Until the first quarter of 1998, we were subject to a revenue-sharing regime whereby we only received a portion of the revenues from domestic and international long-distance voice services. We also did not pay for any domestic interconnection costs associated with this revenue. Since April 1, 1998, we have begun receiving the entire amount of long-distance revenues and in turn, commenced paying interconnection costs. As a result, 1998 and 1999 voice revenues and interconnection costs are not strictly comparable. Data revenues, however, were never subject to the same revenue sharing regime.

We are currently required to pay certain per-minute interconnection charges to the regional fixed-line companies for the use of their networks in originating and/or terminating such calls. In addition to such charges, we are required to pay a supplemental per-minute charge, the Parcela Adicional de Transição, or PAT, until June 30, 2001. See "- Rate Regulation". Furthermore, until the fixed-line companies complete their intra-regional long-distance network, such companies may lease transmission facilities from us to carry some interstate calls within their respective regions.

Our remuneration with respect to domestic and international long-distance calls originating on a cellular operator's network was not affected by the April 1998 changes to the division of revenues system applicable to us and the fixed-line companies. We will continue to receive from the cellular operators the revenues relating to cellular long-distance calls and will continue to pay per-minute interconnection charges to the cellular operators for connection to and use of their networks in originating and/or terminating such calls.

In July 1999, pursuant to the privatization plan, companies began to compete for domestic long-distance and outgoing international calls made on the networks of fixed-line operators, and for calls that originate in a fixed-line network and terminate in a cellular network. After that date, customers were able to select a long-distance carrier for their domestic and international calls by dialing the code of the carrier, or the PIC code. For domestic intra-regional long-distance calls, we compete with regional fixed-line operators. For domestic interregional long-distance and international calls, we compete with Intelig, the mirror license holder, which began operating on January 23, 2000. See "- Regulation of the Brazilian Telecommunications Industry - Concessions and Authorizations".