.26 DATA SERVICES
System Data Services using Interworking Function (IWF) are available.
These support Group 3 fax and asyncronous data. The MSC contains call
control and routing functions for data and fax services. The services
that are supported are Non-Transparent Async Data and Non-Transparent
Fax. The addition of IWF requires the purchase of IWF hardware at
additional cost. The MSC software to support IWF functionality must be
purchased as part of the IWF Hardware package.
2.1.3.27 NEAR REAL TIME BILLING
This near real time data transfer feature allows billing records to be
sent to the billing center as soon as the records are formatted and
written to disk. This capability enables the billing center to generate
billing records shortly after the calls terminate. To incorporate this
feature, a billing server must be purchased at additional cost.
2.1.3.28 CLASS-OF-SERVICE (OPTIONAL)
DMS-MSC/HLR subscribers are partitioned into various customer groups at
provisioning time. The customer group ID given to a subscriber
community logically relates and uniquely identifies uniform and group
specific services. NCOS in the DMS allows further service
differentiation within a customer group. There are a maximum of 256
NCOS per subscriber group that can define originating and terminating
restrictions on a subscriber basis. The combination of customer group
IDs and NCOS allows the control of services for a class of subscribers.
For example, they can be used initially for restricting a group of
subscribers from making calls to a particular exchange.
To add Class-of-Service to the iDEN System requires purchase of the
software feature.
2.1.3.29 LOCAL CALLS ONLY
A mobile subscriber that subscribes to Local Calls Only can make calls
to those directory numbers in the target area that the network has
designated as local.
37
2.1.3.30 INTER-MSC HANDOVER
Inter-MSC handover occurs when a subscriber moves into a new MSC area.
A terrestrial connection is set up to the new MSC, and the radio
resource is switched to the new BSC on the new MSC.
2.1.3.31 THREE PARTY CALLING
This service provides MS the ability to have three party call, i.e.,
simultaneous communication with two additional parties. In order for a
user to activate a three-party service, the user must have: (1) one
active call; (2) one call on hold, and (3) both calls must have been
answered. In this situation, the served mobile subscriber can request
the network to begin the three party service.
2.1.3.32 DIGITAL CROSSCONNECT SYSTEM (DCS)
The DCS may be used as the BSC Site interface to EBTS. DCS requirements
are explained in greater detail in Section 1.1.6 of the Exhibit.
2.1.3.33 ADDING SYSTEM FEATURES
For reliability, both the MSC and the HLR have duplicated control
component elements that operate synchronously, and duplicated messaging
component elements that operate in a load-sharing mode. This
duplication offers hardware fault protection, as well as the ability to
carry out office extensions and software updates without disrupting
service.
Batch Change Supplement (BCS) is Northern Telecom's means of enhancing
existing features and adding new features to the DMS-MSC and DMS-HLR.
The following is an explanation of Northern Telecom's software update
procedures that are followed after Customer requests such an update:
o Customer is notified of the proposed BCS application schedule.
o Each office scheduled for a BCS application is polled approximately 7
weeks prior to the software delivery date. The BCS polling group
first contacts Customer to request permission to poll the office, and
then dials via remote modem into the MSC/HLR to begin the polling
session. Memory usage and current BCS levels are verified on the
MSC/HLR. The polling also contains information on the hardware
configuration and subscriber database. This information is used by
various hardware and software engineering groups who build and
deliver the new BCS load.
38
o The polling is used to determine any BCS gating hardware
requirements. An example of gating hardware is additional memory
requirements, or updated circuit packs. After engineering has
evaluated the hardware configuration, any required gating hardware is
sent to Site, and is installed in the System for at least 12 days.
These 12 days are called the "soak period" during which this new
hardware is monitored for stability. Any hardware that becomes
defective within the soak period is replaced and must operate a
minimum of 72 hours without a fault prior to the BCS application. If
there is insufficient time to allow for a 72-hour period, the
application will be rescheduled by NTI.
This 12-day soak rule decreases the likelihood that the software
upgrade will be impacted or unsuccessful due to faulty or unstable
hardware in the office.
o Pre-production activities are performed immediately prior to building
or producing the new BCS load. These activities include:
- Verification of the job feature database. Confirm the software
packages ordered by Customer are included in the database, and
all software interdependencies are met.
- Ship documentation to Site (includes Northern Telecom Practices
(NTPs) for the particular BCS load).
o Production of the software load (load build). Load build is a series
of procedures that merge base-level software (general software
packages common to all offices) with optionally ordered features into
a customized un-datafilled software load.
o The software delivery process involves moving the office-specific
data from the old BCS load to the new BCS load, prior to applying the
new load to Customer's MSC.
After the data has been verified, the application process is started.
The new BCS load is first added into the inactive side of the CPU.
Once the inactive side is loaded, an activity command is used to
bring the System on-line with the new software load. By using this
method, new software can be added to the System without affecting
service.
2.1.4 NORTHERN TELECOM DMS-MSC
The Northern Telecom DMS-MSC(TM) is based on the Northern Telecom DMS
Family of switching products.
2.1.4.1 DMS-MSC ELECTRICAL/ENVIRONMENTAL CHARACTERISTICS
----------------------------------------------------------------------
Nominal Voltage -48 v DC
----------------------------------------------------------------------
Temperature 10 -30 degrees C
----------------------------------------------------------------------
Humidity 20 -55% relative humidity
----------------------------------------------------------------------
39
2.1.4.2 HLR (HOME LOCATION REGISTER)
The HLR is based on a fault tolerant hardware platform.
HLR ELECTRICAL/ENVIRONMENTAL CHARACTERISTICS
---------------------------------------------------------------------
Nominal Voltage -48 v DC
---------------------------------------------------------------------
Temperature 10 - 30 degrees C
---------------------------------------------------------------------
Humidity 20 - 55% relative humidity
---------------------------------------------------------------------
2.2 XCDR (VOICE TRANSCODER)
The XCDR module is generally located at the MSC Site. Its function is
to provide the transcoding between MS VSELP compressed audio and the 64
kB Pulse Code Modulation (PCM) utilized in the MSC and PSTN.
The MSC provides the interface to the PSTN, therefore, VSELP compressed
speech arriving from the BSC/EBTS needs to be converted to the Mu-law
(T1)/A-law (E1) PCM format by the XCDR. Due to the delays inherent in
packetized low rate speech, the MSC must provide the required degree of
echo cancellation/suppression and noise masking to ensure audio
quality. Communication links between the MS and the BSC/EBTS employ DTx
which improves radio channel utilization and conserves the battery life
of the handportable MS. The XCDR supports the DTx algorithm used by the
MS, including noise masking of the silence intervals to ensure a more
natural sounding speech. Voice packets may arrive at the XCDR with a
variable delay. This occurs due to the BSC/EBTS internal packet
processing. This delay is removed to provide an uninterrupted stream of
PCM speech to the MSC.
The BSC may be remotely located or co-located with the XCDR. Depending
on traffic density, and if co-located, the BSC and the XCDR card cages
may be housed in the same cabinet to form an integral BSC/CP/XCDR
system or in separate cabinets to optimize trunking efficiency.
2.3 DAP (DISPATCH APPLICATIONS PROCESSOR)
The DAP is a fault tolerant node responsible for the overall
coordination and control of the dispatch communication services and
support of the network operations related to MS units. The DAP has been
optimized to support the rapid response time required for dispatch
services. Up to four DAPs may be combined as one system for increased
subscriber capacity. These services include typical dispatch calls with
support for inter-Site calls when any target MS unit(s) is outside the
coverage area of the call-initiating Site. The dispatch-type features
included are:
PRIVATE CALL (INDIVIDUAL DISPATCH CALL) -- An MS user can engage in a
conversation with another MS user.
40
TALK-GROUP CALL (FLEET DISPATCH CALL) -- An MS can engage in a
conversation with a predefined group of MS users.
SELECTED TALK-GROUP CALL (GROUP DISPATCH CALL) -- A dispatcher can
communicate with a predefined group of MS users or dynamically select a
subset of members based upon their current location (e.g. selected
service area, selected local area, or wide area).
In addition to the above basic features, the DAP will support the
following:
OVER-THE-AIR-PROGRAMMING -- All of the parameters necessary for
defining a MS unit's essential operating parameters will be provided
via an over-the-air protocol.
PTT-ID -- The controller will optionally forward individual MS IDs to a
properly equipped MS.
CALL ALERT -- A MS user can send an alert message containing his ID to
another MS registered on the System requesting him to call back.
AFFILIATION -- A MS user can change its default groups and System to be
used from a predefined list of choices.
In order to support all the dispatch/MS unit network management
services, the DAP must manage/request global-shareable System resources
and track the state and location of dispatch units. The network
management services include the resources managed locally by the DAP,
the resources managed by the ACG and the MSCs themselves. This includes
knowing if the unit is registered, where it is registered and providing
it with the correct default groups. The following System features will
provide the System with this information:
AUTO-REGISTRATION -- A MS will indicate that it is coming into a new LA
so it can continue operating at that area. The unit will be provided
with the parameters necessary for operating in this LA.
AUTO-DE-REGISTRATION -- A MS will indicate that it is leaving the
current LA because of either powering-off or by roaming into another
LA.
Since the location data is needed for the telephone interconnect
services and stored in the HLR/VLR data base, the DAP implements its
own mobility tracking and uses a private data base (D-HLR) maintained
by the DAP to track the locations needed for the dispatch services.
The D-HLR keeps track of all the records necessary for the dispatch
communication services. The database will include a MS unit access
record for each unit to identify which features the unit is permitted
to use. The database will also be used to indicate in which call a MS
unit is currently
41
involved so the DAP can correctly process conflicts that arise. In
addition, records will be needed for dispatch talk-groups to determine
which MSs make-up each of these groups.
The DAP also collects air time usage information and performance
statistics. This information is stored on a disk and provided to other
systems as necessary (e.g., a billing computer).
2.4 MPS (METRO-PACKET-SWITCH)
The MPS is a high-speed digital T1/E1 nodal processor for the System.
This provides virtual circuit connectivity between various end node
EBTS for dispatch traffic, and associated control information. A MPS
may be expanded to form even wider area dispatching services.
The MPS will communicate with end nodes, EBTS and the DAP, via a star
configuration network. The MPS is the central switching node and is
connected to each end node via one or more statically allocated
DSO/timeslots. The MPS and end nodes will coordinate the exchange of
information via industry standard based protocols. These protocols will
provide for the multiplexing of both control and packetized voice over
the shared DS0/timeslots.
The MPS is configured to provide sophisticated network routing,
resiliency, redundancy and cost effectiveness. When possible, it will
provide fast network re-routing on circuit failure to maintain voice
and control sessions. Faults will be indicated by local and network
alarms. The MPS will have continuous diagnostics and can be configured
to provide full hardware redundancy for all components.
2.5 OMC (OPERATIONS MAINTENANCE CENTER)
2.5.1 GENERAL
The OMC is a centralized facility that supports the day to day
management of the System and provides a database for long term network
engineering and planning tools.
The OMC manages the DAP, EBTS and BSC-CP/BSC-XCDR. The DMS-MSC and HLR
will be remotely accessible through terminal emulation windows on the
OMC. The DAP, EBTS and BSC-CP/BSC-XCDR have network management agents
that support a hierarchical network management philosophy. The OMC
supports the following network management applications functions:
o Event/Alarm Management
o Fault Management
o Performance Management
42
o Configuration Management
o Security Management
The Event/Alarm Management functions provide utilities to report and
log alarms for the attention of the maintenance personnel at the OMC.
The Fault Management functions of the OMC allow network devices to be
manually or automatically removed from or restored to service. The
status of the network devices can be checked from the OMC, and tests
and diagnostics on various devices can be invoked. Diagnostic control
can be invoked, for example, on the BSC, EBTS and other fixed network
entities.
The performance management functions include collecting traffic
statistics from the various network entities and archiving them to disk
for display or analysis.
The OMC provides System change control for the software versions and
configuration databases in the network entities. Software loads can be
downloaded from the OMC to other network entities. The OMC keeps track
of which network entities are running which versions of software.
Software upgrades are coordinated from the OMC.
The System configuration databases of the other network entities can
also be downloaded. These databases change as the physical
configuration of the network expands to accommodate growth. By using
either OSI procedures to manipulate defined managed objects or by using
a remote man-machine interface when objects are not defined, the data
bases on other entities can be changed from the OMC. The OMC can also
perform consistency checks on data bases in the other entities.
The OMC network management application is built to run on the UNIX
operating system which provides maximum flexibility in adapting new
applications by providing an industry standard operating environment.
The OMC security management function provides a secure environment for
operating the network. It contains a password and authorization
database which limit the functions each maintenance person can perform.
An OMC MMI (Man-Machine Interface) is supplied for interacting with the
Network Manager providing a user-friendly interface. The OMC has the
ability to operate autonomously so that normally the Network Manager
need only supervise the reported events and reactions of the network.
The MMI control is provided through "X" terminals and provides
facilities to enter commands and to display command responses and
alarms. Multiple "X" terminals can be connected to the MMI to allow
access through several locations. With this interface all equipment
repair and replacement, all maintenance, recent change, troubleshooting
and diagnostics, and System administration can be executed through a
single focal point.
43
2.5.2. OMC (OPERATIONS MAINTENANCE CENTER)
OMC ELECTRICAL/ENVIRONMENTAL CHARACTERISTICS
----------------------------------------------------------------------
Voltage Range 100 - 120V AC (uses an inverter
for battery backup)
----------------------------------------------------------------------
Temperature 10 -38 degrees C
----------------------------------------------------------------------
Humidity 10 - 85% relative humidity
----------------------------------------------------------------------
Note: Other supply voltage options are available.
OMC/MMI ELECTRICAL/ENVIRONMENTAL CHARACTERISTICS
---------------------------------------------------------------------
Voltage Range 90 - 132V AC
---------------------------------------------------------------------
Temperature 5 - 40 degrees C
---------------------------------------------------------------------
Humidity 10 - 80% relative humidity
---------------------------------------------------------------------
Note: Other supply voltage options are available.
44
2.6 THIS SECTION INTENTIONALLY BLANK. (FOR FUTURE USE)
2.7 BSC/CP/XCDR ARCHITECTURE
[GRAPHIC OMITTED]
FIGURE 2-4 BSC-CP BLOCK DIAGRAM
2.7.1 GENERAL DESCRIPTION
The Motorola BSC-CP equipment provides the control and interface
between the MSC and the EBTS. It is also a way of remoting some of this
capability away from the MSC. The BSC can function as a remote
concentration point to minimize recurring line costs. In addition, the
BSC architecture provides a platform for the Speech Transcoder (XCDR).
These functions are normally associated with the MSC. This flexibility
is achieved by defining a set of common boards which are used
throughout. A block diagram of the BSC-CP is shown in FIGURE 2-4 BSC-CP
BLOCK DIAGRAM. A block diagram of the BSC-XCDR is shown in FIGURE 2-6
BSC-XCDR BLOCK DIAGRAM. This section describes the architecture and the
modules used in these subsystems.
45
[GRAPHIC OMITTED]
FIGURE 2-5 BSC CABINET CONFIGURATION
Two card cages are mounted in a 24 inch rack as depicted in FIGURE 2-5
BSC CABINET CONFIGURATION. Each card cage is powered by three load
sharing DC power supplies operating from -48 VDC. Modules are
interconnected using the microprocessor bus, the TDM bus and the Local
Area Network. Control and communication functions are performed by the
GPROC. System interfaces are based on the T1/E1 standard with extensive
use of HDLC based data communications.
A parallel TDM bus is used for voice and data traffic. The bus is fully
redundant. It is controlled through the KSW which performs 64, 32 and
16 kbps time slot interchange functions.
46
Local Area Network is based on IEEE 802.5 standard (Token Ring). It is
used for communications between the GPROCs. It is also extendible
between the card cages using the fiber-optic interface. The LAN is
fully redundant.
The MCAP bus is used by the GPROCs to control the extender boards. This
bus is not extendible beyond the boundaries of a single digital board
shelf.
[GRAPHIC OMITTED]
FIGURE 2-6 BSC-XCDR BLOCK DIAGRAM
2.7.2 BSC/CP/XCDR TECHNICAL SPECIFICATIONS
Cabinet ratings shown in the chart below are common to the CP/XCDR
components.
47
-----------------------------------------------------------------------
CABINET RATINGS
-----------------------------------------------------------------------
Size (inches)
-----------------------------------------------------------------------
width 28
-----------------------------------------------------------------------
depth 16
-----------------------------------------------------------------------
height 83
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Weight (loaded)
-----------------------------------------------------------------------
kg 242
-----------------------------------------------------------------------
lbs 535
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Power
-----------------------------------------------------------------------
watts 3,100
-----------------------------------------------------------------------
BTU/hr 11,000
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Temperature(degree)C 0 to +50
-----------------------------------------------------------------------
Supply Voltage
-----------------------------------------------------------------------
-48 VDC -40 to-75 volts
-----------------------------------------------------------------------
Supply Maximum Current
-----------------------------------------------------------------------
-48 VDC 30 amps DC
-----------------------------------------------------------------------
2.8 ENHANCED BASE TRANSCEIVER SYSTEM
2.8.1 GENERAL DESCRIPTION
The EBTS diagrammed in FIGURE 2-7 ENHANCED BASE TRANSCEIVER SYSTEM,
provides radio communication link between the land network and the MS
units. The base radios actually perform the communications with the MS
units, sending both the control information and the compressed speech
over a multiplexed radio channel. Each base radio handles one 25 kHz,
in the 800 MHz Land-Mobile Band channel with 6 time slots. Therefore up
to 6 conversations per frequency can take place at the same time. Some
of the time slots are assigned for control data. These slots are also
used for channel requests by the MS units and for paging the units from
the network.
48
[GRAPHIC OMITTED]
FIGURE 2-7 ENHANCED BASE TRANSCEIVER SYSTEM
Most of the control messages are originated at the ACG portion of the
ISC which is the Site's "resource manager". The ACG keeps track of the
available frequencies and the slots and assigns these resources to the
MS units as necessary. The ISC communicates with the network over the
T1/E1 lines. Compressed voice is sent out to be connected to the PSTN
or for "one to many" duplication in the dispatch call. The ISC also
communicates with operations and management computer and the subscriber
authorization computers at the MSC. Two ISC units are needed to provide
a fall back capability. A Local Area Network links the EBTS modules.
Time synchronization and a common frequency standard are also provided
within the ISC. The RF distribution system depends on the particular
Site capability and is described in other sections of this document.
49
This System provides a considerably more private grade of voice and
data operation than currently available from the FM cellular systems
and most FM trunking systems. This occurs because no commercially
available monitor receivers for this type of modulation currently
exist, and the difficulty with regard to building one represents a
significant barrier. Some of the key difficulties include: handover
tracking, VSELP decoding, authentication and linear demodulation. These
features of the System effectively block most eavesdroppers. For these
reasons many System operators may not require any additional security.
[GRAPHIC OMITTED]
FIGURE 2-8 STATION MECHANICS
As reflected in FIGURE 2-8 STATION MECHANICS, EBTS functional modules
are constructed as card cages which are 15 inches deep and mount in EIA
standard 19 inch width rails. The BR is a 5U (Rack Unit =1.75") high
card cage. The card cage contains the RF Power Amplifier, the
receivers, the BRC, the power converter and the exciter.
2.8.2 BASE RADIO (BR)
2.8.2.1 BASE RADIO CONTROLLER (BRC)
This microprocessor based module shown in FIGURE 2-9 BASE RADIO BLOCK
DIAGRAM, controls basic station functions including transmitter keying,
operating frequency programming, data routing and fault management. The
BRC connects three receivers (3 branch diversity) and one transmitter
via the dedicated high speed digital links. This module contains two
DSPs for performing advanced linear modulation and demodulation.
50
[GRAPHIC OMITTED]
FIGURE 2-9 BASE RADIO BLOCK DIAGRAM
The BRC supports a local area network connection used to exchange radio
channel data and base radio control messages with the ISC. Radio
channel data includes compressed voice packets and user data such as
telephone dialing commands. It also contains the control stream, which
is used to perform such functions as handovers, System registration and
unit paging.
The BRC performs the real-time control of the three receivers and one
transmitter. At the physical layer the BRC demodulates the digitized IF
signals from the receivers into a bit stream by locking onto and
tracking the received signals within the time slots. Three way
diversity is used to combat the channel disturbances at this very high
data rate. On the transmit side, the radio channel data and the pilot
symbols are combined, and the output waveform is synthesized. At the
data link layer, the BRC performs partitioning of the time slots used
for multiplexing of 6 traffic channels onto one frequency resource. The
BRC also performs error detection and correction using optimized
procedures to handle voice and data. The outbound channels are always
active even if no users are assigned to these channels. The BRC
generates the idle pattern for these channels.
The BRC supports network management functions. The BRC is capable of
self-testing and conducting the diagnostic checks of transmitter,
receiver and power converter modules. It also configures these modules
on command or on power up. The BRC monitors the alarm conditions and
routes the alarm messages to the ISC and the local serial port. A
command set that supports access to the alarm information, run-time
statistics and on-demand testing is used. The BRC software, except for
the "boot" code, can be remotely updated.
The BRC utilizes an external Site synchronization signal supplied by
the time frequency reference. This signal is used to align the time
division slots on different frequencies.
51
2.8.2.2 INTEGRATED SITE CONTROLLER (ISC)
The ISC is the Site controller and the communications gateway between
an EBTS Site and the System's central network.
The ACG is a functional portion of the ISC. The ACG relieves the BSC,
DAP and MSC from the lower level Site control functions. It provides
the isolation between the central network and the RF System
implementation. Because most of the Site control functions are
performed by the ACG, the number of messages to the MSC is decreased.
This approach also results in the shortest call setup time and
decreased link capacity requirements.
The ISC controls the RF base radios via a LAN. The ISC communicates
with higher levels of the network via a T1/E1 link. It communicates
with the BSC/MSC for interconnect calls and the DAP for dispatch calls.
For example, a "page" received from the controlling BSC is sent to the
correct base radio, and an acknowledgment is returned to the originator
BSC.
In conjunction with the MS, the EBTS measures handover parameters. The
EBTS/ACG handles intra Site handovers between sectors. For telephone
interconnect handovers involving multiple Sites, the handover metrics
are passed on to the upper layers of the network (BSC and/or MSC) from
several Sites for evaluation and the handover decision.
Additionally, the ACG contains a "network management agent" process
controlled by the operations and management computer at the MSO. This
process is responsible for performing all the local network management
functions such as configuration management (e.g. code download), fault
management (alarm processing and re-configuration support), performance
management (e.g. statistics gathering) and communication with its
"agent" processes resident in the base radios and the MS units.
The ISC supports data-communications over a single T1/E1. The ISC card
cage houses the TFR, EAS, and CSU. Two ISC units are required for
standby operation. Communication exists between the master and standby
ISC to determine the current ISC master.
The ISC supports up to 10 RF channels (60 RF servers) at an Omni EBTS
Site and 12 RF channels (72 RF servers) at a Sector EBTS Site.
The ISC interfaces (on its T1/E1 side) to 64 kbps DSO/timeslots where
24/30 DS0s form one T1/E1. The quantity of DSO/timeslots required in
the single T1/E1, from an EBTS Site, will depend on the number of RF
servers, the total traffic loading and the traffic mix (Interconnect
and Dispatch) at the EBTS Site. The ISC requires a full T1/E1 (not a
fractional T1/E1) unless a Customer provided DCS (grooming the T1/E1)
is located at the EBTS Site.
52
The EBTS/ISC passes the following traffic via the T1/E1 to the iDEN
central network: Network Management (Status/Control and Configuration),
Telephone Interconnect Service and Dispatch Service.
Compressed voice for Interconnect is sent in a 16 kbps sub-rated
format. "Clear T1/E1" capability is needed to support the sub-rates
which is accomplished via B8ZS/HDB3.
Time Frequency Reference (TFR), an ultra high stability ovenized Site
reference, is incorporated in the ISC. Each base transceiver is
connected to the reference signal from the Site standard.
2.8.2.3 RECEIVER
The receiver converts the low level RF signal into the digitized IF
data which is sent to the BRC for post processing via the dedicated
high speed serial link. The receiver includes a synthesizer for
operation on any of the 800 MHz band channels with 25 kHz spacing. The
receiver is capable of linear operation over a wide dynamic range
necessary to support the advanced linear modulation. Adjacent channel
selectivity is provided by the combination of crystal and digital
filters.
2.8.2.4 TRANSMITTER
The transmitter converts the digitized output waveform, received from
the base radio controller via the dedicated high speed serial link,
into a high power RF signal. The transmitter includes a 800 MHz band
linear power amplifier. The linear 350 Watts PEP power amplifier
provides 60 dB IMR and is rated for 70 Watts average continuous duty.
The high level of linearity is achieved with a double conversion
feedback design using a number of custom integrated circuits. The
transmit frequency is controlled through the on-board synthesizer. The
BRC is used to perform thermal derating, transmitter initialization,
power control loop leveling and synthesizer loading. This module
includes fans for thermal management.
2.8.2.5 POWER CONVERTER
The power converter provides DC voltage necessary for base radio
operation. It operates from the nominal input voltage. Fans are
included in this module for cooling the power supply devices.
2.8.3 THIS SECTION REMOVED INTENTIONALLY.
53
2.8.4 LAN (LOCAL AREA NETWORK)
The LAN provides a method of routing both data and compressed voice on
the same communication link. The LAN operates at 10 Mbps to carry
traffic between the base radios and the ACG. The functionality of the
LAN repeater has been integrated into the LAN interfaces of the base
radios and the ISC. This further improves System reliability. All base
radio and ISC LAN interfaces are equipped with circuitry that will
provide continued LAN functionality should a problem occur on either
the base radio or the ISC. Thus, no single failure in the base radio of
the ISC will bring down the LAN.
2.8.5 SITE SYNCHRONIZATION
The BRs at a Site must transmit their information in synchronization
with other BRs at that Site as well as with BRs at other Sites. Some of
the reasons are to prevent interference and to permit optimal handoff.
To meet this requirement, a Global Positioning Satellite Receiver
(GPSR) system, included in above TFR, is used to supply a Site timing
reference.
The ISC contains the GPSR to provide absolute time sync. This
information is distributed to all the BRs at a Site to provide
knowledge of when timeslots start.
Synchronization of base radios is necessary to ensure that MS units do
not lose time reference as they change operating frequency.
Synchronization is achieved via a GPSR at each Site. Since the time
sync is generated from one source, MS units are synchronized to the
System's time reference. To protect against a single point of failure,
a standby GPSR is supplied with each standby ISC.
2.8.6 STANDBY CAPABILITY
Three way antenna diversity is provided for each BR's receiver. The
failure of any antenna results in potentially degraded coverage and
capacity performance, but not a complete failure of the Site. The
specific degradation of Site capacity will depend on the Site's
transmitter combining scheme.
The Site equipment operates from the -48 VDC source, so that a backup
battery may be used to provide service during a power outage.
54
2.8.7 BASE RADIO TECHNICAL SPECIFICATION
GENERAL
Frequency Generation Synthesized
Frequency Stability 3400 PPB or better per year with external
reference
Frequency Spacing 25 kHz
T/R Separation (with Duplexer) 45 MHz
RF Input Impedance 50 ohms
Nominal Input Voltage -48 v DC
Average Power Consumption (Max. @ 70W output) 625 Watts
Size, Weight 8.5"H x 19" W x 15" D, 90 lbs
Temperature Range (except batteries) 0(degree)C to +40(degree)C
TRANSMITTER
Frequency Range 851-866 MHz
Frequency Switching Time 100 msec
Power Output 70W average,
350W Peak Envelope Power
Operating Bandwidth 15 MHz
Spurious and Harmonic Emissions -80 dBc
Adjacent Channel Power Per Part 90 FCC Mask
RF Emissions Per FCC Requirements
55
RECEIVER
Frequency Range 806-821 MHz
Channel Spacing 25 kHz
Adjacent Channel IF Filter Attenuation 100 dB
Preselector Bandwidth 15 MHz
Sensitivity (8% BER, Static M-QAM) Typically -115 dBm
Radio 3rd Order Intercept Point +13 dBm
RF Filter Spur Selectivity 106 dB
RF Emissions Per FCC Requirements
2.9 NETWORK SYSTEM DESIGN
2.9.1 GENERAL
The System network design, its capacity and routing will determine
which of any additional subsystems may be desired or required.
For example, in some cases, remote BSCs might optimize T1/E1 efficiency
as the System grows.
Also, the placement of the MSO Site, the dedicated T1/E1 routing to
EBTS Sites and the associated T1/E1 route distances may require
additional remote DAPSs and MPSs due to circuit delay.
2.9.1 CIRCUIT DELAY
A System design guideline has been established that recommends that
delays from an EBTS cell Site to the MPS be kept to less than 5 ms and
the delay from the MPS to the DAP be kept to less than 2.5 ms. This
limits the range from an EBTS to an MPS to about 600 (1000 KM) circuit
miles if there are no other significant delays in the inter-exchange
carrier's network (other than the link propagation delays themselves).
Telephone interconnect, short message service and circuit-switched data
can tolerate longer delays because of their less critical and less
frequent set-up times and audio delay adjustment capability, and thus
do not require the above stated dispatch system design criteria.
However, extremely long delays (such as satellite hops or terrestrial
links that have delays beyond 20 ms. should be avoided as this will add
to the telephone audio delay.
56
2.9.2 EBTS TO MSO LINKS
2.9.2.1 TI
Motorola requires that the T1 span (1.544 mbps) linking Motorola
provided equipment meet the following specifications:
o Extended super frame
o Clear channel signaling
o Binary 8 zero substitution (B8ZS) (64 kbps DSO/timeslot)
o North American T1
NOTE: The MSC to PSTN trunk interface will support 56 kbps super frame
protocol in addition to above.
2.9.2.2 E1
Motorola requires that the E1 span (2.048 Mbps) linking Motorola
provided equipment met the following specifications.
o Clear channel signaling
o HDB3 (64 kbps time slot)
o 75? Coaxial or 120? 4-wire termination.
57
3. QUALITY AND RELIABILITY
3.1 SYSTEM AVAILABILITY
System availability is calculated based upon the individual
contributions of each part of the System. In the design of the System,
Motorola has made use of fault tolerant computer architectures at all
locations where a device failure would result in the loss of a
significant part of the System. Also, Motorola has battery backup
capability at all MSO Sites and its EBTS Sites to prevent loss of
coverage and/or capacity given a failure of the AC mains.
3.2 FAULT TOLERANCE
Following is a list of fault tolerant capabilities of the System. It is
important to keep in mind that although this discussion treats a board
as a single point failure, typically this is not accurate. Many of the
boards contain identical functional blocks such as T1/E1 interfaces or
voice transcoding circuits. In such instances, a board may be capable
of functioning with some but not all of its capability. In other
instances, performance of a board may degrade without an apparent
failure. Critical circuitry is monitored as practical, and equipment
alarms are generated so that a board may be replaced before an
interruption of service occurs.
3.2.1 EBTS
A complete failure of a single EBTS may be partially offset by the
adjacent EBTS.
Three way antenna diversity is provided for each Base Radio's receiver.
The failure of any antenna may result in degraded coverage and capacity
performance, but not a complete failure of the Site. The specific
degradation of Site capacity will depend on the Site's transmitter
combining scheme.
Two ISC units can be used at every EBTS Site. If one fails the other
takes over control of the Site. After a short interruption, service is
restored automatically. All Sites use one T1/E1 to bring service from
the telephone company CO. A protected fault tolerant T1/E1 connection
between the COs can be requested from the serving telephone company.
3.2.2 BSC/CP/XCDR
Within the BSC, the GPROCs are designated as Base Site Control
Processor or Link Control Processor. The Base Site Control Processor is
a centralized control point. In the XCDR the GPROCs perform the
operations and maintenance processing.
The MSI boards provide E1/T1 link connectivity. These may be assigned
to two destinations. A high capacity connection which uses more
capacity than one T1/E1 will be degraded if a MSI board fails.
58
The transcoders boards are normally provided to support 0.1% blocking
rate. If one of the boards fails, blocking probability may increase.
3.2.3 MSC/HLR/DAP
The MSC, HLR, and DAP are provided on fault tolerant platforms. The
fault tolerant platforms incorporate redundant pairs of processor
boards that mirror the execution of the stored program. Should a
processor fail, the redundant processor of the pair takes over and
continues to operate. The failed board can be replaced on-line without
service interruption.
59
DEFINITION OF ACRONYMS
-A - B - C-
"A" Interface Switch MSC Switch
ACG Access Controller Gateway
ADC Administrative Data Center
AUC Authentication Center
BCS Batch Change Supplement
BHCA Busy Hour Call Attempts
BR Base Radio
BRC Base Radio Controller
BSC Base Site Controller
BTC Bus Terminator Card
CCS/C7(CCITT) CCITT Signaling System 7
CLKX Clock Extender
CO Central Office
CP Call Processor (Part of BSC)
CPU Central Processing Unit
CSU Channel Service Unit
-D-
DAP Dispatch Application Processor
DCS Digital Crossconnect System
DMS-MSC (Refer to MSC)
DN Directory Number
DRX Discontinuous Receive
DS Dispatch Station
DS0 Single Time Slot of E1 or T1 circuit
DSP Digital Signal Processor
DTC Digital Trunk Controller
DTC Digital Trunk Cage
DTMF Dual Tone Multi-frequency
DTX Discontinuous Transmit
-E - F-
E1 A 2.048 Megabit per second communications channel
EBTS Enhanced Base Transceiver System
EIA Electronic Industries Association
ENET Enhanced Network
(MSC Switching Network)
ERP Effective Radiated Power
ESN Equipment Serial Number
FCC Federal Communications Commission
FNE Fixed Network Equipment
FTAM File Transfer Access Method
-G - H-
GCLK Generic Clock
GPROC Generic Processor Card
GSM Global System for Mobile Communications
HDLC High Level Data Link Control
HLR Home Location Register
60
-I - J -K-
iDEN Integrated Dispatch Enhanced Network
IMEI International Mobile Equipment Identifier
IMSI International Mobile Subscriber Identifier
IOC Input/Output Controller
ISC Integrated Site Controller
ISO International Standards Organization
IWF Interworking Function
KSW Kiloport Switch
KSWX Kiloport Switch Extender
-L - M - N - O-
LA Location Area
LAI Location Area Identity
LAN Local Area Network
LANX Local Area Network Extender
LIU Link Interface Unit
LPP Link Peripheral Processor
LR Location Register
M16QAM Motorola's RF Modulation for iDEN
MAP Maintenance Administration Port
(MSC Control Terminal)
MAP Mobile Application Part (Protocol)
MCAP Motorola Cellular Processor - Advanced
MMI Man-Machine-Interface
MPC MultiPersonal Computer
MPS Metro-Packet-Switch
MS Mobile Station
MS-ISDN Mobile Station International Subscriber Directory Number
MSC Mobile Switching Center
MSI Multiple Serial Interface
MSO Mobile Switching Office
MSRN Mobile Station Roaming Number
OAU Office Alarm Unit
OCOS Originating Class of Service
OM Operational Measurement
OMC Operations and Maintenance Center
-P - Q - R - S-
PCM Pulse Code Modulation
PLMN Public Land Mobile Radio Network
PSTN Public Switched Telephone Network
PTT Push To Talk
RAM Random Access Memory
RBDS Remote BSS Diagnostic Subsystem
RF Radio Frequency
RSO Remote Switching Office
SIX Serial Interface Extender
SMR Specialized Mobile Radio
SMS Short Message Service (Message-Mail(TM))
SMS-SC Short Message Service Service Center
SS7 Signaling System 7
61
STP Signal Transfer Point
62
T - U - V - W - X - Y- Z
T1 A 1.544 Megabit-per-second communications
channel.
TDM/TDMA Time Division Multiplexed/Time Division
Multiple Access
TMSI Temporary Mobile Station Identifier
USDC United States Digital Cellular
VLR Visited Location Register
VSELP Vector Sum Excited Linear Prediction
XCDR Speech Transcoder
63
EXHIBIT "C"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM LATINOAMERICA, S.A.
ACCEPTANCE TEST PLAN
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to that Purchase Agreement to which this document is Exhibit "C" and
to the other Exhibits to that Agreement. All definitions set forth in the
Agreement shall apply hereto, unless otherwise specified herein.
1.0 PURPOSE
The purpose of this Exhibit "C" Acceptance Test Plan is to set forth the
Acceptance Testing procedures and to demonstrate to Customer that Motorola has
delivered the Hardware, Software, and features as described in and pursuant to
the Agreement and its Exhibits.
2.0 ACCEPTANCE TESTING PROCEDURES
2.1 The parties agree that the acceptance testing shall be done
for all new Systems and a modified ATP shall be performed for
all System Expansions and shall be included in all relevant
Purchase Orders. The ATP tests shall be chosen from the GATP,
as set forth below, that the parties have agreed to and
identified when Customer purchases ATP Services.
This ATP is generic in nature and tests operational features.
Should a certain feature or option not be purchased then it is
agreed that portion of the ATP shall be deleted and will not
be performed. Motorola shall supply new sections to cover new
products or features Motorola develops. The GATP will be
amended to reflect desired practices for testing Systems in
Commercial Service. The parties acknowledge that different
approaches are required for Systems in Commercial Service and
those acceptable for Systems not in Commercial Service.
Motorola and the Customer agree and acknowledge that System
performance may be affected by local regulatory constrains on
System's operation. Since such situation will be beyond
Motorola's control, it shall not impact or affect in any way
the attainment of Conditional Acceptance or Final Acceptance.
Furthermore, any condition derived from such situation shall
not become an item on the Punchlist.
Motorola and the Customer shall agree upon the ATP. It is
understood that in the event Customer uses services of the
Consultant for the ATP, Consultant's opinions will be subject
to the decisions made by Motorola and Customer.
2.2 Should Customer request additional testing above and beyond
the ATP, the parties shall not be required to consider these
tests before Conditional Acceptance. Motorola shall prepare
and present to Customer a quotation detailing the time and
material charges that such additional testing may require.
However, if Customer requests additional acceptance tests for
the sole purpose of
1
isolating any defects that affect the operation of the System,
such tests will be conducted at no additional cost to the
Customer
3 SYSTEM AND SYSTEM EXPANSION ACCEPTANCE
Acceptance of all Systems and System Expansions shall be governed by the
requirements set forth below:
3.1 Motorola shall conduct acceptance test procedures in
accordance with Section 5.0, ATP -- Conditional Acceptance,
and Section 6.0, ATP -- Final Acceptance, below. The test
procedures shall be contained in the Acceptance Test Plan
(ATP) for each System or System Expansion.
3.2 The ATP shall be based on the Generic Acceptance Test Plan
(GATP) maintained by Motorola and may also include other
additional tests mutually agreed to. The GATP shall be
modified as needed to incorporate acceptance test procedures
for newly developed Equipment and Software as part of the
Software general release process and shall reflect the then
current acceptance test procedures available. Any
modifications to the GATP shall be made by Motorola to reflect
Equipment or Software or to correct errors or omissions in the
GATP. A copy of the current GATP is attached for reference.
3.3 The scope of the ATP required to achieve Conditional
Acceptance - and Final Acceptance for each specific System or
System Expansion shall be identified and mutually agreed to.
The specific System or System Expansion ATP shall contain only
those GATP test procedures required to test the Equipment,
Software, and the associated features ordered and shall be
developed by Motorola based upon portions of the GATP
applicable to the mutually agreed upon scope for ATP
Conditional Acceptance and Final Acceptance. The schedule for
performance of such specific ATP shall be included in the
Implementation Schedule for the specific System or System
Expansion.
3.4 Motorola shall supply to Customer, no later than sixty (60)
days prior to the scheduled commencement of ATP Conditional
Acceptance and Final Acceptance, as applicable, the particular
required test procedures to achieve the specific System or
System Expansion ATP Conditional Acceptance and Final
Acceptance. Customer shall have thirty (30) days following
receipt of said test procedures to review and comment on the
content of the test procedures.
3.5 Only those features and items of Equipment and Software
supplied by Motorola in accordance with the definitions of
System and System Expansion contained herein, and installed by
Motorola, or installed by Customer in accordance with
Motorola-authored or Motorola-approved published installation
and engineering standards, shall be included in and tested
under the ATP for a System or System Expansion.
3.6 Individual Site tests and the switch test shall be performed
in accordance with the ATP as soon as the individual Sites and
switch are completed. The System test in accordance with the
ATP shall be performed as soon as the switch and Site tests
are completed. These tests shall take place even when all the
Sites are not operational if all such unavailable Sites are
due to Customer failure to perform its applicable obligations
in accordance with the Implementation Schedule ("Customer
Unavailable Sites"). If there remain Customer Unavailable
Sites due to Motorola's failure to perform its applicable
obligations in accordance with the Implementation Schedule,
such tests shall be delayed until the affected Sites become
operational.
3.7 The areas served by Customer Unavailable Sites shall not be
included in the System Test. When the Customer Unavailable
Sites are completed, the Site Test shall be completed for any
Customer Unavailable Sites. The existence of Customer
Unavailable Sites shall not delay - Conditional
2
Acceptance or Final Acceptance as long as the other items
necessary for Conditional Acceptance or Final Acceptance are
complete.
3.8 Customer may order additional testing above and beyond the
specific acceptance test procedures defined in Sections 5.0
and 6.0, below, for a System or System Expansion. In
accordance with Section 2.0 above, the additional test
procedures to be performed and the price thereof shall be
identified and mutually agreed to prior to acceptance of an
order. The completion of these additional test procedures
shall be outside the scope of the System or System Expansion
ATP and shall not be apart of, nor a precedent to, Conditional
Acceptance or Final Acceptance of a System or System
Expansion.
3.9 The acceptance test procedures as defined in Sections 5.0 and
6.0 shall not include, and shall be separate and distinct
from, any Software testing developed and executed in
conjunction with, and required to achieve, general release of
Software under the Software Maintenance Program (SMP) of the
Agreement.
3.10 The conduct of Conditional Acceptance testing procedures shall
preclude Customer from initiating an expansion to a System or
System Expansion prior to the relevant Scheduled Completion
Date, unless the parties agree in writing that such expansion
does not result in material delay and/or expense to Motorola
in conducting and/or completing Conditional Acceptance testing
procedures in accordance with the relevant Scheduled
Completion Date.
4 RESPONSIBILITIES
4.1 Initial System acceptance testing involves both the testing of
the FNE itself and the exercising of interfaces to Systems
external to the FNE. For this reason, testing of all external
equipment must be completed prior to recommencement of FNE
acceptance testing to assure its proper functioning. The
Customer is responsible to ensure the proper functioning of
equipment not supplied by Motorola. Initial System acceptance
testing shall be a joint responsibility between Motorola and
Customer.
4.2 During Motorola's performance of the ATP, Customer shall: (i)
place the System or subsystem in the appropriate condition
(i.e. System lockdown) necessary to permit such testing to be
conducted at all reasonable times in accordance with a
schedule to be mutually agreed to by the parties; (ii) make
the Equipment, data, and facilities required for completion of
Conditional Acceptance testing available to Motorola in
accordance with such approved schedule; and (iii) provide free
access, ingress and egress to Customer facilities as
reasonably required to perform Conditional Acceptance in
accordance with such approved schedule.
4.3 A qualified member of the Motorola staff, as designated by
Motorola, will serve as acceptance test coordinator. The test
coordinator will be responsible for observing and documenting
test results. Customer will provide an acceptance test monitor
who will assist in conducting the test procedure and observe
and verify the tests.
4.4 Motorola shall provide Customer a schedule of the ATP
procedures and notify Customer of the time and place at which
such tests are to be conducted. Customer shall have the right
to observe the conduct of the tests and the results thereof.
Customer shall use reasonable efforts to accommodate
Motorola's ATP schedule.
4.5 Customer is responsible for coordinating, with Motorola's
assistance, the activities of any common carrier or other
public or private agency, firm, etc., whose participation may
be required in successfully executing the test plan.
3
5 TEST PROCEDURES FOR ATP -- CONDITIONAL ACCEPTANCE
5.1 The ATP Conditional Acceptance is comprised of four (4) test
sections, as appropriate, to verify performance and
functionality of a System or subsystem. The defined test
methodologies, target performance goals, timing, reference
documents and applicability to a new System or System
Expansion are described below. The test sections include:
o Customer Unique Information Testing
o Site Operational Readiness
o Interconnect Voice Circuit Testing
o Administrative Function Test
5.2 Customer Unique Information Testing
The Customer Unique Information Testing shall evaluate the
implementation of System unique database elements developed by
Motorola utilizing specific information provided by Customer.
The test shall ensure that new System elements are properly
provisioned prior to loading of end users on a new network.
The System unique database may consist of the following
database elements, but Motorola shall specify the database
requirements based upon the final System configuration.
a) MSC Dialplan. Verify the MSC translations by
generating incoming and outgoing calls on each
NPA-NXX for each call type to include supplementary
services.
b) Dispatch and Interconnect Voice Server Testing. The
voice server tests shall include the confirmation of
functional call processing on all Site time slots
provisioned for I6 dispatch and of functional call
processing on all Site time slots provisioned for I6
and I3 interconnect call applications.
5.3 Site Operational Readiness
Site Operational Readiness will consist of the evaluation of
Site Hardware installations against established Motorola
standards. It will follow installation of each Site when power
is available to each Site and all radio equipment is installed
and hooked up. It will ensure that all Motorola-supplied
Equipment is present, properly installed, and connected with
other Site equipment.
5.4 Interconnect Voice Circuit Testing
Interconnect Voice Circuit Testing shall confirm the
connectivity and operations of all voice circuits between the
MSC and the BSC Equipment.
5.5 Administrative Function test
Administrative Function Tests will confirm the operation of
primary and common administrative functions available on the
Operations Maintenance Center (OMC). These functions include,
but are not limited to, Site build and load, parameter
changes, System statistics gathering, alarm functionality, and
making back-ups on the System.
5.6 Pass/Fail Criteria
Pass/Fail criteria of individual ATP-Conditional Acceptance
tests will be included within the detailed test procedures
delivered by Motorola to Customer as defined in Section 7.0
below.
4
Pass/fail criteria identified in the ATP -- Conditional
Acceptance test procedures will be based on the applicable
component specifications.
5.7 Special Consideration for System Expansions
The ATP for a System Expansion may contain a subset of the
acceptance tests for a System and will be dependent upon the
Equipment and Software purchased in the System Expansion.
5.8 Conditional Acceptance
In the event that commercial service has not yet commenced,
Conditional Acceptance for a System or System Expansion shall
occur when Motorola has completed and passed, to mutual
agreement, the applicable ATP tests. Conditional Acceptance
shall not be delayed because of minor (level 4 or below) test
failures. Such defects may be placed on the punchlist for
later resolution. In the event of major test failures caused
by level 6 or above defects, completion of the ATP will be
delayed until each such defect is corrected and the item
retested. Defects caused by systemic Software issues that are
not service affecting are covered under the Software
Maintenance Program (SMP).
5.9 Customer Performance Test Period
a) Upon completion of the ATP, a Punchlist shall be
mutually developed within 14 days. In addition, a
Performance Test Period, shall commence immediately
following successful completion of the ATP --
Conditional Acceptance Test Procedures, to allow
Customer to operate the System to determine if
additional failures are found as a result of Motorola
products failure to operate as specified.
b) Prior to completion of the Performance Test, Customer
may load the System or System Expansion for a period
not to exceed thirty (30) days (unless otherwise
mutually agreed to) with up to 100 employees and up
to 250 non-paying subscribers, or as otherwise
mutually agreed to, in accordance with the terms of
the Commercial Service definition in Section 1.0 of
the Agreement, provided this activity does not
interfere with commissioning or System testing. Such
loading for Customer testing purposes shall not
trigger Commercial Service.
c) Testing conducted during the Performance Test Period
shall be witnessed by Motorola, and the results,
including failures, must be reproducible and
documented by Customer to be included in the
Punchlist in the terms of Section b) below. This
testing shall be limited to testing of the System
infrastructure functionality tested in the ATP. The
testing shall specifically exclude testing of System
RF coverage and voice quality.
d) To be included in the ATP Punchlist, test failures
found during the Performance Test Period must be
Level 6 or above and, upon mutual agreement, placed
on the Punchlist within the 14-day Performance Test
Period. Any defects found after the Punchlist is
finalized shall be resolved in accordance with the
warranties provided under the Agreement.
5.10 Customer Certification of Conditional Acceptance
Upon agreement on the contents of the Punchlist, Customer
shall endorse the Motorola provided letter of acceptance
signifying occurrence of ATP -- Conditional Acceptance.
5
6 ATP -- FINAL ACCEPTANCE AND CUSTOMER CERTIFICATION
When substantially all Punchlist Items (including all Level 6 and above
defects) are resolved, ATP -- Final Acceptance shall be granted. Such
approval shall not be unreasonably withheld. Final Acceptance shall be
evidenced by a letter of acceptance provided by Motorola and signed by
Customer.
7 ACCEPTANCE GUIDELINES
7.1 In the event that, due to a problem outside Motorola's
control, a particular test or group of tests cannot be
completed within the time scheduled, one of these procedures
will be implemented:
a) The affected test or portion of a test may be
interrupted and rescheduled for completion or
retesting at some future time.
b) The affected test or portion of a test may be
continued to completion and the Acceptance Test
schedule amended as required to accommodate the
remaining tests and the exceptions that failed the
original testing.
c) If the problem results from Customer action or
inaction or due to non-performance of a Customer
responsibility, the affected test will be rescheduled
and any additional costs will be borne by Customer.
Motorola will confer with Customer and decide, on a case by
case basis, which of these procedures is appropriate and
notify Customer.
7.2 In the event of Customer-caused delays (i.e. not force majeure
or Motorola-caused) in the implementation of a System or
System Expansion, Conditional Acceptance shall be deemed
granted 60 days after the ATP -- Conditional Acceptance date
set forth in the Project Implementation Schedule and all
payments associated with Conditional Acceptance shall be due
and payable as of this date. Final Acceptance for such System
or System Expansion shall be deemed granted 90 days after the
Conditional Acceptance date set forth in the Project
Implementation Schedule and all payments associated with Final
Acceptance shall be due and payable as of this date. In either
case, 45 days before the automatic granting date is expected,
Motorola shall provide written notice to the Customer that the
provisions of this Section will apply. Notwithstanding the
foregoing, Motorola may provide the aforementioned written
notice 30 days before the automatic granting date is expected.
In such case, if Customer takes action to cure the cause of
the delay but requires more than 30 days, Customer shall be
allowed an additional 15 days before Conditional or Final
Acceptance, as the case may be, becomes automatic.
8 REPORTING RESULTS AND RETESTING
8.1 Test Sequencing
At the completion of each test, a pass/fail determination will
be made based on the performance of FNE Equipment supplied by
Motorola and subject to Acceptance Testing under the
Agreement. In the event of test failure, other tests not
effected by the failed test will not be delayed and can
continue while remedies are prepared for the failed test.
Failed test procedures will be scheduled for retesting as
appropriate.
8.2 Regression Testing
6
After a test failure has been remedied it will be scheduled
for retest. Previous tests that have passed and that logically
could be affected by the remedy for the failed test will be
repeated. Previously passed tests that are logically
unaffected by the remedy for the failed test do not require
retesting. Motorola and Customer will determine whether a test
is or is not logically affected by any remedy.
8.3 Test Failure Severity Levels
The following table defines the Test Severity Levels to be
used in recording Test Results:
TABLE 1
------------ --------------------------------------------------------------------------------------------------------
LEVEL DESCRIPTION
------------ --------------------------------------------------------------------------------------------------------
SERVICE AFFECTING. Call processing or traffic handling is severely affected in some manner by the
10 failure.
------------ --------------------------------------------------------------------------------------------------------
PERFORMANCE AFFECTING. Some adverse impact on System performance affecting the quality of service on
6 call processing or traffic handling.
------------ --------------------------------------------------------------------------------------------------------
MINOR PROBLEM. The failure does not impact call processing, traffic handling, or System performance,
4 but pass/fail criteria of the test procedure have not been satisfied.
------------ --------------------------------------------------------------------------------------------------------
DOCUMENTATION. Proper System operation has been observed, but System documentation referenced in the
3 test procedure is ambiguous, misleading, or incorrect.
------------ --------------------------------------------------------------------------------------------------------
PROCEDURAL. Proper System operation has been observed, but the test procedure is ambiguous,
1 misleading, or incorrect.
------------ --------------------------------------------------------------------------------------------------------
EXTERNAL. Test failure was caused by equipment not supplied by Motorola or Equipment supplied by
0 Motorola but not subject to Acceptance Testing under the current Agreement or R/F interference
generated by sources outside the System not under control of Motorola.
------------ --------------------------------------------------------------------------------------------------------
CHANGE REQUEST. Customer has requested a change to test procedures or System characteristics which is
0 beyond the scope of the current Agreement.
------------ --------------------------------------------------------------------------------------------------------
8.4 Record of Test Results
During the entire Acceptance Test period, the Motorola
Coordinator will maintain a record of test results on the
standard data sheets, which will be made available for review
by Customer's Acceptance Test Monitor. In the event of test
failure, the severity of the failure will be determined and
recorded. A description of the extent of the failure will also
be recorded, along with requirements for retesting to
demonstrate that the failure has been cleared.
8.5 Acceptance Report
8.5.1 Upon completion of each ATP test, Motorola shall
submit to Customer for approval all test reports
setting forth full and accurate test results
obtained. Customer's approval of such test reports
shall not be unreasonably withheld or delayed. The
test reports shall also summarize the results of
testing conducted. Each test report shall contain the
necessary analysis and collected data to support
conclusions, and copies of the original test data
sheets shall be provided to the Customer.
8.5.2 The completed data sheet will contain all of the test
results. Therefore, it will form the basis for
Acceptance of the System. Information on any
Acceptance Test procedures still pending will be
included.
8.6 Acceptance
Neither endorsement of the Acceptance Test results nor the
issuance of a Letter of Acceptance will be delayed because of
minor (level 4 or below) defects of Equipment or Software.
Motorola will
7
expeditiously correct such reproducible defects, if any,
within 90 days after Conditional Acceptance.
8
EXHIBIT "D"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM
IMPLEMENTATION ENGINEERING, SITE PREPARATION, INSTALLATION AND INTEGRATION
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"D" and to the other Exhibits to that Agreement. All definitions set forth in
the Agreement shall apply hereto.
1.0 SCOPE OF WORK
1.1 Customer shall provide all Site acquisition and Site
development efforts. Customer shall be responsible for
architectural engineering drawings. Motorola shall be
responsible for installation and integration of Fixed Network
Equipment (FNE).
1.2 Customer shall pay the prices for Expansion Engineering,
Installation, and Integration as set forth in the iDEN
Infrastructure Price Book at the then current rate.
1.3 All drawings, specifications and other documentation furnished
by Motorola will be in English. Drawings created by Motorola
specifically for this Agreement will utilize metric
measurements. Standard drawings, specification sheets and
other documentation will be furnished using the measurements
as published by the provider. Motorola will attempt to obtain
metric measurements if available from the provider.
1.4 All drawings, specifications and other documentation furnished
by Customer, including notations made by Customer on Motorola
furnished drawings shall be in English.
2.0 COMMENCEMENT OF WORK
2.1 System Implementation Engineering shall commence upon the
execution of the purchase order and formulation of the
preliminary System definition as specified by Customer and
Motorola.
2.2 Site acquisition shall commence in accordance with the dates
contained in the Implementation Schedule of the specific
Purchase Agreement.
2.3 Installation and integration by Motorola shall commence in
accordance with the Purchase Agreement Implementation
Schedule.
3.0 SITE ACQUISITION
3.1 All Site acquisitions must be complete within the time frame
defined in the Purchase Agreement Implementation Schedule to
assure inclusion in the acceptance testing and Conditional
Acceptance of the System or System Expansion. Site acquisition
by Customer is that process from Site selection through lease
or purchase negotiation. Building permits and other
entitlements, inclusive of zoning deviations, are a part of
Site acquisition. Once the Site is ready for construction
and/or alteration, this responsibility is fulfilled.
1
3.2 ***NOTE***
Avoid zones which are prone to or consist of: flammable
material storage buildings, frequent grass and brush fires,
hazardous materials, hazardous processes, flood planes,
landfills, radon gas, excessive vibration, or areas which may
be prone to railroad or vehicular mishaps.
4.0 iDEN SYSTEM IMPLEMENTATION ENGINEERING
After Sites have been released to Motorola by Customer, iDEN
Implementation Engineering shall be performed. This shall include a
Site appraisal and installation analysis. The iDEN Implementation
Engineering shall be performed as follows:
4.1 Customer will select all Sites. Following Site selection,
Motorola will conduct a Site appraisal and installation
analysis which shall be used to determine the required tasks,
material and effort necessary for installation and
integration.
4.2 Upon completion of the Site appraisal and installation
analysis Motorola will provide Customer with a list of all
tasks which need to be accomplished prior to the System's
equipment installation and integration.
4.3 Additionally, Motorola shall prepare Site-specific FNE and
Motorola-supplied ancillary equipment lists. Pre-construction
documentation developed therefrom shall include:
4.3.1 Site layouts.
4.3.2 Wiring diagrams.
4.3.3 Rack layout diagrams for equipment to be installed
during the initial construction cycle.
4.3.4 Wiring lists.
4.3.5 Block and level diagrams.
4.3.6 Overall iDEN System diagram and an iDEN System block
and level diagram.
4.4 Customer is responsible for the public switched telephone
network ("PSTN") configuration, including the Dial Plan and
design.
5.0 SITE PREPARATION
5.1 Standards
Customer shall provide all Site Development Services. Customer
shall furnish all labor and material necessary to prepare and
complete each Site in compliance with all applicable codes,
inclusive of the Architectural Engineering Drawings and
Motorola applicable standards, and in accordance with the
project's Implementation Schedule. All Site acquisition must
be completed in accordance with the Implementation Schedule to
assure inclusion in acceptance testing and Conditional
Acceptance of the System or System Expansion.
5.2 Scope of Work Existing Site
Below are the standard requirements which should be met in
order for the Sites to be considered acceptable to Motorola
under normal business conditions. Deviations to these criteria
must be reviewed and approved by Motorola on a case-by-case
basis.
2
5.2.1 Existing Building Site Requirements
5.2.1.1 Structure must safely support the floor load
of current and future system equipment
requirements, which is subject to change.
5.2.1.2 Walls, ceilings, and enclosures must
accommodate approved equipment layouts.
5.2.1.3 Area should be a minimum of 200 square feet
usable space with ceilings that will
accommodate approved equipment layouts
(Minimum Ceiling Height 8'6" - Maximum
12'0"). The building must provide adequate
access for construction, installation, and
material movement. Should space be
unavailable which meets the provisions of
this Section, Motorola System Engineering
must be notified prior to equipment
manufacture.
5.2.1.4 A 5 ohm resistance measured between the
building and earth ground in accordance with
the Motorola grounding specification
document R-56 must be available within 20
feet of the equipment to meet Motorola
engineering specifications.
5.2.1.5 Power shall be within 20 feet of the
equipment room and provide either 120/240V
AC, single phase, or 208V, three phase at
200 amps to allow for future expansion of
equipment.
5.2.1.6 Motorola suggests that antennas be mounted
within 150 feet of the equipment thus
allowing the use of 7/8 inch coaxial cable.
In those cases where longer feed lines are
necessary, coaxial cable size must be
adjusted accordingly by the change process.
5.2.1.7 Must meet or exceed all local building
codes.
5.2.1.8 Compliance with site specific safety codes
as contained in the local regulations and
codes.
5.2.1.9 Doors, lock sets, and/or security devices
(Customer provided) must be in place and
functioning.
5.2.1.10 Provisions must be made to allow
installation of all cables in a non-plenum
space.
5.2.2 Existing Building Architectural Engineering
Requirements. (This section is a list of the items
that are typically required from the Architectural
Engineering provider. This is Customer's
responsibility.)
5.2.2.1 Site Plan
5.2.2.1.1 Entire property and leased area
fully dimensioned.
5.2.2.1.2 Existing structural drawings.
5.2.2.1.3 Existing street, driveways,
utilities, easements drawings.
5.2.2.1.4 Dimensions from proposed
structures to property lines,
other structures.
5.2.2.1.5 Elevations with dimensions of
existing towers and antennas.
3
5.2.2.1.6 Ownership identification
documents.
5.2.2.1.7 Legal descriptions.
5.2.2.1.8 Flood plane documents where
required.
5.2.2.1.9 Special city code documentation
where required.
5.2.2.1.10 Floor loading-structure
specifications.
5.2.2.2 Mechanical Plans
5.2.2.2.1 For existing structures.
5.2.2.2.2 Floor plans, mechanical
equipment, duct work, piping.
5.2.2.2.3 Specifications.
5.2.2.2.4 Local requirements and
restrictions.
5.2.2.3 Electrical Plans
5.2.2.3.1 Floor plans, single line and
panel schedule.
5.2.2.3.2 Specifications.
5.2.2.3.3 Local requirements.
5.2.2.3.4 Ground systems including details
and specifications.
5.2.2.4 Tower Drawings (by the party performing
tower installation)
5.2.2.4.1 Details (foundations included).
5.2.2.4.2 Structural analysis.
5.2.2.5 Shelter Drawings (by the provider of the
shelter).
5.2.2.5.1 Details with elevations,
placement and dimensions by
architectural engineering
provider.
5.2.2.5.2 Approved as necessary by
appropriate governmental
authorities and stamped by
shelter provider.
5.2.3 Site preparation tasks to be performed by Customer
shall include:
5.2.3.1 Install air conditioning system and/or
forced air ventilation system.
5.2.3.2 Install wall feed through port for
transmission lines.
5.2.3.3 Provide three-phase AC distribution system,
including lighting and convenience outlets.
5.2.3.4 Ground system tied to building ground.
5.2.3.5 Construction and installation of electrical
shield (if required).
5.2.3.6 Installation of cable ladder.
4
5.2.3.7 Installation of seismic bracing.
5.2.3.8 Mount and test antennas and transmission
lines and any tower-mounted amplifiers that
may be required.
5.2.3.9 Installation and testing of telephone
services.
5.2.3.10 Site clean up and trash removal.
5.2.3.11 Project Management and field supervision
exclusive of FNE equipment.
5.3 Scope of Work Vacant Property Site (Scope may vary based on
Site specific requirements)
5.3.1 Vacant Property Shelter Site Requirements:
5.3.1.1 Site is assumed to be a vacant plot of
cleared land that has sufficient area and
with ingress and egress which will allow the
installation of the required building and
antenna structure.
5.3.1.2 The site is assumed to have normal soil.
Normal soil is defined as a cohesive soil
with an allowable net vertical bearing
capacity of 4,000 pounds per square foot,
and an allowable net horizontal pressure of
400 pounds per square foot per linear foot
of depth to a maximum of 4,000 pounds per
square foot. Rock, non-cohesive soils, or
saturated or submerged soils are not to be
considered normal soil. In addition, the
soil shall be suitable for mechanical
backhoe excavation and no forming
requirements for pouring sub-surface
concrete should be considered.
5.3.2 Vacant Property Architectural and Engineering Drawing
Requirements to be provided by Customer. (In all
cases the information furnished for each Site is
based on the specific Site selected and the local
conditions, ordinances, codes, etc.)
5.3.2.1 Site Plan
5.3.2.1.1 Topographic and drainage
information and calculations.
5.3.2.1.2 Existing structural drawings.
5.3.2.1.3 Existing street, driveways,
utilities, easements.
5.3.2.1.4 Dimensions from proposed
structures to property lines,
other structures.
5.3.2.1.5 Setbacks.
5.3.2.1.6 Ownership documentation.
5.3.2.1.7 Legal descriptions.
5.3.2.1.8 Flood plane information.
5.3.2.1.9 Local seismic codes.
5.3.2.1.10 Fire Protection.
5
5.3.2.2 Foundation Plans
5.3.2.2.1 Details, plans and elevations for
tower and shelters.
5.3.2.2.2 Soils recommendations.
5.3.2.3 Tower Drawings
5.3.2.3.1 Details (foundation included by
tower provider).
5.3.2.3.2 Structural steel license (where
required).
5.3.2.3.3 Wooden tower approved as
necessary by appropriate
governmental authorities.
5.3.2.4 Shelter Drawings
5.3.2.4.1 Details (foundations included)
with elevations, placement and
dimensions.
5.3.2.4.2 Approved as necessary by
appropriate governmental
authorities and stamped by
shelter provider.
5.3.2.5 Landscaping Plans
5.3.2.5.1 If required, detail size,
species, number location,
irrigation with details, and
material lists.
5.3.3 Vacant property site preparation tasks provided by
Customer shall include where appropriate:
5.3.3.1 Soil boring and analysis.
5.3.3.2 Certified drawings for tower, building and
foundations.
5.3.3.3 Appropriate layouts and drawings.
5.3.3.4 Identification of existing or required
utilities.
5.3.3.5 Construction of building and tower
foundation based on soil analysis.
5.3.3.6 Assembly of building on Site (where
required).
5.3.3.7 Erection of tower, installation and test of
antennas, and transmission line.
5.3.3.8 Building electrical wiring connections.
5.3.3.9 Connection and testing of HVAC.
5.3.3.10 Installation and testing of telephone
services.
5.3.3.11 Building and tower grounding system per
Motorola Systems Engineering specifications.
5.3.3.12 Construction and installation of electrical
shielding (if required).
5.3.3.13 Construction of access road or driveway as
required.
5.3.3.14 Site fencing as desired by Customer.
6
5.3.3.15 Final site grading (where required).
5.3.3.16 Landscaping (where required).
5.3.3.17 Site clean up and trash removal.
5.3.3.18 Program management and field supervision.
5.3.4 Existing building Site requirements in Section 5.2.1
also apply to buildings constructed on vacant Sites.
5.4 Scope of Work - Switch Site
5.4.1 Switch Site Requirements:
5.4.1.1 Existing building Site requirements in
Section 5.2.1 also apply to the Switch Site,
unless modified in this section.
5.4.1.2 Site is assumed to be an existing building
of suitable size to house the Switch
equipment and power supplies, inclusive of
space for offices and storage.
5.4.1.3 Area should accommodate approved equipment
layouts, house support personnel and provide
storage for repair equipment. Cable tray
height of between 8'6" to 9'6" is required,
with adequate access for construction,
installation, and material movement.
5.4.1.4 Power shall be within reasonable distance of
the equipment room and provide AC, three
phase, at sufficient amperage to support the
MSO equipment configuration.
5.4.2 Switch Site Architectural Engineering Requirements:
5.4.2.1 Reference 5.2.2.
5.4.3 When appropriate Customer will provide:
5.4.3.1 Structural analysis and certification for
existing buildings.
5.4.3.2 Certified drawings of building layout
modifications and the appropriate building
subsystems.
5.4.3.3 Air conditioning system as required to
support the equipment configuration and
personnel.
5.4.3.4 Adequate electrical service to support
electrical distribution system, including
lighting and convenience outlets, DC power
plant, and inverters to support the MSO.
5.4.3.5 A stand-by generator, as required, and
transfer equipment.
5.4.3.6 Building ground system compliant with
Motorola grounding standards specified in
R-56.
5.4.3.7 Ground loop tied to building ground.
5.4.3.8 Adequate space for 48 V battery system sized
to provide eight (8) hours of system
operation without recharge.
7
5.4.3.9 Cable ladder system.
5.4.3.10 Fire suppression, external alarms, and
security systems.
5.4.3.11 Site clean up and trash removal.
5.4.3.12 Program management and field supervision.
6.0 INSTALLATION AND INTEGRATION
6.1 Standards
All Site Preparation must be completed in accordance with the
project's Implementation Schedule to assure inclusion in
acceptance testing and Conditional Acceptance of the System or
System Expansion. Customer shall furnish all labor and
materials necessary to prepare and complete each Site in
compliance with all applicable codes and in accordance with
the Implementation Schedule.
Customer will advise Motorola upon completion of MSO Site
preparation. Motorola will commence installation and
integration only after this notification of "READY for FNE" is
made. The equipment will be installed and integrated by
Motorola in accordance with the following standards:
6.1.1 All work shall be performed by skilled Motorola
personnel and qualified subcontractors approved by
Motorola.
6.1.2 Motorola parts or parts of equal quality will be
used.
6.1.3 The work will be performed in accordance with the
instructions and techniques as described in the
manuals supplied by the equipment vendor.
6.1.4 All grounding shall be in conformance with Motorola
systems engineering requirements.
6.2 Unless otherwise agreed by the parties, Motorola shall install
and integrate the System or System Expansion as specified in
the Agreement when the Site is listed "Ready for FNE." A Site
is "FNE Ready" at the point in time when the installation team
can deliver, install, integrate, and test all of the FNE and
associated ancillary equipment in a continuous, uninterrupted
manner. "Ready for FNE" is further defined as, but is not
limited to, the following conditions being met:
6.2.1 Lease agreement commenced.
6.2.2 All construction work has been completed. This
includes but is not limited to the completion of
interior finishes (including all paint and floor
covering), electrical work (including all lighting,
convenience outlets, grounding and bonding), cable
ladder (installed and grounded), and HVAC systems
fully operational.
6.2.3 Final inspection granted.
6.2.4 Power activated.
6.2.5 Access and security issues resolved (24 hour access
and theft security provided).
6.2.6 Construction punchlist complete.
6.2.7 Telephone company circuits, and any associated
modems, installed and tested.
8
6.2.8 Antennas, transmission lines, poly phasers,
grounding, and bonding installed and tested on
prepared support structures, per specifications.
6.3 FNE Installation and Integration
6.3.1 Install and interconnect the battery/charger
equipment to Customer-provided commercial power
source.
6.3.2. Unpack and position cabinets and racks and fasten to
the floor, if required. Include earthquake bracing as
applicable.
6.3.3 Interconnect and lace or tie-wrap all cables and
wiring on the Motorola-supplied equipment.
6.3.4 Connect equipment to Customer-provided commercial
power cables.
6.3.5 Program all iDEN FNE Software with iDEN System data.
6.3.6 Load the System Software.
6.3.8 Perform any other tests or adjustments required by
Motorola to verify that the iDEN System or System
Expansion is operating according to the agreed
specifications.
6.3.9 Verify and test proper operation of alarm system.
6.3.10 Place all refuse in Customer provided trash
receptacles.
6.4 Upon completion of the above procedures, Motorola will inform
Customer that the System is ready for formal acceptance
testing as set forth in Exhibit "C."
7.0 CUSTOMER RESPONSIBILITIES
7.1 Customer is responsible to negotiate all leases and/or
purchases of all Sites.
7.2 Customer is responsible for obtaining any required operating
authority to install or operate the System, including, without
implied limitation, radio licenses, governmental
authorizations and approvals, local zoning approvals,
environmental impact studies and waivers, and building
permits.
7.3 Information, documentation, facilities and services under
Customer's control or those documents not furnished by
Motorola shall be furnished by Customer in a timely manner to
facilitate the orderly progress of the work in accordance with
the project's Implementation Schedule. Included, without
implied limitation, shall be: access and right of entry to all
Sites; regulatory filing information; floor plans; and any
supporting documents which may affect Site engineering,
installation analysis, acquisition, permitting and
construction.
7.4 Customer will be responsible for warehousing, reloading,
transporting, off-loading and moving the equipment onto the
permanent Site. Customer will bear the responsibility for
safekeeping and warehousing of the equipment in environmental
conditions as set out in the specifications. Motorola agrees,
with the exception of certain drop ship type equipment
(antennas, lines, combiners, etc.), not to ship equipment
prior to the scheduled dates without Customer's prior
approval. Motorola agrees to make a reasonable effort to batch
the equipment.
9
7.5 To the fullest extent possible, Customer shall negotiate 24
hour per day Site availability during installation and the
maintenance period. Site access includes providing Motorola
with keys, pass codes, security clearances, escort, etc.,
necessary to gain entrance to and exit from the work area.
Should a specific Site not be made available 24 hours per day,
response will commence at the beginning of the access time
frame. Response time ends at the access route to remote high
Sites.
7.6 Customer is at all times responsible for the costs of
commercial AC power usage, building air conditioning and
facility access issues.
7.7 Customer is responsible for telephone service, inclusive of
cables and wiring, which shall be run to the immediate area of
the Motorola-supplied equipment, i.e., to the same room or
within twenty (20) cable feet of the termination point of the
equipment, whichever is closer.
7.8 In the event that Customer fails to meet any of its
responsibilities and such failure results in any delays to the
agreed upon Implementation Schedule, Customer and Motorola
shall negotiate in good faith a revised Implementation
Schedule and additional costs, if necessary, reflecting the
effect of those delays.
8.0 RIGHT TO SUBCONTRACT
Motorola and Customer shall have the right to subcontract the Site
installation work in whole or in part.
9.0 SUPERVISION
Motorola shall provide Program Management to supervise the installation
and integration of the iDEN System or System Expansion. Customer shall
appoint a System Manager who shall have authority to make changes that
may be required during the installation.
10.0 OUT OF SCOPE WORK
Out of scope work requested by Customer to be performed by Motorola and
not specified in this Exhibit "D" required to complete installation or
integration shall be authorized in writing via a formal change order by
Customer prior to the commencement of such work as set forth in the
Changes section in the Agreement.
11.0 SYSTEM ACCEPTANCE
Within seven (7) days after Motorola has advised Customer that any
increment or all of the System or System Expansion is complete,
Customer shall furnish representatives to witness acceptance testing as
set forth in the Acceptance Test Plan (ATP) and Exhibit "C." In the
event Customer does not furnish representatives within the time frame
above, Motorola may proceed with the acceptance tests and send Customer
a written report of the acceptance test results, which results shall be
as valid as if Customer representatives had personally witnessed the
ATP.
12.0 FREQUENCY MANAGEMENT RECORDS
Provision and maintenance of records required by appropriate frequency
management authorities are the sole responsibility of Customer.
13.0 BUILDING SPECIFICATIONS
No Site buildings are to be provided by Motorola. However, all System
Site buildings are to be in accordance with applicable Motorola
specifications.
10
EXHIBIT "E1"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA, INC.
AND
TRICOM
SYSTEM HARDWARE MAINTENANCE
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"E1" and to the other Exhibits to that Agreement. All definitions set forth in
the Agreement shall apply hereto.
This Exhibit sets forth Motorola's technical maintenance obligations
(collectively, the "System Hardware Maintenance") with respect to FNE Equipment
during the warranty periods stated in Section 8 of the Agreement and any
maintenance options purchased by Customer.
Motorola shall provide its " System Hardware Maintenance Plan," as set forth in
Schedules A and B below during the initial warranty period for each item of FNE
Equipment purchased under the Agreement. The maintenance services in Schedule B
are included in the FNE item's warranty purchase price and shall be provided for
a period of fifteen (15) months after the date of Conditional Acceptance. An
optional maintenance service, referred to as "Optional Local Engineering Support
Services," is also offered by Motorola as set forth in Schedule C below. The
maintenance option, when selected by Customer, must be procured in accordance
with pricing in the iDEN Infrastructure Price Book.
SERVICE PLAN
The following is a description of the scope of work to be provided by Motorola
under Motorola's System Hardware Maintenance Plan (see Schedules A and B) and
Optional Local Engineering Support Services (see Schedule C).
1. SCOPE
1.1 Motorola shall maintain each FNE product covered by a
maintenance plan according to the terms and conditions set
forth herein and for the prices referenced above and in
Section 8 of the Agreement.
1.2 The System Hardware Maintenance Plan shall be provided during
the FNE Equipment warranty period as defined in Section 8 of
the Agreement. The individual segments of the plan may be
extended thereafter at Motorola's then current rates. The plan
shall consist of the following:
1.2.1 Schedule A: Telephone Technical Support
1.2.2 Schedule B: Depot Repair Maintenance.
1.3 The optional maintenance services listed below will be
provided when separately purchased in accordance with the iDEN
Infrastructure Price Book:
1.3.1 Schedule C: Optional Local Engineering Support
Services.
1
2. CUSTOMER RESPONSIBILITIES
Customer shall:
2.1 Appoint a System Manager for each system and supply Motorola
with the name, address and telephone number of the System
Manager who shall be responsible for coordination with
Motorola personnel and who shall, at the option of the
Customer System Manager, make available a Customer
Representative during Motorola performance of Services.
2.2 Control site environmental conditions including but not
limited to temperature, humidity, voltage, VSWR, etc.
according to FNE specifications.
2.3 Provide reasonable facilities including, but not limited to,
secure storage space, a designated work space with adequate
temperature control and light, and use of all FNE and
communications facilities, including access to a telephone
line.
2.4 Supervise and perform all normal day-to-day System operational
activities.
2.5 Perform System restarts or other maintenance activity as
directed by Motorola service manuals prior to initiating a
service call for any System problem unless previously
instructed otherwise by a Motorola representative.
2.7 Furnish, maintain and repair equipment, products, and services
supplied by:
2.7.1 The local telephone company (which include but are
not limited to local exchange interface),
2.7.2 Vendors other than Motorola, and
2.7.3 Vendors of mobile and/or other portable subscriber
units.
2.9 Procure its desired test equipment for its own use.
2.10 Procure and stock Field Replaceable Units ("FRUs").
3. SCHEDULE A: TELEPHONE TECHNICAL SUPPORT
With Respect to FNE equipment, Motorola shall provide Customer a
telephone number for access to unlimited twenty-four (24) hour seven
(7) days a week telephone technical support from a Motorola supplied
central support function in Schaumburg, Illinois.
4. SCHEDULE B: DEPOT REPAIR SERVICE
Motorola shall provide depot repair of Field Replaceable Units (FRUs)
at a Motorola repair facility or a repair facility authorized by
Motorola in accordance with Section 8.1 of the Agreement and the terms
set forth below:
4.1 Customer shall determine and identify all FRUs indicated to be
defective and ship, prepaid by Customer, said defective
equipment to the designated Motorola repair facility. Customer
must provide a summary of the nature of the defect. Customer
must also choose a reasonable method of shipment so that FRU
is received on a timely basis. Failure to adhere to these
steps may result in repair delays.
4.2 Motorola will repair and test all defective FRUs and will
return said FRUs to Customer at a location designated by
Customer within a reasonable time after receipt at the
Motorola authorized repair location. Motorola shall pay for
shipping to Customer's location.
2
5. SCHEDULE C: OPTIONAL LOCAL ENGINEERING SUPPORT SERVICES
The following Service option is offered by Motorola to Customer
concurrently with the maintenance service contained in Schedules A and
B during the warranty period and may be extended on an annual basis.
5.1 Local Engineering Support
Motorola shall provide local engineering support to Customer
in accordance with the selected MSO warranty in the iDEN
Infrastructure Price Book for each new switch purchased. Said
engineering support shall aid in troubleshooting switch
issues, provide telephone support to troubleshoot issues for
remote BSC and EBTS sites, and be available during Customer's
normal working hours (the equivalent of 8:00 am to 5:00 pm),
Monday through Friday.
6. SERVICE LIMITATIONS AND EXCLUSIONS
The following applies to any of the Maintenance Plans contained in this
Exhibit.
6.1 Service does not include installation for System hardware
expansions requested by Customer.
6.2 Service does not include: normal system operating
responsibilities; the provision of operating supplies or
replacement of consumable supplies; electrical work external
to the Switch; or any other functions not required per this
Exhibit "E".
6.3 Service does not include maintenance or repair of towers,
antennas, transmission lines, telephone lines, microwave
equipment, building's HVAC, or back-up generators unless such
products are provided by Motorola.
6.4 Movement of equipment and reinstallation by anyone not
authorized by Motorola may void any obligation or warranty by
Motorola. Such authorization by Motorola will not be
unreasonably withheld.
6.5 Customer shall not modify, remove, or obliterate the bar code,
serial number, or other identifying mark(s) on the products.
Any Product so altered and in need of repair shall be repaired
at the sole discretion of Motorola.
6.6 Motorola shall have no obligation to repair or replace items
when such repair or replacement is caused by the following:
6.6.1 An event of Force Majeure. However, Motorola agrees,
upon Customer's request, to participate with Customer
and make an assessment with respect to any damage as
a result of such event and to provide a quotation
with respect to the repair and/or replacement of the
items damaged.
6.6.2 Acts of vandalism.
6.6.3 Attempts by other than personnel authorized by
Motorola to repair, maintain, install or modify the
equipment, or if the product is used in other than
its normal and customary manner;
6.6.4 Customer's failure to maintain prescribed
environmental conditions or external electrical
tolerances.
6.6.5 Damage which occurs during shipment from Customer to
Motorola.
3
6.6.6 Replacement or malfunction of consumable items such
as printing ribbons.
6.6.7 Failure of any part of the Interconnected Carrier
equipment.
4
EXHIBIT "E2"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA, INC.
AND
TRICOM
SOFTWARE SYSTEM MAINTENANCE
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"E2" and to the other Exhibits to that Agreement. All definitions set forth in
the Agreement shall apply hereto.
This Exhibit sets forth Motorola's technical maintenance obligations
(collectively, the "Software System Maintenance") with respect to Software
during the warranty periods stated in Section 9 of the Agreement. Upon the
expiration of the initial warranty period Customer shall purchase the Software
Maintenance Program pursuant to Section 8.5 of the Agreement.
Motorola shall provide its "Software System Maintenance Plan," as set forth in
Schedules A and B during the initial warranty period for Software purchased
under the Agreement. The services in Schedules A and B are provided under the
terms of the annual Software Maintenance Program (SMP).
SERVICE PLAN
The following is a description of the scope of work to be provided by Motorola
under Motorola's Software System Maintenance.
1. SCOPE
1.1 Motorola shall maintain each Software product covered by a
maintenance plan according to the terms and conditions set
forth herein and for the prices referenced above and in
Section 8 of the Agreement.
1.2 The Software Maintenance Plan shall be provided during
warranty period as defined in Section 8 of the Agreement. The
individual segments of the plan may be extended thereafter at
Motorola's then current rates. The plan shall consist of the
following:
1.2.1 Schedule A: Telephone Technical Support
1.2.2 Schedule B: Software Maintenance.
2. CUSTOMER RESPONSIBILITIES
Customer shall:
2.1 Appoint a System Manager for each System and supply Motorola
with the name, address and telephone number of the System
Manager who shall be responsible for coordination with
Motorola personnel and who shall, at the option of the
Customer System Manager, make available a Customer
Representative during Motorola performance of Services.
1
2.2 Control site environmental conditions including but not
limited to temperature, humidity, voltage, VSWR, etc.
according to Motorola specifications.
2.3 Provide reasonable facilities including, but not limited to,
secure storage space, a designated work space with adequate
temperature control and light, and use of communications
facilities, including access to a telephone line.
2.4 Supervise and perform all normal day-to-day System operational
activities.
2.5 Perform System restarts or other maintenance activity as
directed by Motorola Software manuals prior to initiating a
service call for any System problem unless previously
instructed otherwise by a Motorola representative.
2.6 Assist Motorola in Motorola's diagnosis of reproducible
Software malfunctions and cooperate with Motorola remote and
local personnel as they provide technical supervision and
support to Customer's maintenance technicians.
2.7 Furnish, maintain and repair equipment, products, and services
supplied by:
2.7.1 The local telephone company (which include but are
not limited to local exchange interface),
2.7.2 Vendors other than Motorola, and
2.7.3 Vendors of mobile and/or other portable subscriber
units.
2.8 Supervise, manage and control its use of the licensed Software
including but not limited to:
2.8.1 Assuring proper machine configuration, program
installation, audit controls and operating methods;
2.8.2 Implementing adequate backup plans, based on
alternate procedures to diagnose, patch and repair
Software defects in the event of a Software
malfunction; and
2.8.3 Implementing sufficient procedures and checkpoints to
satisfy Customer's requirements for security and
accuracy of input and output as well as restart and
recovery in the event of malfunction. Such procedures
and checkpoints will be provided to and followed by
Motorola.
2.9 Procure its desired test equipment for its own use.
3. SCHEDULE A: TELEPHONE TECHNICAL SUPPORT
Motorola shall provide Customer a telephone number for access to
unlimited twenty-four (24) hour seven (7) days a week telephone
technical software support from a Motorola supplied central support
function in Schaumburg, Illinois.
2
5. SCHEDULE B: SOFTWARE MAINTENANCE PROGRAM ("SMP")
Pursuant to Section 9.4 of the Agreement, the subsections below set
forth SMP general terms, the proposal set forth in Exhibit "A" further
defines the SMP services and pricing for 2000, and Motorola
periodically shall make proposals governing SMP services and pricing
for the remaining portions of the term of the Agreement. The license
for Software provided during the SMP shall be provided in accordance
with Exhibit "F" to the Agreement.
5.1 Definitions
CERTIFICATION - The approval by Motorola that Customer's
current Software is in acceptable condition for coverage under
the Software Maintenance Program.
FEATURE - A new Software functionality or substantial
performance improvement that is made available to Customer for
the then current Software release.
FIRMWARE - Software in object code form that is implanted in
hardware such as, by example and not limitation: ROM (Read
Only Memory); PROM (Programmable Read Only Memory); or EPROM
(Erasable Programmable Read Only Memory).
MAJOR RELEASE - The issue of Software and any superseding
issue thereof which adds to, improves, or enhances existing
Software Features and capabilities involving more extensive
changes to the underlying source code or the user interface
than Is the case in a Point Release. A Major Release may also
correct defects in earlier releases.
NEW FEATURE RELEASE - A Major Release which contains one or
more new Features.
POINT RELEASE - A superseding issue of the Software which adds
to, improves, or enhances existing Features and capabilities
of the Major Release of Software with which it is associated.
A Point Release may also correct defects in earlier releases.
REHOSTING - The integration of SP Software into Customer's
current release of Software.
SOFTWARE PATCH - Software that corrects or removes a
reproducible anomaly or "bug" in an existing Major Release.
SOFTWARE UPDATES - Those Software "fixes" and "patches" issued
by Motorola which correct a reproducible service-affecting
defect in a Major Release of the Software, whether or not such
defect applies to Software furnished to Customer under this
Agreement. Software Updates do not include Point Releases or
Major Releases, and do not represent an upgrade to or
enhancement of existing Software performance levels.
SPECIAL PRODUCT SOFTWARE (SP) - Features developed for
Customer which contain Customer unique features and/or
functionality.
5.2 All Major Releases and Software Updates (not Optional
Features) made available by Motorola to any other iDEN
customer shall be made available to Customer free of charge
(except for SMP charges).
5.3 Optional Features and SP Software may be included in SMP at
additional cost which shall be added to the base SMP rate and
included as part of the annual audit set forth in Section
5.14.
5.4 Travel and associated expenses for on-site visits by Motorola
personnel are not covered by this SMP unless, in Motorola's
judgment, such travel is required to perform the warranty work
or is
3
provided for under the "iDEN System Software Loading Support
Services"section of the Clearnet 1999 SMP Proposal set forth
in Exhibit "O".
5.5 Customer may purchase Motorola FNE additions required to
accommodate new features and/or functionality at an additional
charge to Customer as set forth in the iDEN Infrastructure
Price Book. Motorola shall notify Customer of any additional
hardware requirements as soon as they are aware that such
additional hardware is necessary. Motorola's failure to notify
Customer of material changes in hardware, when known prior to
Customer order for such features or functions, will result in
cancellation of the original order and allowance for the
Customer to reconsider its wish to proceed.
5.6 After completion of an SMP coverage period, if Customer
declines to purchase and extend the SMP for a future term or
if Customer terminates a subsequent SMP and thereby allows SMP
coverage to lapse for a System, Motorola must certify (as
described in Section 5.7 herein) the System before Motorola
will make the SMP available to Customer for such System for
another term.
5.7 Certification for SMP consists of the following: (1) Motorola
will audit Customer's System at Customer's expense; (2)
Motorola will identify the FNE and/or IPL that must be
purchased by Customer, if any, in order to bring Customer's
System to the current release level (this includes back
payment of all lapsed SMP); (3) Customer must acquire such FNE
and/or IPL; and (4) once Customer has purchased the necessary
items, Motorola will certify Customer's System and make SMP
available to Customer at the then current Motorola price.
5.8 While Customer is enrolled in the SMP, Motorola shall provide
all labor necessary to correct any service-affecting Software
defects for the full warranty period and for any period the
Software is covered by the SMP, without charge to Customer,
and in accordance with the warranty provisions contained in
Exhibit "F".
5.9 During the period SMP is purchased by Customer, Motorola shall
provide the services defined in Schedule A (Telephone
Technical Support) under SMP.
5.10 Customer shall be responsible for the first level of
maintenance, including but not limited to diagnosis and
isolation of reproducible Software malfunctions. In the event
of any such Software malfunction, Customer shall notify
Motorola immediately, followed by written confirmation of such
notice. Motorola will acknowledge receipt of verified
reproducible Software malfunctions and will promptly provide
such service as is necessary to correct service-affecting
defects in accordance with the published Motorola
specifications. Customer shall be responsible for the
installation of new Releases, Updates and associated Firmware.
5.11 SMP applies only to the Software as supplied or modified by
Motorola. Modifications, attempted modifications, or additions
to the Software by Customer or by any party other than
Motorola is a breach of the Software License contained in
Exhibit "F" to the Purchase Agreement and will void all
obligations of Motorola under the SMP.
5.12 Motorola shall have no obligation to support any Software
other than the current Release and the immediately preceding
Major Release.
5.13 The SMP supplied to Customer during the warranty period shall
be automatically renewed on a yearly basis. If Customer
desires not to renew SMP, Customer must notify Motorola a
minimum of ninety (90) days prior to the end of the warranty
period or any subsequent renewal period.
5.14 Customer shall agree to yearly audits by Motorola of Systems
configurations and capacities in order to calculate the new
SMP price. The new SMP price for the following year shall be
calculated at the end of each calendar year and shall be based
on the Products in Commercial Service at that time. If
Customers' initial SMP coverage expires prior to December 31,
the renewal
4
period shall expire on December 31, and Customer shall be
charged for the pro rata amount of the SMP fee to cover the
period from expiration to December 31 of that year. The next
renewal period shall begin on January 1 of the next year.
6. SCHEDULE C: OPTIONAL LOCAL ENGINEERING SUPPORT SERVICES
The following Service option is offered by Motorola to Customer
concurrently with the maintenance service contained in Schedules A
through C during the warranty period and may be extended on an annual
basis.
6.1 Local Engineering Support
Motorola shall provide local engineering support to Customer
in accordance with the selected MSO warranty in the iDEN
Infrastructure Price Book for each new switch purchased. Said
engineering support shall aid in troubleshooting switch
issues, provide telephone support to troubleshoot issues for
remote BSC and EBTS sites, and be available during Customer's
normal working hours (the equivalent of 8:00 am to 5:00 pm),
Monday through Friday.
7. SERVICE LIMITATIONS AND EXCLUSIONS
The following applies to any of the Maintenance Service Plans contained
in this Exhibit.
7.1 Service does not include installation for System hardware
expansions requested by Customer.
7.2 Service does not include: normal system operating
responsibilities; the provision of operating supplies or
replacement of consumable supplies; electrical work external
to the Switch; or any other functions not required per this
Exhibit "E".
7.3 Service does not include maintenance or repair of towers,
antennas, transmission lines, telephone lines, microwave
equipment, building's HVAC, or back-up generators unless such
products are provided by Motorola.
7.4 Movement of equipment and reinstallation by anyone not
authorized by Motorola may void any obligation or warranty by
Motorola. Such authorization by Motorola will not be
unreasonably withheld.
7.5 Customer shall not modify, remove, or obliterate the bar code,
serial number, or other identifying mark(s) on the products.
Any Product so altered and in need of repair shall be repaired
at the sole discretion of Motorola.
7.6 Motorola shall have no obligation to repair or replace items
when such repair or replacement is caused by the following:
7.6.1 An event of Force Majeure. However, Motorola agrees,
upon Customer's request, to participate with Customer
and make an assessment with respect to any damage as
a result of such event and to provide a quotation
with respect to the repair and/or replacement of the
items damaged.
7.6.2 Acts of vandalism.
7.6.3 Attempts by other than personnel authorized by
Motorola to repair, maintain, install or modify the
equipment, or if the product is used in other than
its normal and customary manner;
7.6.4 Customer's failure to maintain prescribed
environmental conditions or external electrical
tolerances.
5
7.6.5 Damage which occurs during shipment from Customer to
Motorola.
7.6.6 Replacement or malfunction of consumable items such
as printing ribbons.
7.6.7 Failure of any part of the Interconnected Carrier
equipment.
6
EXHIBIT "F"
TO THE PURCHASE AND SALE AGREEMENT
BETWEEN
MOTOROLA, INC.
AND
TRICOM
SOFTWARE LICENSE
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the Purchase and Sale Agreement to which this document is Exhibit
F and to the other Exhibits to that Agreement, except as otherwise stated
herein. All definitions set forth in the Agreement shall apply hereto except as
otherwise expressly defined herein.
1. DEFINITIONS
FEATURES - Features include Optional Features and Standard Features.
INITIAL PROGRAM LOAD (IPL) - The Initial Program Load contains the
Operating System Software (O/SS) and the Standard Features of the
current Software Release.
INITIAL LICENSE FEE (ILF) - The Initial License Fee is the License Fee
for using the O/SS, and all Standard Features included in the IPL. This
fee does not cover the use of any Optional Features. This fee also does
not cover the use of Software on expansion equipment associated with
Network Elements, unless such expansion equipment is installed when
Customer pays the Initial License Fee.
LICENSE FEE - License Fee means the fee paid by Customer pursuant to
Section 6.1.4 of the Agreement for the right to use Software in
accordance with the terms of this Exhibit.
NETWORK ELEMENTS - Network Elements refer to the network infrastructure
components, including those component associates with Internet Protocol
(IP) network architecture. Network Elements include, but are not
limited to, the Fixed Network Equipment (FNE), and any expansions or
sub-components thereof. Network Elements may be either manufactured or
supplied by Motorola or by third parties.
NETWORK FEATURES - Network Features allow specialized communication
between any Network Elements.
OPERATING SYSTEM SOFTWARE (O/SS) - The O/SS brings the hardware
platform to a state of readiness that allows Standard and Optional
Features to run.
OPERATIONAL FEATURES - Operational Features improve the overall
non-call performance of the network. Non-call performance includes
increased call quality, increased availability and decreased cost of
ownership. Examples of Operational Features include Billing Features,
CAMP Terminal Expansions, Interference Cancellation, and Multiple Alarm
Expansions.
OPTIONAL FEATURES - Optional Features provide incremental functionality
beyond the Standard Release and require the purchase of individual
feature licenses. Optional Feature categories include Subscriber
Features, Network Features and Operational Features.
1
SOFTWARE - Software is any computer program, including the O/SS, the
Features and any other computer program, whole or partial copies of a
computer program, adaptations, derivative works, modifications,
translations, updates or enhancements of all or part of a computer
program, documentation associated with a computer program, and the
techniques and ideas embodied and expressed in a computer program
(including but not limited to the structure, sequence and organization
of a computer program.) A computer program comprising Software under
this Agreement is in any medium (including but not limited to all types
of permanent or semi-permanent memory or storage devices, in hard-wired
logic instructions, or in any electronic medium) and in any form (for
example, human or machine-readable form), and a computer program is
furnished directly or indirectly by Motorola to Customer, or, to the
extent permitted under this Agreement, is a Customer's copy,
adaptation, derivative work, modification, translation, update or
enhancement of a computer program furnished directly or indirectly by
Motorola to Customer. The computer programs comprising Software may be
used solely in conjunction with the System Configuration.
Notwithstanding the foregoing, the term Software shall not include
third party computer programs provided under separate license
agreements such as shirk-wrap license agreements, or third party
computer programs not licensable under the terms of this Agreement,
such as third party computer programs provided under the free software
foundation's general public license. Any reference herein to Software
being "sold" or "purchased" shall in fact be deemed to be a reference
to Software being "licensed."
SOFTWARE RELEASE - A Software Release is a new version of Software that
contains new Standard Features, O/SS upgrades, and those Optional
Features that have been licensed separately and individually by
Customer.
STANDARD FEATURES - Standard Features are included in the current
Software Release at no additional charge. Included in the Standard
Features is the Call Processing functionality that allows the Network
Elements to operate as a wireless communications system.
SUBSCRIBER FEATURES - Subscriber Features are those that can either be
offered on a per-subscriber or per-traffic channel basis and/or which
are apparent as features to the subscriber. Examples of Subscriber
Features include Caller Preview Service, Message Waiting Notification
and Authentication.
SYSTEM CONFIGURATION - System Configuration means the combination of
Software and Network Elements installed in the System for which the
most recent License Fees due under the terms of this Agreement have
been paid by Customer. (For the purposes of this definition, a Network
Element does not include that expansion equipment associated with such
Network Elements if such expansion equipment has not yet been
installed.)
2. LICENSE GRANT
2.1 Concurrent with execution of the Agreement and subject to the
payment of applicable License Fees hereunder, Motorola grants
to Customer a personal, perpetual, revocable, limited,
non-exclusive and non-transferable license under applicable
copyrights and trade secret rights to use Software in
connection with the System Configuration. The term "use" means
to load, execute, store or display the Software, for the
purpose of operating or maintaining the System Configuration.
The term "maintain" means performing diagnostic and testing
functions consistent with Customer's obligation to provide
first echelon diagnosis under the Software warranty set forth
in the Agreement.
2.2 The following License Fees for the use of Software on the
initial System Configuration are set forth in Exhibit A of the
Agreement: (i) ILF; and (ii) License Fees for specified
Optional Features.
2.3 Changes to System Configuration and/or additional use of
existing Software (by Network Elements or subscribers) may
require payment of additional License Fees. Examples of
changes to System Configuration and/or additional Software
uses include, but are not limited to, the following:
(i) use of additional Optional Features;
(ii) increased capacity of Optional Features;
(iii) increased call processing capacity;
2
(vi) expansion of Network Elements (e.g. increase in the
number of trunk shelves);
(vii) addition of Network Elements.
3. [LEFT BLANK ON PURPOSE]
4. LIMITATIONS ON USE OF SOFTWARE
4.1 The Software is Confidential Information of Motorola or its
licensors. Customer agrees to keep confidential, in accordance
with the terms of the Agreement, and not use, provide or
otherwise make available in any form any Software or its
contents, or any portion thereof, to any third party.
4.2 Customer shall not translate, modify, merge, adapt,
de-compile, disassemble, or reverse engineer the Software or
any portion thereof.
4.3 Customer shall notify Motorola in the event that it has
purchased Network Elements from a third party. Motorola shall
have the right to audit Customer's System Configuration at any
time for the purpose of calculating any additional License
Fees which may be due pursuant to Section 3.3. Notwithstanding
any Software warranty or other performance requirements
included in the Agreement, Motorola shall have no
responsibility for the operation of Software on components
that have not been originally packaged together by Motorola.
4.4 Subsequent transfers or sale of Network Elements by Customer
may require the transferee or purchaser to obtain a Software
license from Motorola, as well as payment of applicable
license fees, prior to the use of Software by the transferee
or purchaser. Customer shall notify Motorola upon such
transfer or sale in order to permit Motorola to grant a
Software license to the transferee or purchaser, if
appropriate.
5. RIGHT TO COPY, PROTECTION AND SECURITY
5.1 Software provided hereunder may be copied (for back-up
purposes only) in whole or in part, in machine-readable form
for Customer's internal use only, provided, however, that no
more than two (2) printed copies and two (2) machine-readable
copies will be in existence at any one time without the prior
written consent of Motorola, other than copies resident in the
System Configuration.
5.2 With reference to any copyright notice of Motorola associated
with Software, Customer agrees to include the same on all
copies it makes in whole or in part. Motorola's copyright
notice may appear in any of several forms, including
machine-readable form. Use of a copyright notice on the
Software does not imply that such has been published or
otherwise made generally available to the public.
5.4 SOFTWARE AND ANY COPY OF SOFTWARE IS THE SOLE AND EXCLUSIVE
PROPERTY OF MOTOROLA OR ITS LICENSORS AND NO TITLE OR
OWNERSHIP RIGHTS TO THE SOFTWARE OR ANY OF ITS PARTS IS
TRANSFERRED TO CUSTOMER.
5.5 Customer acknowledges that it is the responsibility of
Customer to take all reasonable measures to safeguard Software
and to prevent its unauthorized use or duplication. In the
event that Customer discovers the unauthorized use or
duplication of Software, Customer shall notify Motorola in
writing and provide reasonable assistance in securing such
unauthorized Software.
6. REMEDIES
Customer acknowledges that violation of the terms of this Exhibit or
the Agreement shall cause Motorola irreparable harm for which monetary
damages may be inadequate, and Customer agrees that Motorola may seek
temporary or permanent injunctive relief without the need to prove
actual harm in order to protect Motorola's interests.
3
7. TERMINATION
7.1 Any license granted hereunder may be terminated by Customer
upon one (1) month's prior written notice.
7.2 Motorola may revoke any license granted hereunder if Customer
is in default of any of the terms and conditions of the
Agreement or Exhibits, and such revocation shall be effective
if Customer fails to correct such default within ten (10) days
after written notice thereof by Motorola.
7.3 Within one (1) month after termination or revocation of any
license, Customer shall furnish to Motorola a document
certifying, through its best efforts and to the best of its
knowledge, the original and all copies in whole or in part of
all Software, in any form, including any copy in an updated
work, have been returned to Motorola or destroyed.
8. LICENSEE RIGHTS
8.1 Nothing contained herein shall be deemed to grant, either
directly or by implication, estoppel, or otherwise, any
license under any patents or patent applications of Motorola
or Motorola's licensors, except where a license may arise by
operation of law, and only to the extent that such license is
necessary to operate the System.
8.2 During the term of the license granted pursuant to Section 2
herein and for a period of one year after expiration or
termination, Motorola, its licensor(s), or their
representatives may, upon prior notice to Customer: (i)
inspect the files, computer processors, equipment, facilities
and premises of Customer during normal working hours to verify
Customer's compliance with this Agreement; and (ii) while
conducting the inspection, copy or retain any item that
Customer may possess in violation of the license or the
Agreement.
8.3 Customer acknowledges that the provisions of this Exhibit are
intended to inure to the benefit of Motorola and its
licensors. Customer acknowledges that Motorola or its
licensors have the right to enforce these provisions against
Customer, whether in Motorola's or its licensor's name.
8.4 Third party computer programs not licensable under the terms
of this Agreement, such as third party computer programs
provided under the Free Software Foundation's General Public
License, are only licensed to the extent allowed by the
original licensor.
Pursuant to Customer's request, with respect to computer
programs provided under the Free Software Foundation's General
Public License ("Freeware Programs") (i) such freeware
programs shall be identified by Motorola using commercially
reasonable best efforts and to the best of Motorola's
knowledge and (ii) for a period of three years after receipt
of such freeware programs, a free copy of the source code of
the freeware programs in machine-readable form shall be
provided by Motorola (although distribution fees may be
applicable).
9. ENTIRE UNDERSTANDING
Notwithstanding anything to the contrary in other agreements, purchase
orders or order acknowledgments, the Agreement and this Exhibit F set
forth the entire understanding and obligations regarding use of
Software, implied or expressed.
4
EXHIBIT "G"
TO iDEN(R) INFRASTRUCTURE EQUIPMENT PURCHASE AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM
TRAINING
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"G" and to the other Exhibits to that Agreement. All definitions set forth in
this Agreement shall apply hereto. Payment of the fee set forth in the then
current iDEN Training Catalog shall evidence incorporation of this Exhibit "G"
into the Agreement.
Technical Training is intended for System Operators, Maintenance personnel,
Supervisor and Management personnel responsible for operation of an iDEN System
who possess the necessary prerequisite knowledge, including but not necessarily
limited to knowledge of telephony, digital communications and networking, logic
circuitry, Pulse Code Modulation theory, and RF Technology.
1.0 GENERAL
1.1 The series of sub-component courses presented in the iDEN
Training Catalog are primarily intended for delivery at the
iDEN Technical Training Center in Schaumburg, IL, using
dedicated training equipment and training facilities. Some
level 1 courses can be delivered at the Customer premises.
1.2 The training pricing shown in the iDEN Training Catalog
includes all instructional services and student course
materials for use by Customer's students. No license is
granted for further reproduction or distribution of these
Motorola developed training materials provided during the
class sessions.
1.3 All training will be conducted in English and all course
material will be in English, unless otherwise agreed by both
parties
1.4 For classes conducted at Motorola facilities in Schaumburg,
IL, any and all other expenses incurred by Customer's student
attendees, including but not limited to travel, meals, lodging
and personal entertainment, are the responsibility of Customer
or the attendee.
1.5 For instructional services, consulting, or classes conducted
at a Customer-supplied facility, or for any location other
than Motorola facilities in Schaumburg, IL, Customer shall be
responsible for the payment of all incidental expenses
resulting from the training session. This would include but
not be limited to facilities costs such as meeting room costs
or equipment rental, plus Customer or attendee food, travel,
and lodging expenses. Instructor expenses (food, travel and
lodging) will be passed through to the Customer at cost.
1.6 The courses utilized in support of the iDEN System will, in
most cases, be divided between periods of lecture and periods
of practical "Hands-On" training. Courses conducted at
Customer location will utilize customer-supplied product,
terminals, test equipment and related paraphernalia for the
practical "Hands-On" sessions. Motorola reserves the right to
subcontract training to authorized Motorola training
departments outside of the Network Solutions Sector (NSS),
and/or subcontractors of Motorola.
1
2.0 TECHNICAL TRAINING PLAN DESCRIPTION
2.1 One of the many initiatives of iDEN technical training is to
provide training that will help Customer participants perform
their jobs more efficiently. To do this, Motorola's technical
training representatives interviewed managers, and more
importantly, the technicians and engineers who actually do the
work to find out what the Customer's needs are to maintain the
iDEN infrastructure.
2.2 The Technical Training Curriculum is divided into 3 levels.
A. Level 1 is for someone new to the MSO environment
B. Level 2 is designed to train individuals how to
maintain and troubleshoot the infrastructure.
C. Level 3 will teach the technicians and engineers
advanced concepts and troubleshooting techniques.
All equipment maintenance courses will be structured to
provide servicing information consistent with the service plan
established by Motorola. No component level servicing
information is included in this training plan for any Fixed or
Subscriber equipment within this System.
3.0 SCHEDULING OF TRAINING
The training curriculum available in the iDEN Training Catalog will be
accompanied by the schedule for all of the classes held in the Motorola
Training facility in Schaumburg, IL. Training that can be delivered at
the Customer location will be scheduled depending on instructor
availability and the acceptance of the proposed quote. These field
classes may be subject to change based on resource, equipment, and
System availability. To ensure a wider range of available training
dates, scheduling requests should be made at least 120 days in advance
of the start of the requested delivery date. At the time of Customer's
request for scheduling, Motorola will confirm the request and will
inform Customer of changes that may have occurred in course length,
delivery location, content or source that would materially affect the
training session.
4.0 DELIVERABLES FOR TECHNICAL TRAINING AND TECHNICAL TRAINING-RELATED
PRODUCTS
The Curriculum list in the iDEN Training Catalog shows the course
titles for each of the expected classes in each of the three training
levels. The lists of training courses are subject to revision, based on
changes in Customer's System hardware and software. In addition,
training course title, content, source and desired location is subject
to change.
Course Descriptions for each of these training courses are shown in the
attached iDEN Training Catalog.
5.0 TECHNICAL TRAINING PREREQUISITES
Each of the courses or course levels shown in the catalog has one or
more prerequisites.
In general, if a course is to be taken without completing the suggested
prerequisites for that particular course, the prerequisite waiver form
located in the catalog must be completed and attached to the
registration form. The filling out of this waiver form indicates that
the specified individual has the equivalent experience, and/or
knowledge base, to assimilate the course content without completing the
suggested prerequisites. It also indicates that the individual is
registering without having taken the prerequisites but is part of the
target audience.
6.0 COURSE DESCRIPTIONS
The course descriptions set forth in Motorola's Training Catalog shall
be considered a representative sample of the courses available to
Customer. All material in the catalog is subject to change.
2
EXHIBIT "H"
TO IDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM
DOCUMENTATION
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the above-referenced Agreement to which this document is Exhibit
"H" and to the other Exhibits to that Agreement. All definitions set forth in
the Agreement shall apply hereto.
Following is a brief description of the iDEN System manuals. All manuals will be
in English.
1.0 GLOSSARY OF TERMS AND SYSTEM DESCRIPTION
Consists of a definition of SWITCH acronyms and telephony terms along
with a description of the various System parts (i.e., SWITCH, Base
Site) and how they tie together.
2.0 SWITCH TECHNICAL DESCRIPTION
This document includes the SWITCH Theory of Operation, hardware (block
diagrams) description, and software (data flow diagrams) description.
3.0 SWITCH OPERATOR'S MANUAL
Description of how to operate the Switch, including loading procedures,
commands, operational modes, and alarm descriptions.
4.0 SWITCH FIELD MAINTENANCE
This manual helps a technician identify and replace boards and modules
which are non-functional. The manual is basically divided into two
sections: troubleshooting and board replacement. Troubleshooting is an
alphabetical listing of error messages followed by a suggested
procedure. If the procedure involves replacing a defective board, the
crafts person will be routed to a specific cage and slot number in the
board replacement section.
5.0 BASE SITE CONTROLLER
This manual consists of Base Site Controller information. Configuration
information, theory of operation, operating procedures, and maintenance
information are described.
6.0 BASE STATION EQUIPMENT
This Base Station manual includes configuration information, block
diagrams of product hardware, theory of operation, and routine
maintenance.
Motorola will provide the above-mentioned volumes as part of the
Agreement. Quantities include one copy of each of the manuals described
in paragraphs 1 through 6, and two copies of all other manuals.
Additional copy pricing will be quoted separately.
Motorola reserves the right to change Documentation without notifying
Customer beforehand. Motorola periodically will supply relevant changes
to standard Documentation to Customer.
Motorola Documentation is copyrighted by Motorola, Inc. No reproduction
rights for these Motorola developed manuals will be granted.
EXHIBIT "I"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM LATINOAMERICA, S.A.
ADDITIONAL OPERATING ENTITIES
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to that Purchase Agreement to which this document is Exhibit "I" and
to the other Exhibits to that Agreement. All definitions set forth in the
Agreement shall apply hereto, unless otherwise specified herein.
1.0 PURPOSE
The purpose of this Exhibit "I" is to set forth the wording of the document to
be executed, from time to time, by the Motorola, Customer and the corresponding
Additional Operating Entity, whereby Customer assigns to the corresponding
Additional Operating Entity certain rights, and obligations of the Customer for
a particular country of the Area.
2.0 THE AGREEMENT
This agreement (the "AOE Agreement") between (i) Motorola, Inc., a Delaware
corporation, by and through its Network Solutions Sector, Customer Solutions
Group with offices at 1301 East Algonquin Road, Schaumburg, Illinois 60196
("Motorola", which term shall also mean, where the context requires, Motorola
subsidiaries or subcontractors involved in providing services or materials for
this Agreement), (ii) Tricom Latinoamerica, S. A., a Cayman Islands corporation,
with offices at Campbell Corporate Services Limited, The Bank of Nova Scotia
Building, P.O. Box 268, George Town, Grand Cayman ("Customer" or "Tricom"), and
(iii) [AOE's name], a [AOE's country of incorporation] company, with offices at
[AOE's domicile] ("AOE").
RECITALS:
Motorola and Customer entered into the iDEN(R) Infrastructure Supply Agreement
("Agreement" or "Supply Agreement") on ___ July, 2000, which purpose is for
Customer to purchase and for Motorola to sell, and where required by the
Customer, for Motorola to install and integrate iDEN Systems, as set forth in
the Agreement and in the Exhibits thereto.
Customer desires to develop an iDEN(R) System in the Area, which will be
developed either directly or through the AOE in each of the countries in the
Area, as provided in Section 2.8 of the Agreement.
AOE has obtained certain rights to use certain electromagnetic radio frequencies
licensed by the Spectrum Regulatory Agency and employs or intends to employ such
frequencies to operate iDEN Systems in [the country] (the "Country").
AGREEMENT:
Now therefore, in consideration of the mutual obligations herein contained, the
parties agree as follows:
1.0 DEFINITIONS
All definitions set forth in the Agreement shall apply hereto, unless
otherwise specified herein.
2.0 THE ASSIGNMENT
By virtue of this AOE Agreement, Customer assigns to include the AOE
and the AOE accepts the assignment of Customer's rights and obligations
derived from the Agreement with respect to the Country. Customer
understands and agrees that notwithstanding the assignment of such
rights and obligations to AOE, including payment for Equipment and/or
Services, Customer remains liable for performance of those obligations
under the Agreement. AOE understands and agrees that the terms and
conditions of the Agreement will govern its relationship with Motorola
and that the AOE agrees to all the terms and conditions of the
Agreement applicable to Customer. Motorola agrees to the assignment of
the Agreement by Customer to AOE, and Motorola remains liable for the
performance of its obligations under the Agreement.
Page 1
3.0 COUNTRY'S INITIAL SYSTEM
The Country's Initial System is the minimum required System to operate
as a digital mobile network to provide mobile integrated services in
the Country utilizing the iDEN technology platform. This Country's
Initial System is described in Exhibit "A_" of the Agreement, attached
hereto as Annex "A" and corresponds to what has been defined in the
Agreement as the Initial System's Firm Quote for the Country.
4.0 REPRESENTATIONS AND WARRANTIES
A. Customer and AOE represent and warrant to Motorola that:
4.1 AOE is a company, subsidiary or partnership in which Customer
holds at least 51% interest;
4.2. AOE has obtained certain rights to use certain electromagnetic
radio frequencies licensed by the Spectrum Regulatory Agency
which allows it to operate iDEN Systems in the Country;
4.3. AOE has obtained all necessary approvals, consents and
authorizations of third parties and governmental authorities
to enter into this AOE Agreement and has obtained all
necessary approvals, consents and authorizations of third
parties and governmental authorities to perform and carry out
its obligations hereunder, if any are required;
4.4. The persons executing this Agreement on its behalf have
express authority to do so, and, in so doing, to bind the
party thereto;
4.5. The execution, delivery, and performance of this AOE Agreement
does not violate any provision of any bylaw, charter,
regulation, or any other governing authority of the party,
and;
4.6 The execution, delivery, and performance of this AOE Agreement
has been duly authorized by all necessary partnership or
corporate action and this AOE Agreement is a valid and binding
obligation of Customer and AOE, as the case may be, and
enforceable in accordance with its terms.
B. Motorola represents and warrants to Customer and AOE that:
4.7. Motorola shall extend [Preferred Deployment or Headstart, as
the case may be] treatment to this AOE in accordance with the
terms of the Agreement.
4.8. Motorola shall extend all warranties for Motorola and
Non-Motorola manufactured products and services to this AOE in
accordance with the terms of the Agreement.
4.9. Motorola shall extend to this AOE all applicable terms of the
Agreement in accordance with the terms of said Agreement.
5.0 RATIFICATION OF AGREEMENT
Except as specifically stated in this AOE Agreement, the Agreement is
in all other respects ratified, confirmed and continues in full force
and effect.
In witness whereof, the parties have caused this AOE Agreement to be effective
on __________, 200_.
MOTOROLA, INC. TRICOM LATINOAMERICA, S.A.
By: By:
------------------------------ ----------------------------
(Signature) (Signature)
Name: Name:
------------------------------ ----------------------------
(Print-Block Letters) (Print-Block Letters)
Title: Regional Director - LAC Title:
------------------------------ ----------------------------
(Print-Block Letters) (Print-Block Letters)
[AOE'S NAME]
By:
--------------------------------
(Signature)
Name:
------------------------------
(Print-Block Letters)
Title:
-----------------------------
(Print-Block Letters)
Page 2
EXHIBIT "J"
TO THE iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM LATINOAMERICA, S.A.
[2 pages. Confidential portion omitted and filed separately
with the Securities and Exchange Commission purusant to an
application for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.]
EXHIBIT "L"
TO iDEN(R) INFRASTRUCTURE SUPPLY AGREEMENT
BETWEEN
MOTOROLA
AND
TRICOM LATINOAMERICA, S.A.
REQUEST FOR QUOTATION (RFQ)
QUESTIONNAIRE
INT'L iDEN INFRASTRUCTURE
NEW SYSTEM
................................................................................
PLEASE NOTE THAT THE FOLLOWING IS REQUIRED BEFORE QUOTATION WORK WILL BEGIN:
1. A SIGNED NON DISCLOSURE AGREEMENT (NDA)
2. AN EXPORT CONTROL SCREENING FORM (TABLE OF DENIAL ORDERS)
3. GOVERNMENT SCREENING FORM
4. Q-GATE 17 (SALES STRATEGY MAY BE WAIVED)
THE ABOVE MUST BE FILLED OUT, SIGNED, AND FAXED TO MOTOROLA NSS-iDEN BID AND
QUOTE (847-576-5801). THESE FORMS ARE A REQUIREMENT PER MOTOROLA STANDARD
OPERATING PROCEDURES.
................................................................................
Customer Name: TRICOM, S. A.
-------------
Customer Address: AVENIDA LOPE DE VEGA #95
----------------------------
APARTADO POSTAL 30373
---------------------
SANTO DOMINGO, REPUBLICA DOMINICANA
-----------------------------------
Proposal Number: _______________________________________
Submitted by: __
Approved by: _
Requested Due Date for Quotation? ___
Anticipated Date of Contract Award? __________
(MSO/EBTS Forecast will be submitted based upon anticipated contract award
date.)
Page 1 of 10
PLEASE CHECK WHICH TYPE OF QUOTATION IS REQUIRED. (See definitions below).
Budgetary or Firm Proposal XXXX
--------- ---------------
A BUDGETARY QUOTE WILL NOT be reviewed by the Configuration Engineering Team.
This quote will be based upon generic equipment models and other recently
engineered equipment lists. In addition, the budgetary quote will be comprised
of an Exhibit A ONLY unless other documentation is required.
Please check other documentation required for the Budgetary Quote:
Generic Executive Summary xx
------------
Generic Implementation Schedule xx
----------
Generic Statement of Work xx
------------
Generic Responsibility Matrix xx
------------
Standard iDEN Purchase Agreement with Exhibits xx
-----------
ASSUMING COMPLETE INFORMATION IS RECEIVED PER THIS RFQ, THE NORMAL TURNAROUND
TIME TO COMPLETE A BUDGETARY QUOTE IS APPROXIMATELY 1-2 WEEKS. PLEASE NOTE
NORMAL TURNAROUND TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE
AVAILABILITY.
A FIRM PROPOSAL will be reviewed by the Configuration Engineering Team.
Customized engineering will be prepared per the configuration requirements as
defined on this RFQ. The standard proposal format includes a generic executive
summary, generic implementation schedule and the standard iDEN Purchase
Agreements with Exhibits.
ASSUMING COMPLETE INFORMATION IS RECEIVED, THE NORMAL TURNAROUND TIME TO
COMPLETE A FIRM PROPOSAL IS APPROXIMATELY 4 WEEKS. PLEASE NOTE NORMAL TURNAROUND
TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE AVAILABILITY. NOTE:
COMPLETE INFORMATION INCLUDES AN ENGLISH VERSION OF THE PSTN SIGNALING
SPECIFICATION.
Hard Copy of the Proposal or Budgetary Required? YES (yes/no) If No,
------------
Exhibit A will be sent via E-mail. Proposal/Budgetary Hard Copies to be sent to:
Name: Virgilio Cadena
Title: Vicepresidente de Operaciones Tricom
Address: Avenida Lope de Vega #95
Santo Domingo, Republica Dominicana
Phone: (809) 476-4042
Page 2 of 10
Total number of Proposal/Budgetary Copies Required for Customer: 3
--------------
Two (2) copies will be given to Sales Team. Are additional copies required?
YES
-------
If Yes, how many additional copies? ______.
To whom and to what address are they to be sent?
Luis Quijano and Valerie Bennett ( Project PM )
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
In order to construct an accurate and timely quotation for an iDEN system,
several pieces of information are necessary. This information includes details
about the area to be covered and the subscribers to be served.
DISCLAIMER
The quotation constructed through this information is intended for preliminary
use. Estimates of site coverage will be made using theoretical models that make
assumptions such as, but not limited to, flat earth and uniform density
buildings. These estimates do not replace the need for detailed RF planning.
Customers are encouraged to retain a RF planning consultant to perform RF
design. Traffic models are provided for information only. Actual traffic loading
may vary based on factors such as, but not limited to, base site locations and
customer marketing. Upon completion of this input document, Motorola will
produce a budgetary pricing estimate. Final pricing will require additional
information from customer and additional analysis by Motorola.
Page 3 of 10
DESCRIBE YOUR iDEN SYSTEM REQUEST
Describe the New iDEN System you are requesting:
MSO Design Capacity - subscribers
------------------
Phase 1 Phase 2 Phase 3
RF Design Capacity 9,382 14,073 20,265
----- ------ ------
(CUMULATIVE)
Briefly describe the system you are requesting with this RFQ. Include
information like system features (Multiservice Only, SMS, Packet Data, IWF,VMS).
TRICOM'S iDEN SYSTEM WILL BE IMPLEMENTED IN COSTA RICA . INTERCONNECT INTERLEAVE
WILL BE 3:1 AND THE SUBSCRIBERS DISTRIBUTION WILL BE 30% DISPATCH AND 70%
MULTISERVICE. THERE WILL BE 59 EBTS'S SITES WITH 287 BR'S., DIVIDED IN THREE (3)
PHASES. THE COSTA RICA EBTS'S INFRASTRUCTURE WILL BE LINKED UP TO THE PANAMA
HOST MSO, FOR YEAR 1; YEAR 2 AND YEAR 3 WILL BE DETERMINED BASE ON TRAFFIC
GROWTH IN THE REGION. PLEASE TO SPECIFY, IF REQUIRED, ANY EXPANSION IN THESE MSO
FOR ADDITIONAL OF COSTA RICA INFRASTRUCTURE. THE PROPOSAL MUST BE ITEMIZED
PRICING FOR EQUIPMENT AND SERVICES (INSTALLATION, ENGINEERING, O&M FOR YEAR
BASIS, ETC). TRAINING FOR YEAR 1 TO YEAR 3 PLUS RECOMMENDED TEST EQUIPMENTS AND
SPARES FOR E-BTS (2).
Explain briefly any special considerations to be taken into account by
Configuration Engineering and Proposal Management. (For Example: Do not quote
power system to be provided by the customer. Design MSO for capacity of phase
3.)
detailed in section 1.2.
---------------------------
State which system features should be quoted as options (e.g. VMS).
PACKET DATA ( THE DEFAULT EQUIPMENT FOR PD IS THE 64K MDG ) . An external HLR
for the MSC should be quoted as an option. One EBTS engineer should also be
quoted on a quarterly
Page 4 of 10
1. SITE INFORMATION
1.1 MSO LOCATION:
Please provide the expected MSO location below:
Expected MSO Name: N/A
City Name; Guatemala
1.2 EBTS SITE INFORMATION
Please provide the types of EBTS configuration and their total number
of sites that are planned to be deployed in the table below. Double
click Table below and then modify.
AVAILABLE CONFIGURATIONS (SEE PRICEBOOK SECTION 4):
o Omni 1 through 18 (Cavity sites 1 through 20)
o 3SECTOR - __Through
o SRRC Omni - through 16
o SRRC 3Sector - 3 through 22
o Indoor SRSC Omni 1 through 3 (Omni 1 through 4 on 40w sites)
o Outdoor SRSC Omni 1 through 3
---------
AVAILABLE OPTIONS:
o LR - Left or Right Side Panel
o FR - Front and Rear Door
o TB - Top and Base Cover
o TTAI - Tower Top Amp Interface
o TTA - Tower Top Amp
o UP - Utility Pedestal and parts (Outdoor SRSC only)
Page 5 of 10
EBTS Configuration Table
--------------------------------------------------------------------------------------------------------------------------
# OF 70w/ HYB/ 75/120 OPTIONS
SITES SITE TYPE # OF BRS FREQ. 40w CAV E1/T1 Ohms
--------------------------------------------------------------------------------------------------------------------------
SAMPLE 3 SRRC SECTOR 3-2-2 21 800MHZ 70 HYB E1 120 TTAI, TTA
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 5 OMNI 3 15 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 2 OMNI 4 8 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 2 OMNI 6 12 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 8 OMNI 7 56 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 3 SECTOR -3-3-4 30 800MHZ 70 HYB E1 120 NO
-------------------------------------------------------------------------------------------------------
Total Ph 1 20 121
--------------------------------------------------------------------------------------------------------------------------
PHASE 2 STAND ALONE BR'S 41
--------------------------------------------------------------------------------------------------------------------------
PHASE 2 39 OMNI 2 78 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
Total Ph 2 39 119
--------------------------------------------------------------------------------------------------------------------------
PHASE 3 STAND ALONE BR'S 47
--------------------------------------------------------------------------------------------------------------------------
Total Ph 3 0 47
--------------------------------------------------------------------------------------------------------------------------
Page 6 of 10
2. CALL PROFILE:
2.1 PLANNED CALL PROFILE: DISPATCH AND INTERCONNECT
Please provide the following call model information.
Double click Table below and then modify BLUE BOLD only. If call
profile is different by phases, please copy the table below and
generate call profile separately.
-----------------------------------------------------------------------------------------------------------
UNIT TYPE Int. Disp. Multi. Units Total
--------------------- Number
Only Units Only Units Int. Disp. of
--------------------------------------------------------------------------------------- Subscriber
Interleave 3:1 6:1 3:1 6:1 Units
--------------------------------------------------------------------------------------- by
Calls/hr 0.18 1.80 0.60 1.80 Phase
Hold Time 120 20.0 84 20
Illum. Cells 1 2 1 2
Erlangs/Unit 0.0060 0.0120 0.0140 0.0120
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 1 0 2,815 6,567 9,382
-----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 2 0 4,222 9,851 14,073
-----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 3 0 6,080 14,186 20,265
-----------------------------------------------------------------------------------------------------------
Int. = Interconnect, Disp. = Dispatch, Multi. = Multiservice
2.2 PLANNED CALL PROFILE: VMS, SMS, IWF AND MDG
Please provide the following expected number of subscribers below.
Double click Table below and then modify BLUE BOLD only.
---------------------------------------------------------------------------------------------------------
Default Value Phase 1 Phase 2 Phase 3
---------------------------------------------------------------------------------------------------------
VMS Users 100 % of Int. Units 10000 USERS 15000 USERS 0 USERS
---------------------------------------------------------------------------------------------------------
SMS Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
---------------------------------------------------------------------------------------------------------
IWF Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
---------------------------------------------------------------------------------------------------------
Packet Data Users 5 % of Disp. Units 1000 USERS 2000 USERS 0 USERS
---------------------------------------------------------------------------------------------------------
Int. Units = (3:1 Int. Only Units) + (3:1 Int. in Multiservice Units)
Disp. Units = (6:1 Disp. Only Units) + (6:1 Disp. In Multiservice Units)
3 PLANNED MSO PARAMETERS
3.1 MSC PARAMETERS
o Equipment Type Approval Required (Yes, No, Default = Yes)................................(YES )
o Type of PSTN Signaling (R1, R2, ISUP, TUP, etc., Default = R2)...........................(R2 AND C7 )
o Number of PSTN Pools (1,2,3, etc., Default = 3)..........................................(3 )
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120 (OMEGA) E1).....(120(OMEGA) E1 )
o External HLR Required (Yes, No, Default = No)............................................(NO )
Page 7 of 10
3.2 VMS PARAMETERS
o Average Voice Message per day per subscriber (Default = 2)...............................(2 )
o Average Message Length per Message (Default = 30 Sec)....................................(30 SEC )
o Average Voice Mail Greeting Length (Default = 20 Sec)....................................(25SEC )
o Average Retention (Read) Time per Message (Default = 12 Hr)..............................(24HR
o Busy Hour Call Rate (Default = 10 %).....................................................(10% )
o GOS (Default = 5 %)......................................................................(5% )
3.3 SMS PARAMETERS
o Short Message per day per subscriber (Default = 0.6).....................................(.6 )
o Busy Hour per Day (6, 7, 8, 9, 10, etc. Default = 8) ....................................(8 )
o VMS Penetration (50, 60, 70, 80, etc. Default = 70 %)....................................(70% )
o SMS Penetration (20, 30, 40, 50, etc. Default = 30 %)....................................(30% )
Note: Sum of VMS and SMS Penetration Rates must be 100 %.
3.4 IWF PARAMETERS
o Circuit Data Busy Hour Call Rate (0.1, 02, 0.3, etc. Default = 0.1)......................(0.1 )
o Average Holding Time (100, 150, etc. Default = 180 Sec)..................................(180 SEC )
o GOS (1, 2, etc. Default = 5 %)...........................................................(5% )
3.5 PACKET DATA
o Number of subscribers (15K, 64K, etc Default =15K)....................................(64 K)
4 EXPECTED MSO ROOM REQUIREMENTS
4.1 MSO ROOM: CUSTOMER'S RESPONSIBILITY
o Ceiling Height from Floor (2.5, 3.0, etc. Default = 3.5 m)...............................(3.5 M )
o Cable Tray or Floor Tile.................................................................(MOTOROLA )
o HVAC.....................................................................................(MOTOROLA )
4.2 AC POWER: CUSTOMER'S RESPONSIBILITY
o Inputs to Rectifiers Chose one:
o Voltage (380/415 VAC, 50/60 Hz).......................................................( )
o Voltage (208/240 VAC, 50/60 Hz).......................................................(208/240 VAC,60HZ )
o Voltage (480 VAC, 50/60 Hz)...........................................................( )
o Voltage (specify VAC, 50/60 Hz).......................................................(60 HZ )
o Inputs to Monitors:
o Voltage (120VAC, 240VAC, 440VAC, etc. Default = 240 VAC)..............................(120 VAC )
o Phases (Single, Three, etc. Default = Single Phase)...................................(SINGLE PHASE )
o Frequencies (50, 60, etc. Default = 50 Hz)............................................(60 HZ )
Page 8 of 10
4.3 DC POWER:
o DC Power Plant (- 48 VDC System) and Rectifiers:
o Supplied by (Motorola, Customer, etc. Default = Motorola).............................(MOTOROLA )
o N+1 Redundant Rectifier? (Yes, No, Default = Yes).....................................(YES )
o Battery Backup Hour (2,4, 6, 8, etc. Default = 2 Hr)..................................(8 HRS.
o DC to AC Inverters (Yes, No, Default = Yes)..............................................(YES )
o DC Generator, if required................................................................(CUSTOMER SUPPLIED)
5 EBTS INFORMATION
5.1 FREQUENCY AVAILABLE
o Frequency Range Chose one:
o Base RX (806 - 821 MHz, 896-901 MHz)..................................................(806 - 821 MHZ )
o Base TX (851-866 MHz, 935-940 MHz)....................................................(851 - 866 MHZ )
5.2 EBTS EQUIPMENT
o EBTS Power (Standard, None, Specific)....................................................(STANDARD )
o EBTS Antenna (Standard, None, Specific)..................................................(CUSTOMER SUPPLIED)
o EBTS Spares (Standard, None, Specific)...................................................(STANDARD )
6 STANDARD EBTS SITE REQUIREMENTS
6.1 SPAN LINES FROM EBTSS TO MSO: CUSTOMER'S RESPONSIBILITY
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120 (OMEGA) E1).....(120(OMEGA) E1 )
7 TEST EQUIPMENT
7.1 MSO TEST EQUIPMENT
o How many sets of MSO Test Equipment? (0,1 , 2, etc. Default = 1).........................(1 )
7.2 EBTS TEST EQUIPMENT
o How many sets of EBTS Test Equipment? (0, 1, 2, etc. Default = 1)........................(2 )
Page 9 of 10
8 Additional Information
Please provide any additional comments concerning the system
requirements or the quotation format below:
The grade of service GOS that should be used is 2% blocking for
interconnect and 5% for dispatch.
9 ATTACHMENTS:
9.1 PSTN SIGNALING SPECIFICATION - MANDATORY IF INTERCONNECT IS REQUESTED
This specification is mandatory if the system is to be designed for
both Interconnect and Dispatch. Disregard if your entire system is for
Dispatch Only.
In order to process a quotation for an MSC, Nortel will require an
English version of the local PSTN Signaling document/specifications.
Upon receipt of this document the quote can be officially started.
English version should include references to international standards.
For example: ISUP (ITU-T Blue Book).
9.2 SYSTEM BLOCK DIAGRAM - PREFERRED
ATTACH
9.3 NON DISCLOSURE AGREEMENT (NDA) - HARD COPY REQUIRED WITH CUSTOMER
SIGNATURE. FAX TO 847-576-5801.
ATTACH
9.4 EXPORT CONTROL SCREENING
ATTACH
9.5 GOVERNMENT SCREENING FORM
ATTACH
9.6 Q-GATE 17
ATTACH
9.7 SALES STRATEGY FORM (IF APPLICABLE)
ATTACH
Page 10 of 10
REQUEST FOR QUOTATION (RFQ)
QUESTIONNAIRE
INT'L iDEN INFRASTRUCTURE
NEW SYSTEM
................................................................................
PLEASE NOTE THAT THE FOLLOWING IS REQUIRED BEFORE QUOTATION WORK WILL BEGIN:
1. A SIGNED NON DISCLOSURE AGREEMENT (NDA)
2. AN EXPORT CONTROL SCREENING FORM (TABLE OF DENIAL ORDERS)
3. GOVERNMENT SCREENING FORM
4. Q-GATE 17 (SALES STRATEGY MAY BE WAIVED)
THE ABOVE MUST BE FILLED OUT, SIGNED, AND FAXED TO MOTOROLA NSS-IDEN BID AND
QUOTE (847-576-5801). THESE FORMS ARE A REQUIREMENT PER MOTOROLA STANDARD
OPERATING PROCEDURES.
................................................................................
Customer Name: TRICOM, S. A.
-------------
Customer Address: AVENIDA LOPE DE VEGA #95
----------------------------
APARTADO POSTAL 30373
---------------------
SANTO DOMINGO, REPUBLICA DOMINICANA
-----------------------------------
Proposal Number: _______________________________________
Submitted by: __
Approved by: _
Requested Due Date for Quotation? ___
Anticipated Date of Contract Award? __________
(MSO/EBTS Forecast will be submitted based upon anticipated contract award
date.)
Page 1 of 10
PLEASE CHECK WHICH TYPE OF QUOTATION IS REQUIRED. (See definitions below).
Budgetary or Firm Proposal XXXX
--------- ---------------
A BUDGETARY QUOTE WILL NOT be reviewed by the Configuration Engineering Team.
This quote will be based upon generic equipment models and other recently
engineered equipment lists. In addition, the budgetary quote will be comprised
of an Exhibit A ONLY unless other documentation is required.
Please check other documentation required for the Budgetary Quote:
Generic Executive Summary xx
------------
Generic Implementation Schedule xx
----------
Generic Statement of Work xx
------------
Generic Responsibility Matrix xx
------------
Standard iDEN Purchase Agreement with Exhibits xx
-----------
ASSUMING COMPLETE INFORMATION IS RECEIVED PER THIS RFQ, THE NORMAL TURNAROUND
TIME TO COMPLETE A BUDGETARY QUOTE IS APPROXIMATELY 1-2 WEEKS. PLEASE NOTE
NORMAL TURNAROUND TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE
AVAILABILITY.
A FIRM PROPOSAL will be reviewed by the Configuration Engineering Team.
Customized engineering will be prepared per the configuration requirements as
defined on this RFQ. The standard proposal format includes a generic executive
summary, generic implementation schedule and the standard iDEN Purchase
Agreements with Exhibits.
ASSUMING COMPLETE INFORMATION IS RECEIVED, THE NORMAL TURNAROUND TIME TO
COMPLETE A FIRM PROPOSAL IS APPROXIMATELY 4 WEEKS. PLEASE NOTE NORMAL TURNAROUND
TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE AVAILABILITY. NOTE:
COMPLETE INFORMATION INCLUDES AN ENGLISH VERSION OF THE PSTN SIGNALING
SPECIFICATION.
Hard Copy of the Proposal or Budgetary Required? YES (yes/no) If No,
------------
Exhibit A will be sent via E-mail. Proposal/Budgetary Hard Copies to be sent to:
Name: Virgilio Cadena
Title: Vicepresidente de Operaciones Tricom
Address: Avenida Lope de Vega #95
Santo Domingo, Republica Dominicana
Phone: (809) 476-4042
Page 2 of 10
Total number of Proposal/Budgetary Copies Required for Customer: 3
--------------
Two (2) copies will be given to Sales Team. Are additional copies required?
YES
-------
If Yes, how many additional copies? ______.
To whom and to what address are they to be sent?
Luis Quijano and Valerie Bennett ( Project PM )
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
In order to construct an accurate and timely quotation for an iDEN system,
several pieces of information are necessary. This information includes details
about the area to be covered and the subscribers to be served.
DISCLAIMER
The quotation constructed through this information is intended for preliminary
use. Estimates of site coverage will be made using theoretical models that make
assumptions such as, but not limited to, flat earth and uniform density
buildings. These estimates do not replace the need for detailed RF planning.
Customers are encouraged to retain a RF planning consultant to perform RF
design. Traffic models are provided for information only. Actual traffic loading
may vary based on factors such as, but not limited to, base site locations and
customer marketing. Upon completion of this input document, Motorola will
produce a budgetary pricing estimate. Final pricing will require additional
information from customer and additional analysis by Motorola.
Page 3 of 10
DESCRIBE YOUR iDEN SYSTEM REQUEST
Describe the New iDEN System you are requesting:
MSO Design Capacity - subscribers
---------------
Phase 1 Phase 2 Phase 3
RF Design Capacity 10,136 15,204 21,894
------ ------ ------
(CUMULATIVE)
Briefly describe the system you are requesting with this RFQ. Include
information like system features (Multiservice Only, SMS, Packet Data, IWF,VMS).
TRICOM'S iDEN SYSTEM WILL BE IMPLEMENTED IN EL SALVADOR . INTERCONNECT
INTERLEAVE WILL BE 3:1 AND THE SUBSCRIBERS DISTRIBUTION WILL BE 30% DISPATCH AND
70% MULTISERVICE. THERE WILL BE 38 EBTS'S SITES WITH 249 BR'S., DIVIDED IN THREE
(3) PHASES. THE EL SALVADOR EBTS'S INFRASTRUCTURE WILL BE LINKED UP TO THE
PANAMA HOST MSO, FOR YEAR 1; YEAR 2 AND YEAR 3 WILL BE DETERMINED BASE ON
TRAFFIC GROWTH IN THE REGION. PLEASE TO SPECIFY, IF REQUIRED, ANY EXPANSION IN
THESE MSO FOR ADDITIONAL OF GUATEMALA INFRASTRUCTURE. THE PROPOSAL MUST BE
ITEMIZED PRICING FOR EQUIPMENT AND SERVICES (INSTALLATION, ENGINEERING, O&M FOR
YEAR BASIS, ETC). TRAINING FOR YEAR 1 TO YEAR 3 PLUS RECOMMENDED TEST EQUIPMENTS
AND SPARES FOR E-BTS (2).
Explain briefly any special considerations to be taken into account by
Configuration Engineering and Proposal Management. (For Example: Do not quote
power system to be provided by the customer. Design MSO for capacity of phase
3.)
detailed in section 1.2.
---------------------------
State which system features should be quoted as options (e.g. VMS).
PACKET DATA ( THE DEFAULT EQUIPMENT FOR PD IS THE 64K MDG ) . An external HLR
for the MSC should be quoted as an option. One EBTS engineer should also be
quoted on a quarterly
Page 4 of 10
1. SITE INFORMATION
1.1 MSO LOCATION:
Please provide the expected MSO location below:
Expected MSO Name: N/A
City Name; Guatemala
1.2 EBTS SITE INFORMATION
Please provide the types of EBTS configuration and their total number
of sites that are planned to be deployed in the table below. Double
click Table below and then modify.
AVAILABLE CONFIGURATIONS (SEE PRICEBOOK SECTION 4):
o Omni 1 through 18 (Cavity sites 1 through 20)
o 3SECTOR - __Through
o SRRC Omni - through 16
o SRRC 3Sector - 3 through 22
o Indoor SRSC Omni 1 through 3 (Omni 1 through 4 on 40w sites)
o Outdoor SRSC Omni 1 through 3
---------
AVAILABLE OPTIONS:
o LR - Left or Right Side Panel
o FR - Front and Rear Door
o TB - Top and Base Cover
o TTAI - Tower Top Amp Interface
o TTA - Tower Top Amp
o UP - Utility Pedestal and parts (Outdoor SRSC only)
Page 5 of 10
EBTS Configuration Table
---------------------------------------------------------------------------------------------------------------------------
# OF 70W/ HYB/ 75/120 OPTIONS
SITES SITE TYPE # OF BRS FREQ. 40W CAV E1/T1 OHMS
---------------------------------------------------------------------------------------------------------------------------
SAMPLE 3 SRRC Sector 3-2-2 21 800Mhz 70 Hyb E1 120 TTAI, TTA
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 5 SECTOR 5-5-7* 85 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 SECTOR 5-5-3 13 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 SECTOR 3-3-3 9 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
1 OMNI 5 5 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
5 OMNI 4 20 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
Total Ph 1 13 132
---------------------------------------------------------------------------------------------------------------------------
* JUST 1 EBTS SITE WITH TTA
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 STAND ALONE BR'S 26
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 5 OMNI 2 10 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 9 OMNI 3 27 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 1 OMNI 4 4 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
Total Ph 2 15 67
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
PHASE 3 STAND ALONE BR'S 50
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Ph 3 0 50
---------------------------------------------------------------------------------------------------------------------------
Page 6 of 10
2. CALL PROFILE:
2.1 PLANNED CALL PROFILE: DISPATCH AND INTERCONNECT
Please provide the following call model information.
Double click Table below and then modify BLUE BOLD only. If call
profile is different by phases, please copy the table below and
generate call profile separately.
-----------------------------------------------------------------------------------------------------------
UNIT TYPE Int. Disp. Multi. Units Total
---------------- Number
Only Units Only Units Int. Disp. of
------------------------------------------------------------------------------------ Subscriber
Interleave 3:1 6:1 3:1 6:1 Units
------------------------------------------------------------------------------------ by
Calls/hr 0.18 1.80 0.60 1.80 Phase
Hold Time 120 20.0 84 20
Illum. Cells 1 2 1 2
Erlangs/Unit 0.0060 0.0120 0.0140 0.0120
-----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 1 0 3,041 7,095 10,136
-----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 2 0 4,561 10,643 15,204
-----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 3 0 6,568 15,326 21,894
-----------------------------------------------------------------------------------------------------------
Int. = Interconnect, Disp. = Dispatch, Multi. = Multiservice
2.2 PLANNED CALL PROFILE: VMS, SMS, IWF AND MDG
Please provide the following expected number of subscribers below.
Double click Table below and then modify BLUE BOLD only.
------------------------------------------------------------------------------------------------------------
Default Value Phase 1 Phase 2 Phase 3
------------------------------------------------------------------------------------------------------------
VMS Users 100 % of Int. Units 10000 USERS 25000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
SMS Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
IWF Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Packet Data Users 5 % of Disp. Units 1000 USERS 2000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Int. Units = (3:1 Int. Only Units) + (3:1 Int. in Multiservice Units)
Disp. Units = (6:1 Disp. Only Units) + (6:1 Disp. In Multiservice Units)
3 PLANNED MSO PARAMETERS
3.1 MSC PARAMETERS
o Equipment Type Approval Required (Yes, No, Default = Yes)................................(YES )
o Type of PSTN Signaling (R1, R2, ISUP, TUP, etc., Default = R2)...........................(R2 AND C7 )
o Number of PSTN Pools (1,2,3, etc., Default = 3)..........................................(3 )
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
o External HLR Required (Yes, No, Default = No)............................................(NO )
Page 7 of 10
3.2 VMS PARAMETERS
o Average Voice Message per day per subscriber (Default = 2)...............................(2 )
o Average Message Length per Message (Default = 30 Sec)....................................(30 SEC )
o Average Voice Mail Greeting Length (Default = 20 Sec)....................................(25SEC )
o Average Retention (Read) Time per Message (Default = 12 Hr)..............................(24HR
o Busy Hour Call Rate (Default = 10 %).....................................................(10% )
o GOS (Default = 5 %)......................................................................(5% )
3.3 SMS PARAMETERS
o Short Message per day per subscriber (Default = 0.6).....................................(.6 )
o Busy Hour per Day (6, 7, 8, 9, 10, etc. Default = 8) ....................................(8 )
o VMS Penetration (50, 60, 70, 80, etc. Default = 70 %)....................................(70% )
o SMS Penetration (20, 30, 40, 50, etc. Default = 30 %)....................................(30% )
Note: Sum of VMS and SMS Penetration Rates must be 100 %.
3.4 IWF PARAMETERS
o Circuit Data Busy Hour Call Rate (0.1, 02, 0.3, etc. Default = 0.1)......................(0.1 )
o Average Holding Time (100, 150, etc. Default = 180 Sec)..................................(180 SEC )
o GOS (1, 2, etc. Default = 5 %)...........................................................(5% )
3.5 PACKET DATA
o Number of subscribers (15K, 64K, etc Default =15K)....................................(64 K)
4 EXPECTED MSO ROOM REQUIREMENTS
4.1 MSO ROOM: CUSTOMER'S RESPONSIBILITY
o Ceiling Height from Floor (2.5, 3.0, etc. Default = 3.5 m)...............................(3.5 M )
o Cable Tray or Floor Tile.................................................................(MOTOROLA )
o HVAC.....................................................................................(MOTOROLA )
4.2 AC POWER: CUSTOMER'S RESPONSIBILITY
o Inputs to Rectifiers Chose one:
o Voltage (380/415 VAC, 50/60 Hz).......................................................( )
o Voltage (208/240 VAC, 50/60 Hz).......................................................(208/240 VAC,60HZ )
o Voltage (480 VAC, 50/60 Hz)...........................................................( )
o Voltage (specify VAC, 50/60 Hz).......................................................(60 HZ )
o Inputs to Monitors:
o Voltage (120VAC, 240VAC, 440VAC, etc. Default = 240 VAC)..............................(120 VAC )
o Phases (Single, Three, etc. Default = Single Phase)...................................(SINGLE PHASE )
o Frequencies (50, 60, etc. Default = 50 Hz)............................................(60 HZ )
Page 8 of 10
4.3 DC POWER:
o DC Power Plant (- 48 VDC System) and Rectifiers:
o Supplied by (Motorola, Customer, etc. Default = Motorola).............................(MOTOROLA )
o N+1 Redundant Rectifier? (Yes, No, Default = Yes).....................................(YES )
o Battery Backup Hour (2,4, 6, 8, etc. Default = 2 Hr)..................................(8 HRS.
o DC to AC Inverters (Yes, No, Default = Yes)..............................................(YES )
o DC Generator, if required................................................................(CUSTOMER SUPPLIED)
5 EBTS INFORMATION
5.1 FREQUENCY AVAILABLE
o Frequency Range Chose one:
o Base RX (806 - 821 MHZ, 896-901 MHZ)..................................................(806 - 821 MHZ )
o Base TX (851-866 MHZ, 935-940 MHZ)....................................................(851 - 866 MHZ )
5.2 EBTS EQUIPMENT
o EBTS Power (Standard, None, Specific)....................................................(STANDARD )
o EBTS Antenna (Standard, None, Specific)..................................................(CUSTOMER SUPPLIED)
o EBTS Spares (Standard, None, Specific)...................................................(STANDARD )
6 STANDARD EBTS SITE REQUIREMENTS
6.1 SPAN LINES FROM EBTSS TO MSO: CUSTOMER'S RESPONSIBILITY
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
7 TEST EQUIPMENT
7.1 MSO TEST EQUIPMENT
o How many sets of MSO Test Equipment? (0,1 , 2, etc. Default = 1).........................(1 )
7.2 EBTS TEST EQUIPMENT
o How many sets of EBTS Test Equipment? (0, 1, 2, etc. Default = 1)........................(2 )
Page 9 of 10
8 ADDITIONAL INFORMATION
Please provide any additional comments concerning the system
requirements or the quotation format below:
THE GRADE OF SERVICE GOS THAT SHOULD BE USED IS 2% BLOCKING FOR
INTERCONNECT AND 5% FOR DISPATCH.
9 ATTACHMENTS:
9.1 PSTN SIGNALING SPECIFICATION - MANDATORY IF INTERCONNECT IS REQUESTED
This specification is mandatory if the system is to be designed for
both Interconnect and Dispatch. Disregard if your entire system is for
Dispatch Only.
In order to process a quotation for an MSC, Nortel will require an
English version of the local PSTN Signaling document/specifications.
Upon receipt of this document the quote can be officially started.
English version should include references to international standards.
For example: ISUP (ITU-T Blue Book).
9.2 SYSTEM BLOCK DIAGRAM - PREFERRED
ATTACH
9.3 NON DISCLOSURE AGREEMENT (NDA) - HARD COPY REQUIRED WITH CUSTOMER
SIGNATURE. FAX TO 847-576-5801.
ATTACH
9.4 EXPORT CONTROL SCREENING
ATTACH
9.5 GOVERNMENT SCREENING FORM
ATTACH
9.6 Q-GATE 17
ATTACH
9.7 SALES STRATEGY FORM (IF APPLICABLE)
ATTACH
Page 10 of 10
REQUEST FOR QUOTATION (RFQ)
QUESTIONNAIRE
INT'L iDEN INFRASTRUCTURE
NEW SYSTEM
................................................................................
PLEASE NOTE THAT THE FOLLOWING IS REQUIRED BEFORE QUOTATION WORK WILL BEGIN:
1. A SIGNED NON DISCLOSURE AGREEMENT (NDA)
2. AN EXPORT CONTROL SCREENING FORM (TABLE OF DENIAL ORDERS)
3. GOVERNMENT SCREENING FORM
4. Q-GATE 17 (SALES STRATEGY MAY BE WAIVED)
THE ABOVE MUST BE FILLED OUT, SIGNED, AND FAXED TO MOTOROLA NSS-IDEN BID AND
QUOTE (847-576-5801). THESE FORMS ARE A REQUIREMENT PER MOTOROLA STANDARD
OPERATING PROCEDURES.
................................................................................
Customer Name: TRICOM, S. A.
-------------
Customer Address: AVENIDA LOPE DE VEGA #95
----------------------------
APARTADO POSTAL 30373
---------------------
SANTO DOMINGO, REPUBLICA DOMINICANA
-----------------------------------
Proposal Number: _______________________________________
Submitted by: __
Approved by: _
Requested Due Date for Quotation? ___
Anticipated Date of Contract Award? __________
(MSO/EBTS Forecast will be submitted based upon anticipated contract award
date.)
Page 1 of 10
PLEASE CHECK WHICH TYPE OF QUOTATION IS REQUIRED. (See definitions below).
Budgetary or Firm Proposal XXXX
--------- ---------------
A BUDGETARY QUOTE WILL NOT be reviewed by the Configuration Engineering Team.
This quote will be based upon generic equipment models and other recently
engineered equipment lists. In addition, the budgetary quote will be comprised
of an Exhibit A ONLY unless other documentation is required.
Please check other documentation required for the Budgetary Quote:
Generic Executive Summary xx
------------
Generic Implementation Schedule xx
----------
Generic Statement of Work xx
------------
Generic Responsibility Matrix xx
------------
Standard iDEN Purchase Agreement with Exhibits xx
-----------
ASSUMING COMPLETE INFORMATION IS RECEIVED PER THIS RFQ, THE NORMAL TURNAROUND
TIME TO COMPLETE A BUDGETARY QUOTE IS APPROXIMATELY 1-2 WEEKS. PLEASE NOTE
NORMAL TURNAROUND TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE
AVAILABILITY.
A FIRM PROPOSAL will be reviewed by the Configuration Engineering Team.
Customized engineering will be prepared per the configuration requirements as
defined on this RFQ. The standard proposal format includes a generic executive
summary, generic implementation schedule and the standard iDEN Purchase
Agreements with Exhibits.
ASSUMING COMPLETE INFORMATION IS RECEIVED, THE NORMAL TURNAROUND TIME TO
COMPLETE A FIRM PROPOSAL IS APPROXIMATELY 4 WEEKS. PLEASE NOTE NORMAL TURNAROUND
TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE AVAILABILITY. NOTE:
COMPLETE INFORMATION INCLUDES AN ENGLISH VERSION OF THE PSTN SIGNALING
SPECIFICATION.
Hard Copy of the Proposal or Budgetary Required? YES (yes/no) If No,
------------
Exhibit A will be sent via E-mail. Proposal/Budgetary Hard Copies to be sent to:
Name: Virgilio Cadena
Title: Vicepresidente de Operaciones Tricom
Address: Avenida Lope de Vega #95
Santo Domingo, Republica Dominicana
Phone: (809) 476-4042
Page 2 of 10
Total number of Proposal/Budgetary Copies Required for Customer: 3
--------------
Two (2) copies will be given to Sales Team. Are additional copies required?
YES
-------
If Yes, how many additional copies? ______.
To whom and to what address are they to be sent?
Luis Quijano and Valerie Bennett ( Project PM )
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
In order to construct an accurate and timely quotation for an iDEN system,
several pieces of information are necessary. This information includes details
about the area to be covered and the subscribers to be served.
DISCLAIMER
The quotation constructed through this information is intended for preliminary
use. Estimates of site coverage will be made using theoretical models that make
assumptions such as, but not limited to, flat earth and uniform density
buildings. These estimates do not replace the need for detailed RF planning.
Customers are encouraged to retain a RF planning consultant to perform RF
design. Traffic models are provided for information only. Actual traffic loading
may vary based on factors such as, but not limited to, base site locations and
customer marketing. Upon completion of this input document, Motorola will
produce a budgetary pricing estimate. Final pricing will require additional
information from customer and additional analysis by Motorola.
Page 3 of 10
DESCRIBE YOUR iDEN SYSTEM REQUEST
Describe the New iDEN System you are requesting:
MSO Design Capacity - subscribers
------------------
Phase 1 Phase 2 Phase 3
RF Design Capacity 16,855 25,283 36,408
------ ------ ------
(CUMULATIVE)
Briefly describe the system you are requesting with this RFQ. Include
information like system features (Multiservice Only, SMS, Packet Data, IWF,VMS).
TRICOM'S iDEN SYSTEM WILL BE IMPLEMENTED IN GUATEMALA CITY, GUATEMALA .
INTERCONNECT INTERLEAVE WILL BE 3:1 AND THE SUBSCRIBERS DISTRIBUTION WILL BE 30%
DISPATCH AND 70% MULTISERVICE. THERE WILL BE 38 EBTS'S SITES WITH 398 BR'S.,
DIVIDED IN THREE (3) PHASES. THE GUATEMALA EBTS'S INFRASTRUCTURE WILL BE LINKED
UP TO THE PANAMA HOST MSO, FOR YEAR 1; YEAR 2 AND YEAR 3 WILL BE DETERMINED BASE
ON TRAFFIC GROWTH IN THE REGION. PLEASE TO SPECIFY, IF REQUIRED, ANY EXPANSION
IN THESE MSO FOR ADDITIONAL OF GUATEMALA INFRASTRUCTURE. THE PROPOSAL MUST BE
ITEMIZED PRICING FOR EQUIPMENT AND SERVICES (INSTALLATION, ENGINEERING, O&M FOR
YEAR BASIS, ETC). TRAINING FOR YEAR 1 TO YEAR 3 PLUS RECOMMENDED TEST EQUIPMENTS
AND SPARES FOR E-BTS (2).
Explain briefly any special considerations to be taken into account by
Configuration Engineering and Proposal Management. (For Example: Do not quote
power system to be provided by the customer. Design MSO for capacity of phase
3.)
detailed in section 1.2.
---------------------------
State which system features should be quoted as options (e.g. VMS).
PACKET DATA ( THE DEFAULT EQUIPMENT FOR PD IS THE 64K MDG ) . An external HLR
for the MSC should be quoted as an option. One EBTS engineer should also be
quoted on a quarterly
Page 4 of 10
1. SITE INFORMATION
1.1 MSO LOCATION:
Please provide the expected MSO location below:
Expected MSO Name: N/A
City Name; Guatemala
1.2 EBTS SITE INFORMATION
Please provide the types of EBTS configuration and their total number
of sites that are planned to be deployed in the table below.
Double click Table below and then modify.
AVAILABLE CONFIGURATIONS (SEE PRICEBOOK SECTION 4):
o Omni 1 through 18 (Cavity sites 1 through 20)
o 3SECTOR - __Through
o SRRC Omni - through 16
o SRRC 3Sector - 3 through 22
o Indoor SRSC Omni 1 through 3 (Omni 1 through 4 on 40w sites)
o Outdoor SRSC Omni 1 through 3
----------
AVAILABLE OPTIONS:
o LR - Left or Right Side Panel
o FR - Front and Rear Door
o TB - Top and Base Cover
o TTAI - Tower Top Amp Interface
o TTA - Tower Top Amp
o UP - Utility Pedestal and parts (Outdoor SRSC only)
Page 5 of 10
EBTS Configuration Table
---------------------------------------------------------------------------------------------------------------------------
# of 70w/ Hyb/ 75/120 Options
Sites Site Type # of BRs Freq. 40w Cav E1/T1 Ohms
---------------------------------------------------------------------------------------------------------------------------
SAMPLE 3 SRRC Sector 3-2-2 21 800Mhz 70 Hyb E1 120 TTAI, TTA
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 11 SECTOR 5-5-5 165 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 3 QUASI OMNI 2 6 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 2 QUASI OMNI 3* 6 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 2 QUASI OMNI 4* 8 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 2 QUASI OMNI 5* 10 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 QUASI OMNI 11 11 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 QUASI OMNI 14 14 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
Total Ph 1 22 220
---------------------------------------------------------------------------------------------------------------------------
* JUST 1 SITE WITH TTA
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 STAND ALONE BR'S 36
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 3 OMNI 2* 6 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 1 OMNI 3 3 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 3 OMNI 4 12 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 2 OMNI 6** 12 800MHZ 72 HYB E3 122 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 1 OMNI 8 8 800MHZ 73 HYB E4 123 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 1 OMNI 5 5 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
Total Ph 2 11 82
---------------------------------------------------------------------------------------------------------------------------
*JUST 2 SITES WITH TTA **JUST 1 SITE WITH TTA
---------------------------------------------------------------------------------------------------------------------------
PHASE 3 STAND ALONE BR'S 73 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
PHASE 3 4 OMNI 2* 8 800MHZ 70 HYB E1 120 YES
---------------------------------------------------------------------------------------------------------------------------
PHASE 3 1 OMNI 15 15 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Ph 3 5 96
---------------------------------------------------------------------------------------------------------------------------
*JUST 2 SITE WITH TTA
Page 6 of 10
2. CALL PROFILE:
2.1 PLANNED CALL PROFILE: DISPATCH AND INTERCONNECT
Please provide the following call model information.
Double click Table below and then modify BLUE BOLD only.
If call profile is different by phases, please copy the table below and
generate call profile separately.
----------------------------------------------------------------------------------------------------------
UNIT TYPE Int. Disp. Multi. Units Total
---------------------- Number
Only Units Only Units Int. Disp. of
--------------------------------------------------------------------------------------- Subscriber
Interleave 3:1 6:1 3:1 6:1 Units
--------------------------------------------------------------------------------------- by
Calls/hr 0.18 1.80 0.60 1.80 Phase
Hold Time 120 20.0 84 20
Illum. Cells 1 2 1 2
Erlangs/Unit 0.0060 0.0120 0.0140 0.0120
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 1 0 5,057 11,799 16,855
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 2 0 7,585 17,698 25,283
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 3 0 10,922 25,485 36,408
----------------------------------------------------------------------------------------------------------
Int. = Interconnect, Disp. = Dispatch, Multi. = Multiservice
2.2 PLANNED CALL PROFILE: VMS, SMS, IWF AND MDG
Please provide the following expected number of subscribers below.
Double click Table below and then modify Blue Bold only.
------------------------------------------------------------------------------------------------------------
Default Value Phase 1 Phase 2 Phase 3
------------------------------------------------------------------------------------------------------------
VMS Users 100 % of Int. Units 10000 USERS 25000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
SMS Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
IWF Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Packet Data Users 5 % of Disp. Units 1000 USERS 2000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Int. Units = (3:1 Int. Only Units) + (3:1 Int. in Multiservice Units)
Disp. Units = (6:1 Disp. Only Units) + (6:1 Disp. In Multiservice Units)
3 PLANNED MSO PARAMETERS
3.1 MSC PARAMETERS
o Equipment Type Approval Required (Yes, No, Default = Yes)................................(YES )
o Type of PSTN Signaling (R1, R2, ISUP, TUP, etc., Default = R2)...........................(R2 AND C7 )
o Number of PSTN Pools (1,2,3, etc., Default = 3)..........................................(3 )
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
o External HLR Required (Yes, No, Default = No)............................................(NO )
Page 7 of 10
3.2 VMS PARAMETERS
o Average Voice Message per day per subscriber (Default = 2)...............................(2 )
o Average Message Length per Message (Default = 30 Sec)....................................(30 SEC )
o Average Voice Mail Greeting Length (Default = 20 Sec)....................................(25SEC )
o Average Retention (Read) Time per Message (Default = 12 Hr)..............................(24HR
o Busy Hour Call Rate (Default = 10 %).....................................................(10% )
o GOS (Default = 5 %)......................................................................(5% )
3.3 SMS PARAMETERS
o Short Message per day per subscriber (Default = 0.6).....................................(.6 )
o Busy Hour per Day (6, 7, 8, 9, 10, etc. Default = 8) ....................................(8 )
o VMS Penetration (50, 60, 70, 80, etc. Default = 70 %)....................................(70% )
o SMS Penetration (20, 30, 40, 50, etc. Default = 30 %)....................................(30% )
Note: Sum of VMS and SMS Penetration Rates must be 100 %.
3.4 IWF PARAMETERS
o Circuit Data Busy Hour Call Rate (0.1, 02, 0.3, etc. Default = 0.1)......................(0.1 )
o Average Holding Time (100, 150, etc. Default = 180 Sec)..................................(180 SEC )
o GOS (1, 2, etc. Default = 5 %)...........................................................(5% )
3.5 PACKET DATA
o Number of subscribers (15K, 64K, etc Default =15K)....................................(64 K)
4 EXPECTED MSO ROOM REQUIREMENTS
4.1 MSO ROOM: CUSTOMER'S RESPONSIBILITY
o Ceiling Height from Floor (2.5, 3.0, etc. Default = 3.5 m)...............................(3.5 M )
o Cable Tray or Floor Tile.................................................................(MOTOROLA )
o HVAC.....................................................................................(MOTOROLA )
4.2 AC POWER: CUSTOMER'S RESPONSIBILITY
o Inputs to Rectifiers Chose one:
o Voltage (380/415 VAC, 50/60 Hz).......................................................( )
o Voltage (208/240 VAC, 50/60 Hz).......................................................(208/240 VAC,60HZ )
o Voltage (480 VAC, 50/60 Hz)...........................................................( )
o Voltage (specify VAC, 50/60 Hz).......................................................(60 HZ )
o Inputs to Monitors:
o Voltage (120VAC, 240VAC, 440VAC, etc. Default = 240 VAC)..............................(120 VAC )
o Phases (Single, Three, etc. Default = Single Phase)...................................(SINGLE PHASE )
o Frequencies (50, 60, etc. Default = 50 Hz)............................................(60 HZ )
Page 8 of 10
4.3 DC POWER:
o DC Power Plant (- 48 VDC System) and Rectifiers:
o Supplied by (Motorola, Customer, etc. Default = Motorola).............................(MOTOROLA )
o N+1 Redundant Rectifier? (Yes, No, Default = Yes).....................................(YES )
o Battery Backup Hour (2,4, 6, 8, etc. Default = 2 Hr)..................................(8 HRS.
o DC to AC Inverters (Yes, No, Default = Yes)..............................................(YES )
o DC Generator, if required................................................................(CUSTOMER SUPPLIED)
5 EBTS INFORMATION
5.1 FREQUENCY AVAILABLE
o Frequency Range Chose one:
o Base RX (806 - 821 MHz, 896-901 MHz)..................................................(806 - 821 MHZ )
o Base TX (851-866 MHz, 935-940 MHz)....................................................(851 - 866 MHZ )
5.2 EBTS EQUIPMENT
o EBTS Power (Standard, None, Specific)....................................................(STANDARD )
o EBTS Antenna (Standard, None, Specific)..................................................(CUSTOMER SUPPLIED)
o EBTS Spares (Standard, None, Specific)...................................................(STANDARD )
6 STANDARD EBTS SITE REQUIREMENTS
6.1 SPAN LINES FROM EBTSS TO MSO: CUSTOMER'S RESPONSIBILITY
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
7 TEST EQUIPMENT
7.1 MSO TEST EQUIPMENT
o How many sets of MSO Test Equipment? (0,1 , 2, etc. Default = 1).........................(1 )
7.2 EBTS Test Equipment
o How many sets of EBTS Test Equipment? (0, 1, 2, etc. Default = 1)........................(2 )
Page 9 of 10
8 ADDITIONAL INFORMATION
Please provide any additional comments concerning the system
requirements or the quotation format below:
THE GRADE OF SERVICE GOS THAT SHOULD BE USED IS 2% BLOCKING FOR
INTERCONNECT AND 5% FOR DISPATCH.
9 ATTACHMENTS:
9.1 PSTN SIGNALING SPECIFICATION - MANDATORY IF INTERCONNECT IS REQUESTED
This specification is mandatory if the system is to be designed for
both Interconnect and Dispatch. Disregard if your entire system is for
Dispatch Only.
In order to process a quotation for an MSC, Nortel will require an
English version of the local PSTN Signaling document/specifications.
Upon receipt of this document the quote can be officially started.
English version should include references to international standards.
For example: ISUP (ITU-T Blue Book).
9.2 SYSTEM BLOCK DIAGRAM - PREFERRED
ATTACH
9.3 NON DISCLOSURE AGREEMENT (NDA) - HARD COPY REQUIRED WITH CUSTOMER
SIGNATURE. FAX TO 847-576-5801.
ATTACH
9.4 EXPORT CONTROL SCREENING
ATTACH
9.5 GOVERNMENT SCREENING FORM
ATTACH
9.6 Q-GATE 17
ATTACH
9.7 SALES STRATEGY FORM (IF APPLICABLE)
ATTACH
Page 10 of 10
REQUEST FOR QUOTATION (RFQ)
QUESTIONNAIRE
INT'L iDEN INFRASTRUCTURE
NEW SYSTEM
................................................................................
PLEASE NOTE THAT THE FOLLOWING IS REQUIRED BEFORE QUOTATION WORK WILL BEGIN:
1. A SIGNED NON DISCLOSURE AGREEMENT (NDA)
2. AN EXPORT CONTROL SCREENING FORM (TABLE OF DENIAL ORDERS)
3. GOVERNMENT SCREENING FORM
4. Q-GATE 17 (SALES STRATEGY MAY BE WAIVED)
THE ABOVE MUST BE FILLED OUT, SIGNED, AND FAXED TO MOTOROLA NSS-iDEN BID AND
QUOTE (847-576-5801). THESE FORMS ARE A REQUIREMENT PER MOTOROLA STANDARD
OPERATING PROCEDURES.
................................................................................
Customer Name: TRICOM, S. A.
-------------
Customer Address: AVENIDA LOPE DE VEGA #95
----------------------------
APARTADO POSTAL 30373
---------------------
SANTO DOMINGO, REPUBLICA DOMINICANA
-----------------------------------
Proposal Number: _______________________________________
Submitted by: __
Approved by: _
Requested Due Date for Quotation? ___
Anticipated Date of Contract Award? __________
(MSO/EBTS Forecast will be submitted based upon anticipated contract award
date.)
Page 1 of 10
PLEASE CHECK WHICH TYPE OF QUOTATION IS REQUIRED. (See definitions below).
Budgetary or Firm Proposal XXXX
--------- ---------------
A BUDGETARY QUOTE WILL NOT be reviewed by the Configuration Engineering Team.
This quote will be based upon generic equipment models and other recently
engineered equipment lists. In addition, the budgetary quote will be comprised
of an Exhibit A ONLY unless other documentation is required.
Please check other documentation required for the Budgetary Quote:
Generic Executive Summary xx
------------
Generic Implementation Schedule xx
----------
Generic Statement of Work xx
------------
Generic Responsibility Matrix xx
------------
Standard iDEN Purchase Agreement with Exhibits xx
-----------
ASSUMING COMPLETE INFORMATION IS RECEIVED PER THIS RFQ, THE NORMAL TURNAROUND
TIME TO COMPLETE A BUDGETARY QUOTE IS APPROXIMATELY 1-2 WEEKS. PLEASE NOTE
NORMAL TURNAROUND TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE
AVAILABILITY.
A FIRM PROPOSAL will be reviewed by the Configuration Engineering Team.
Customized engineering will be prepared per the configuration requirements as
defined on this RFQ. The standard proposal format includes a generic executive
summary, generic implementation schedule and the standard iDEN Purchase
Agreements with Exhibits.
ASSUMING COMPLETE INFORMATION IS RECEIVED, THE NORMAL TURNAROUND TIME TO
COMPLETE A FIRM PROPOSAL IS APPROXIMATELY 4 WEEKS. PLEASE NOTE NORMAL TURNAROUND
TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE AVAILABILITY. NOTE:
COMPLETE INFORMATION INCLUDES AN ENGLISH VERSION OF THE PSTN SIGNALING
SPECIFICATION.
Hard Copy of the Proposal or Budgetary Required? YES (yes/no) If No,
------------
Exhibit A will be sent via E-mail. Proposal/Budgetary Hard Copies to be sent to:
Name: Virgilio Cadena
Title: Vicepresidente de Operaciones Tricom
Address: Avenida Lope de Vega #95
Santo Domingo, Republica Dominicana
Phone: (809) 476-4042
Page 2 of 10
Total number of Proposal/Budgetary Copies Required for Customer: 3
--------------
Two (2) copies will be given to Sales Team. Are additional copies required?
YES
-------
If Yes, how many additional copies? ______.
To whom and to what address are they to be sent?
Luis Quijano and Valerie Bennett ( Project PM )
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
In order to construct an accurate and timely quotation for an iDEN system,
several pieces of information are necessary. This information includes details
about the area to be covered and the subscribers to be served.
DISCLAIMER
The quotation constructed through this information is intended for preliminary
use. Estimates of site coverage will be made using theoretical models that make
assumptions such as, but not limited to, flat earth and uniform density
buildings. These estimates do not replace the need for detailed RF planning.
Customers are encouraged to retain a RF planning consultant to perform RF
design. Traffic models are provided for information only. Actual traffic loading
may vary based on factors such as, but not limited to, base site locations and
customer marketing. Upon completion of this input document, Motorola will
produce a budgetary pricing estimate. Final pricing will require additional
information from customer and additional analysis by Motorola.
Page 3 of 10
DESCRIBE YOUR iDEN SYSTEM REQUEST
Describe the New iDEN System you are requesting:
MSO Design Capacity - subscribers
------------------
Phase 1 Phase 2 Phase 3
RF Design Capacity 3,772 5,658 8,148
----- ----- -----
(CUMULATIVE)
Briefly describe the system you are requesting with this RFQ. Include
information like system features (Multiservice Only, SMS, Packet Data, IWF,VMS).
TRICOM'S iDEN SYSTEM WILL BE IMPLEMENTED IN HONDURAS . INTERCONNECT INTERLEAVE
WILL BE 3:1 AND THE SUBSCRIBERS DISTRIBUTION WILL BE 30% DISPATCH AND 70%
MULTISERVICE. THERE WILL BE 24 EBTS'S SITES WITH 108 BR'S., DIVIDED IN THREE (3)
PHASES. THE HONDURAS EBTS'S INFRASTRUCTURE WILL BE LINKED UP TO THE PANAMA HOST
MSO, FOR YEAR 1; YEAR 2 AND YEAR 3 WILL BE DETERMINED BASE ON TRAFFIC GROWTH IN
THE REGION. PLEASE TO SPECIFY, IF REQUIRED, ANY EXPANSION IN THESE MSO FOR
ADDITIONAL OF HONDURAS INFRASTRUCTURE. THE PROPOSAL MUST BE ITEMIZED PRICING FOR
EQUIPMENT AND SERVICES (INSTALLATION, ENGINEERING, O&M FOR YEAR BASIS, ETC).
TRAINING FOR YEAR 1 TO YEAR 3 PLUS RECOMMENDED TEST EQUIPMENTS AND SPARES FOR
E-BTS (2).
Explain briefly any special considerations to be taken into account by
Configuration Engineering and Proposal Management. (For Example: Do not quote
power system to be provided by the customer. Design MSO for capacity of phase
3.)
detailed in section 1.2.
---------------------------
State which system features should be quoted as options (e.g. VMS).
PACKET DATA ( THE DEFAULT EQUIPMENT FOR PD IS THE 64K MDG ) . An external HLR
for the MSC should be quoted as an option. One EBTS engineer should also be
quoted on a quarterly
Page 4 of 10
1. SITE INFORMATION
1.1 MSO LOCATION:
Please provide the expected MSO location below:
Expected MSO Name: N/A
City Name; Guatemala
1.2 EBTS SITE INFORMATION
Please provide the types of EBTS configuration and their total number
of sites that are planned to be deployed in the table below. Double
click Table below and then modify.
AVAILABLE CONFIGURATIONS (SEE PRICEBOOK SECTION 4):
o Omni 1 through 18 (Cavity sites 1 through 20)
o 3SECTOR - __Through
o SRRC Omni - through 16
o SRRC 3Sector - 3 through 22
o Indoor SRSC Omni 1 through 3 (Omni 1 through 4 on 40w sites)
o Outdoor SRSC Omni 1 through 3
AVAILABLE OPTIONS:
o LR - Left or Right Side Panel
o FR - Front and Rear Door
o TB - Top and Base Cover
o TTAI - Tower Top Amp Interface
o TTA - Tower Top Amp
o UP - Utility Pedestal and parts (Outdoor SRSC only)
Page 5 of 10
EBTS Configuration Table
--------------------------------------------------------------------------------------------------------------------------
# OF 70W/ HYB/ 75/120 OPTIONS
SITES SITE TYPE # OF BRS FREQ. 40W CAV E1/T1 OHMS
--------------------------------------------------------------------------------------------------------------------------
Sample 3 SRRC Sector 3-2-2 21 800Mhz 70 Hyb E1 120 TTAI, TTA
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 OMNI 16 16 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 OMNI 10 10 800MHZ 70 HYB E1 120
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 OMNI 4 4 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 OMNI 3 3 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 1 1 OMNI 7 7 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
Total Ph 1 5 40
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
PHASE 2 STAND ALONE BR'S 9
--------------------------------------------------------------------------------------------------------------------------
PHASE 2 18 OMNI 2 36 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
PHASE 2 1 OMNI 6 6 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------------------------
Total Ph 2 19 51
--------------------------------------------------------------------------------------------------------------------------
PHASE 3 STAND ALONE BR'S 17
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Total Ph 3 0 17
--------------------------------------------------------------------------------------------------------------------------
Page 6 of 10
2. CALL PROFILE:
2.1 PLANNED CALL PROFILE: DISPATCH AND INTERCONNECT
Please provide the following call model information.
Double click Table below and then modify BLUE BOLD only. If call
profile is different by phases, please copy the table below and
generate call profile separately.
----------------------------------------------------------------------------------------------------------
UNIT TYPE Int. Disp. Multi. Units Total
------------------ Number
Only Units Only Units Int. Disp. of
--------------------------------------------------------------------------------------- Subscriber
Interleave 3:1 6:1 3:1 6:1 Units
--------------------------------------------------------------------------------------- by
Calls/hr 0.18 1.80 0.60 1.80 Phase
Hold Time 120 20.0 84 20
Illum. Cells 1 2 1 2
Erlangs/Unit 0.0060 0.0120 0.0140 0.0120
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 1 0 1,132 2,640 3,772
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 2 0 1,697 3,961 5,658
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 3 0 2,444 5,704 8,148
----------------------------------------------------------------------------------------------------------
Int. = Interconnect, Disp. = Dispatch, Multi. = Multiservice
2.2 PLANNED CALL PROFILE: VMS, SMS, IWF AND MDG
Please provide the following expected number of subscribers below.
Double click Table below and then modify BLUE BOLD only.
------------------------------------------------------------------------------------------------------------
Default Value Phase 1 Phase 2 Phase 3
------------------------------------------------------------------------------------------------------------
VMS Users 100 % of Int. Units 5000 Users 10000 Users 0 Users
------------------------------------------------------------------------------------------------------------
SMS Users 5 % of Int. Units 2000 Users 4000 Users 0 Users
------------------------------------------------------------------------------------------------------------
IWF Users 5 % of Int. Units 2000 Users 4000 Users 0 Users
------------------------------------------------------------------------------------------------------------
Packet Data Users 5 % of Disp. Units 1000 Users 2000 Users 0 Users
------------------------------------------------------------------------------------------------------------
Int. Units = (3:1 Int. Only Units) + (3:1 Int. in Multiservice Units)
Disp. Units = (6:1 Disp. Only Units) + (6:1 Disp. In Multiservice Units)
3 PLANNED MSO PARAMETERS
3.1 MSC PARAMETERS
o Equipment Type Approval Required (Yes, No, Default = Yes)................................(YES )
o Type of PSTN Signaling (R1, R2, ISUP, TUP, etc., Default = R2)...........................(R2 AND C7 )
o Number of PSTN Pools (1,2,3, etc., Default = 3)..........................................(3 )
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
o External HLR Required (Yes, No, Default = No)............................................(NO )
Page 7 of 10
3.2 VMS PARAMETERS
o Average Voice Message per day per subscriber (Default = 2)...............................(2 )
o Average Message Length per Message (Default = 30 Sec)....................................(30 SEC )
o Average Voice Mail Greeting Length (Default = 20 Sec)....................................(25SEC )
o Average Retention (Read) Time per Message (Default = 12 Hr)..............................(24HR
o Busy Hour Call Rate (Default = 10 %).....................................................(10% )
o GOS (Default = 5 %)......................................................................(5% )
3.3 SMS PARAMETERS
o Short Message per day per subscriber (Default = 0.6).....................................(.6 )
o Busy Hour per Day (6, 7, 8, 9, 10, etc. Default = 8) ....................................(8 )
o VMS Penetration (50, 60, 70, 80, etc. Default = 70 %)....................................(70% )
o SMS Penetration (20, 30, 40, 50, etc. Default = 30 %)....................................(30% )
Note: Sum of VMS and SMS Penetration Rates must be 100 %.
3.4 IWF PARAMETERS
o Circuit Data Busy Hour Call Rate (0.1, 02, 0.3, etc. Default = 0.1)......................(0.1 )
o Average Holding Time (100, 150, etc. Default = 180 Sec)..................................(180 SEC )
o GOS (1, 2, etc. Default = 5 %)...........................................................(5% )
3.5 PACKET DATA
o Number of subscribers (15K, 64K, etc Default =15K)....................................(64 K)
4 EXPECTED MSO ROOM REQUIREMENTS
4.1 MSO ROOM: CUSTOMER'S RESPONSIBILITY
o Ceiling Height from Floor (2.5, 3.0, etc. Default = 3.5 m)...............................(3.5 M )
o Cable Tray or Floor Tile.................................................................(MOTOROLA )
o HVAC.....................................................................................(MOTOROLA )
4.2 AC POWER: CUSTOMER'S RESPONSIBILITY
o Inputs to Rectifiers Chose one:
o Voltage (380/415 VAC, 50/60 Hz).......................................................( )
o Voltage (208/240 VAC, 50/60 Hz).......................................................(208/240 VAC,60HZ )
o Voltage (480 VAC, 50/60 Hz)...........................................................( )
o Voltage (specify VAC, 50/60 Hz).......................................................(60 HZ )
o Inputs to Monitors:
o Voltage (120VAC, 240VAC, 440VAC, etc. Default = 240 VAC)..............................(120 VAC )
o Phases (Single, Three, etc. Default = Single Phase)...................................(SINGLE PHASE )
o Frequencies (50, 60, etc. Default = 50 Hz)............................................(60 HZ )
Page 8 of 10
4.3 DC POWER:
o DC Power Plant (- 48 VDC System) and Rectifiers:
o Supplied by (Motorola, Customer, etc. Default = Motorola).............................(MOTOROLA )
o N+1 Redundant Rectifier? (Yes, No, Default = Yes).....................................(YES )
o Battery Backup Hour (2,4, 6, 8, etc. Default = 2 Hr)..................................(8 HRS.
o DC to AC Inverters (Yes, No, Default = Yes)..............................................(YES )
o DC Generator, if required................................................................(CUSTOMER SUPPLIED)
5 EBTS INFORMATION
5.1 FREQUENCY AVAILABLE
o Frequency Range Chose one:
o Base RX (806 - 821 MHz, 896-901 MHz)..................................................(806 - 821 MHZ )
o Base TX (851-866 MHz, 935-940 MHz)....................................................(851 - 866 MHZ )
5.2 EBTS EQUIPMENT
o EBTS Power (Standard, None, Specific)....................................................(STANDARD )
o EBTS Antenna (Standard, None, Specific)..................................................(CUSTOMER SUPPLIED)
o EBTS Spares (Standard, None, Specific)...................................................(STANDARD )
6 STANDARD EBTS SITE REQUIREMENTS
6.1 SPAN LINES FROM EBTSS TO MSO: CUSTOMER'S RESPONSIBILITY
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
7 TEST EQUIPMENT
7.1 MSO TEST EQUIPMENT
o How many sets of MSO Test Equipment? (0,1 , 2, etc. Default = 1).........................(1 )
7.2 EBTS Test Equipment
o How many sets of EBTS Test Equipment? (0, 1, 2, etc. Default = 1)........................(2 )
Page 9 of 10
8 ADDITIONAL INFORMATION
Please provide any additional comments concerning the system
requirements or the quotation format below:
THE GRADE OF SERVICE GOS THAT SHOULD BE USED IS 2% BLOCKING FOR
INTERCONNECT AND 5% FOR DISPATCH.
9 ATTACHMENTS:
9.1 PSTN SIGNALING SPECIFICATION - MANDATORY IF INTERCONNECT IS REQUESTED
This specification is mandatory if the system is to be designed for
both Interconnect and Dispatch. Disregard if your entire system is for
Dispatch Only.
In order to process a quotation for an MSC, Nortel will require an
English version of the local PSTN Signaling document/specifications.
Upon receipt of this document the quote can be officially started.
English version should include references to international standards.
For example: ISUP (ITU-T Blue Book).
9.2 SYSTEM BLOCK DIAGRAM - PREFERRED
ATTACH
9.3 NON DISCLOSURE AGREEMENT (NDA) - HARD COPY REQUIRED WITH CUSTOMER
SIGNATURE. FAX TO 847-576-5801.
ATTACH
9.4 EXPORT CONTROL SCREENING
ATTACH
9.5 GOVERNMENT SCREENING FORM
ATTACH
9.6 Q-GATE 17
ATTACH
9.7 SALES STRATEGY FORM (IF APPLICABLE)
ATTACH
Page 10 of 10
REQUEST FOR QUOTATION (RFQ)
QUESTIONNAIRE
INT'L iDEN INFRASTRUCTURE
NEW SYSTEM
................................................................................
PLEASE NOTE THAT THE FOLLOWING IS REQUIRED BEFORE QUOTATION WORK WILL BEGIN:
1. A SIGNED NON DISCLOSURE AGREEMENT (NDA)
2. AN EXPORT CONTROL SCREENING FORM (TABLE OF DENIAL ORDERS)
3. GOVERNMENT SCREENING FORM
4. Q-GATE 17 (SALES STRATEGY MAY BE WAIVED)
THE ABOVE MUST BE FILLED OUT, SIGNED, AND FAXED TO MOTOROLA NSS-IDEN BID AND
QUOTE (847-576-5801). THESE FORMS ARE A REQUIREMENT PER MOTOROLA STANDARD
OPERATING PROCEDURES.
................................................................................
Customer Name: TRICOM, S. A.
-------------
Customer Address: AVENIDA LOPE DE VEGA #95
----------------------------
APARTADO POSTAL 30373
---------------------
SANTO DOMINGO, REPUBLICA DOMINICANA
-----------------------------------
Proposal Number: _______________________________________
Submitted by: __
Approved by: _
Requested Due Date for Quotation? ___
Anticipated Date of Contract Award? __________
(MSO/EBTS Forecast will be submitted based upon anticipated contract award
date.)
Page 1 of 10
PLEASE CHECK WHICH TYPE OF QUOTATION IS REQUIRED. (See definitions below).
Budgetary or Firm Proposal XXXX
--------- ---------------
A BUDGETARY QUOTE WILL NOT be reviewed by the Configuration Engineering Team.
This quote will be based upon generic equipment models and other recently
engineered equipment lists. In addition, the budgetary quote will be comprised
of an Exhibit A ONLY unless other documentation is required.
Please check other documentation required for the Budgetary Quote:
Generic Executive Summary xx
------------
Generic Implementation Schedule xx
----------
Generic Statement of Work xx
------------
Generic Responsibility Matrix xx
------------
Standard iDEN Purchase Agreement with Exhibits xx
-----------
ASSUMING COMPLETE INFORMATION IS RECEIVED PER THIS RFQ, THE NORMAL TURNAROUND
TIME TO COMPLETE A BUDGETARY QUOTE IS APPROXIMATELY 1-2 WEEKS. PLEASE NOTE
NORMAL TURNAROUND TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE
AVAILABILITY.
A FIRM PROPOSAL will be reviewed by the Configuration Engineering Team.
Customized engineering will be prepared per the configuration requirements as
defined on this RFQ. The standard proposal format includes a generic executive
summary, generic implementation schedule and the standard iDEN Purchase
Agreements with Exhibits.
ASSUMING COMPLETE INFORMATION IS RECEIVED, THE NORMAL TURNAROUND TIME TO
COMPLETE A FIRM PROPOSAL IS APPROXIMATELY 4 WEEKS. PLEASE NOTE NORMAL TURNAROUND
TIME IS DEPENDENT UPON OUTSTANDING WORKLOAD AND RESOURCE AVAILABILITY. NOTE:
COMPLETE INFORMATION INCLUDES AN ENGLISH VERSION OF THE PSTN SIGNALING
SPECIFICATION.
Hard Copy of the Proposal or Budgetary Required? YES (yes/no) If No,
------------
Exhibit A will be sent via E-mail. Proposal/Budgetary Hard Copies to be sent to:
Name: Virgilio Cadena
Title: Vicepresidente de Operaciones Tricom
Address: Avenida Lope de Vega #95
Santo Domingo, Republica Dominicana
Phone: (809) 476-4042
Page 2 of 10
Total number of Proposal/Budgetary Copies Required for Customer: 3
--------------
Two (2) copies will be given to Sales Team. Are additional copies required?
YES
-------
If Yes, how many additional copies? ______.
To whom and to what address are they to be sent?
Luis Quijano and Valerie Bennett ( Project PM )
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
In order to construct an accurate and timely quotation for an iDEN system,
several pieces of information are necessary. This information includes details
about the area to be covered and the subscribers to be served.
DISCLAIMER
The quotation constructed through this information is intended for preliminary
use. Estimates of site coverage will be made using theoretical models that make
assumptions such as, but not limited to, flat earth and uniform density
buildings. These estimates do not replace the need for detailed RF planning.
Customers are encouraged to retain a RF planning consultant to perform RF
design. Traffic models are provided for information only. Actual traffic loading
may vary based on factors such as, but not limited to, base site locations and
customer marketing. Upon completion of this input document, Motorola will
produce a budgetary pricing estimate. Final pricing will require additional
information from customer and additional analysis by Motorola.
Page 3 of 10
DESCRIBE YOUR iDEN SYSTEM REQUEST
Describe the New iDEN System you are requesting:
MSO Design Capacity - subscribers
------------------
Phase 1 Phase 2 Phase 3
RF Design Capacity 1,572 2,331 3,310
----- ----- -----
(CUMULATIVE)
Briefly describe the system you are requesting with this RFQ. Include
information like system features (Multiservice Only, SMS, Packet Data, IWF,VMS).
TRICOM'S iDEN SYSTEM WILL BE IMPLEMENTED AT NICARAGUA . INTERCONNECT INTERLEAVE
WILL BE 3:1 AND THE SUBSCRIBERS DISTRIBUTION WILL BE 30% DISPATCH AND 70%
MULTISERVICE. THERE WILL BE 10 EBTS'S SITES WITH 46 BR'S., DIVIDED IN THREE (3)
PHASES. THE NICARAGUA EBTS'S INFRASTRUCTURE WILL BE LINKED UP TO THE PANAMA HOST
MSO, FOR YEAR 1; YEAR 2 AND YEAR 3 WILL BE DETERMINED BASE ON TRAFFIC GROWTH IN
THE REGION. PLEASE TO SPECIFY, IF REQUIRED, ANY EXPANSION IN THESE MSO FOR
ADDITIONAL OF NICARAGUA INFRASTRUCTURE. THE PROPOSAL MUST BE ITEMIZED PRICING
FOR EQUIPMENT AND SERVICES (INSTALLATION, ENGINEERING, O&M FOR YEAR BASIS, ETC).
TRAINING FOR YEAR 1 TO YEAR 3 PLUS RECOMMENDED TEST EQUIPMENTS AND SPARES FOR
E-BTS (2).
Explain briefly any special considerations to be taken into account by
Configuration Engineering and Proposal Management. (For Example: Do not quote
power system to be provided by the customer. Design MSO for capacity of phase
3.)
detailed in section 1.2.
---------------------------
State which system features should be quoted as options (e.g. VMS).
PACKET DATA ( THE DEFAULT EQUIPMENT FOR PD IS THE 64K MDG ) . An external HLR
for the MSC should be quoted as an option. One EBTS engineer should also be
quoted on a quarterly
Page 4 of 10
1. SITE INFORMATION
1.1 MSO LOCATION:
Please provide the expected MSO location below:
Expected MSO Name: N/A
City Name; Guatemala
1.2 EBTS SITE INFORMATION
Please provide the types of EBTS configuration and their total number
of sites that are planned to be deployed in the table below. Double
click Table below and then modify.
AVAILABLE CONFIGURATIONS (SEE PRICEBOOK SECTION 4):
o Omni 1 through 18 (Cavity sites 1 through 20)
o 3SECTOR - __Through
o SRRC Omni - through 16
o SRRC 3Sector - 3 through 22
o Indoor SRSC Omni 1 through 3 (Omni 1 through 4 on 40w sites)
o Outdoor SRSC Omni 1 through 3
---------
AVAILABLE OPTIONS:
o LR - Left or Right Side Panel
o FR - Front and Rear Door
o TB - Top and Base Cover
o TTAI - Tower Top Amp Interface
o TTA - Tower Top Amp
o UP - Utility Pedestal and parts (Outdoor SRSC only)
Page 5 of 10
EBTS Configuration Table
---------------------------------------------------------------------------------------------------------------------------
# of 70w/ Hyb/ 75/120 Options
Sites Site Type # of BRs Freq. 40w Cav E1/T1 Ohms
---------------------------------------------------------------------------------------------------------------------------
SAMPLE 3 SRRC Sector 3-2-2 21 800Mhz 70 Hyb E1 120 TTAI, TTA
---------------------------------------------------------------------------------------------------------------------------
1 OMNI 5 5 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
2 OMNI 4 8 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
4 OMNI 3 12 800MHZ 70 HYB E1 120 NO
---------------------------------------------------------------------------------------------------------------------------
3 OMNI 2 6 800MHZ 70 HYB E1 120 NO
--------------------------------------------------------------------------------------------------------
Total Ph 1 10 31
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
PHASE 2 STAND ALONE BR's 8
--------------------------------------------------------------------------------------------------------
Total Ph 2 0 8
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
PHASE 3 STAND ALONE BR's 7
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Total Ph 3 0 7
---------------------------------------------------------------------------------------------------------------------------
Page 6 of 10
2. CALL PROFILE:
2.1 PLANNED CALL PROFILE: DISPATCH AND INTERCONNECT
Please provide the following call model information.
Double click Table below and then modify BLUE BOLD only.
If call profile is different by phases, please copy the table below and
generate call profile separately.
----------------------------------------------------------------------------------------------------------
UNIT TYPE Int. Disp. Multi. Units Total
Only Units Only Units Int. Disp. Number
--------------------------------------------------------------------------------------- of
Interleave 3:1 6:1 3:1 6:1 Subscriber
--------------------------------------------------------------------------------------- Units
Calls/hr 0.18 1.80 0.60 1.80 by
Hold Time 120 20.0 84 20 Phase
Illum. Cells 1 2 1 2
Erlangs/Unit 0.0060 0.0120 0.0140 0.0120
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 1 0 472 1,100 1,572
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 2 0 699 1,632 2,331
----------------------------------------------------------------------------------------------------------
Numer of Subcriber Units: Phase 3 0 993 2,317 3,310
----------------------------------------------------------------------------------------------------------
Int. = Interconnect, Disp. = Dispatch, Multi. = Multiservice
2.2 PLANNED CALL PROFILE: VMS, SMS, IWF AND MDG
Please provide the following expected number of subscribers below.
Double click Table below and then modify BLUE BOLD only.
------------------------------------------------------------------------------------------------------------
Default Value Phase 1 Phase 2 Phase 3
------------------------------------------------------------------------------------------------------------
VMS Users 100 % of Int. Units 10000 USERS 25000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
SMS Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
IWF Users 5 % of Int. Units 2000 USERS 4000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Packet Data Users 5 % of Disp. Units 1000 USERS 2000 USERS 0 USERS
------------------------------------------------------------------------------------------------------------
Int. Units = (3:1 Int. Only Units) + (3:1 Int. in Multiservice Units)
Disp. Units = (6:1 Disp. Only Units) + (6:1 Disp. In Multiservice Units)
3 PLANNED MSO PARAMETERS
3.1 MSC Parameters
o Equipment Type Approval Required (Yes, No, Default = Yes)................................(YES )
o Type of PSTN Signaling (R1, R2, ISUP, TUP, etc., Default = R2)...........................(R2 AND C7 )
o Number of PSTN Pools (1,2,3, etc., Default = 3)..........................................(3 )
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
o External HLR Required (Yes, No, Default = No)............................................(NO )
Page 7 of 10
3.2 VMS Parameters
o Average Voice Message per day per subscriber (Default = 2)...............................(2 )
o Average Message Length per Message (Default = 30 Sec)....................................(30 SEC )
o Average Voice Mail Greeting Length (Default = 20 Sec)....................................(25SEC )
o Average Retention (Read) Time per Message (Default = 12 Hr)..............................(24HR
o Busy Hour Call Rate (Default = 10 %).....................................................(10% )
o GOS (Default = 5 %)......................................................................(5% )
3.3 SMS Parameters
o Short Message per day per subscriber (Default = 0.6).....................................(.6 )
o Busy Hour per Day (6, 7, 8, 9, 10, etc. Default = 8) ....................................(8 )
o VMS Penetration (50, 60, 70, 80, etc. Default = 70 %)....................................(70% )
o SMS Penetration (20, 30, 40, 50, etc. Default = 30 %)....................................(30% )
Note: Sum of VMS and SMS Penetration Rates must be 100 %.
3.4 IWF Parameters
o Circuit Data Busy Hour Call Rate (0.1, 02, 0.3, etc. Default = 0.1)......................(0.1 )
o Average Holding Time (100, 150, etc. Default = 180 Sec)..................................(180 SEC )
o GOS (1, 2, etc. Default = 5 %)...........................................................(5% )
3.5 Packet Data
o Number of subscribers (15K, 64K, etc Default =15K)....................................(64 K)
4 Expected MSO Room Requirements
4.1 MSO Room: Customer's Responsibility
o Ceiling Height from Floor (2.5, 3.0, etc. Default = 3.5 m)...............................(3.5 M )
o Cable Tray or Floor Tile.................................................................(MOTOROLA )
o HVAC.....................................................................................(MOTOROLA )
4.2 AC Power: Customer's Responsibility
o Inputs to Rectifiers Chose one:
o Voltage (380/415 VAC, 50/60 Hz).......................................................( )
o Voltage (208/240 VAC, 50/60 Hz).......................................................(208/240 VAC,60HZ )
o Voltage (480 VAC, 50/60 Hz)...........................................................( )
o Voltage (specify VAC, 50/60 Hz).......................................................(60 HZ )
o Inputs to Monitors:
o Voltage (120VAC, 240VAC, 440VAC, etc. Default = 240 VAC)..............................(120 VAC )
o Phases (Single, Three, etc. Default = Single Phase)...................................(SINGLE PHASE )
o Frequencies (50, 60, etc. Default = 50 Hz)............................................(60 HZ )
Page 8 of 10
4.3 DC Power:
o DC Power Plant (- 48 VDC System) and Rectifiers:
o Supplied by (Motorola, Customer, etc. Default = Motorola).............................(MOTOROLA )
o N+1 Redundant Rectifier? (Yes, No, Default = Yes).....................................(YES )
o Battery Backup Hour (2,4, 6, 8, etc. Default = 2 Hr)..................................(8 HRS.
o DC to AC Inverters (Yes, No, Default = Yes)..............................................(YES )
o DC Generator, if required................................................................(CUSTOMER SUPPLIED)
5 EBTS Information
5.1 Frequency Available
o Frequency Range Chose one:
o Base RX (806 - 821 MHz, 896-901 MHz)..................................................(806 - 821 MHZ )
o Base TX (851-866 MHz, 935-940 MHz)....................................................(851 - 866 MHZ )
5.2 EBTS Equipment
o EBTS Power (Standard, None, Specific)....................................................(STANDARD )
o EBTS Antenna (Standard, None, Specific)..................................................(CUSTOMER SUPPLIED)
o EBTS Spares (Standard, None, Specific)...................................................(STANDARD )
6 Standard EBTS Site Requirements
6.1 Span Lines from EBTSs to MSO: Customer's Responsibility
o Type of Span Lines (T1, 120(OMEGA) E1, 75(OMEGA) E1, etc., Default = 120(OMEGA) E1)......(120(OMEGA) E1 )
7 Test Equipment
7.1 MSO Test Equipment
o How many sets of MSO Test Equipment? (0,1 , 2, etc. Default = 1).........................(1 )
7.2 EBTS Test Equipment
o How many sets of EBTS Test Equipment? (0, 1, 2, etc. Default = 1)........................(2 )
Page 9 of 10
8 ADDITIONAL INFORMATION
Please provide any additional comments concerning the system
requirements or the quotation format below:
THE GRADE OF SERVICE GOS THAT SHOULD BE USED IS 2% BLOCKING FOR
INTERCONNECT AND 5% FOR DISPATCH.
9 ATTACHMENTS:
9.1 PSTN SIGNALING SPECIFICATION - MANDATORY IF INTERCONNECT IS REQUESTED
This specification is mandatory if the system is to be designed for
both Interconnect and Dispatch. Disregard if your entire system is for
Dispatch Only.
In order to process a quotation for an MSC, Nortel will require an
English version of the local PSTN Signaling document/specifications.
Upon receipt of this document the quote can be officially started.
English version should include references to international standards.
For example: ISUP (ITU-T Blue Book).
9.2 SYSTEM BLOCK DIAGRAM - PREFERRED
ATTACH
9.3 NON DISCLOSURE AGREEMENT (NDA) - HARD COPY REQUIRED WITH CUSTOMER
SIGNATURE. FAX TO 847-576-5801.
ATTACH
9.4 EXPORT CONTROL SCREENING
ATTACH
9.5 GOVERNMENT SCREENING FORM
ATTACH
9.6 Q-GATE 17
ATTACH
9.7 SALES STRATEGY FORM (IF APPLICABLE)
ATTACH
Page 10 of 10