al 31 de diciembre de 2006 y 2005

Financial Statements for the Years ending on December 31st., 2006 and 2005

Estados Financieros

CONTENIDO / CONTENTS Dictamen del auditor independiente Independent auditor's opinion Balance general General balance sheet Estado de ingresos, gastos y excedentes Statement of incomes, expenditures and residual revenues Estado de evolucin del patrimonio neto Statement of evolution of net equity Estado de flujo de efectivo Statement of cash flow Notas a los estados financieros Notes to the financial statements Anexo

39

Bs = boliviano / Bolivian US$ = dlar estadounidense / United States Dollar

PricewaterhouseCoopers S.R.L. Santa Cruz - Bolivia Ciro Torres N 9 - B - Equipetrol Telfono (591-3) 336-4050 Fax (591-3) 336-2436 [Link]/bo

DICTAMEN DEL AUDITOR INDEPENDIENTE 28 de marzo de 2007 A los seores Socios de la Cooperativa de Telecomunicaciones Santa Cruz (COTAS) LTDA. Santa Cruz de la Sierra

INDEPENDENT AUDITORS OPINION March 28 th., 2007 To the gentlemen Members of The Santa Cruz Telecommunications Cooperative (COTAS) LTD. Santa Cruz de la Sierra

1. Hemos examinado los balances generales de Cooperativa de Telecomunicaciones Santa Cruz (COTAS) LTDA. al 31 de diciembre de 2006 y 2005 y los correspondientes estados de ingresos, gastos y excedentes, de evolucin del patrimonio neto y de flujo de efectivo por los ejercicios terminados en esas fechas, as como las notas 1 a 22, que se acompaan. Estos estados financieros son responsabilidad de la gerencia de COTAS LTDA. Nuestra responsabilidad es expresar una opinin sobre dichos estados financieros basados en nuestra auditora. 2. Efectuamos nuestros exmenes de acuerdo con normas de auditora generalmente aceptadas en Bolivia. Esas normas requieren que planifiquemos y ejecutemos la auditora para obtener razonable

1. We have examined the general balance sheets of the Santa Cruz Telecommunications Cooperative (COTAS) LTD. as of December 31 st., 2006 and 2005 and the corresponding statements of incomes, expenditures and surpluses, the evolution of net equity, and the effective cash flows, for the years ending on those dates, as well as the notes 1 through 22, that are attached hereto. These financial statements are responsibility of the management of COTAS LTD. Our responsibility is to express an opinion on the mentioned financial statements based on our audits. 2. We have performed our examinations according to the audit norms generally accepted in Bolivia. Those norms require us to plan and execute the auditing to obtain reasonable assurance that the

seguridad respecto a s los estados financieros estn libres de presentaciones incorrectas significativas. Una auditora incluye examinar, sobre una base de pruebas, evidencia que sustente los importes y revelaciones en los estados financieros. Una auditora tambin incluye evaluar los principios de contabilidad utilizados y las estimaciones significativas hechas por la Gerencia, as como tambin evaluar la presentacin de los estados financieros en su conjunto. Consideramos que nuestros exmenes proporcionan una base razonable para nuestra opinin. 3. En nuestra opinin, los estados financieros mencionados en el primer prrafo presentan razonablemente, en todo aspecto significativo, la situacin patrimonial y financiera de Cooperativa de Telecomunicaciones Santa Cruz (COTAS) LTDA. al 31 de diciembre de 2006 y 2005, los resultados de sus operaciones, la evolucin de su patrimonio neto y su flujo de efectivo por los ejercicios terminados en esas fechas, de acuerdo con principios de contabilidad generalmente aceptados en Bolivia.

financial statements are free of significant incorrect presentations. An audit includes an examination, on the basis of proofs, evidence that support the amounts and revelations in the financial statements. An audit also includes the evaluation of the accounting principles used, and the significant estimates set by the Management, as well as to evaluate the presentation of the financial statements as a whole. We consider that our examinations provide a reasonable base for our opinion. 3. In our opinion, the financial statements mentioned in the first paragraph present reasonably, in all its significant aspect, the equity and financial situation of the Santa Cruz Telecommunications Cooperative (COTAS) LTD., as of December 31 st., 2006 and 2005, the results of its operations, the evolution of its net equity and its cash flow, for the periods ending on those dates, in agreement with the accounting principles generally accepted in Bolivia.

41

PricewaterhouseCoopers S.R.L.

(Socio)

M e m or i a An u a l / An n u a l R e p o r t - 2 0 0 6

B A LA N C E G EN ER A L A L 31 D IC IEMB R E D E 2006 Y 2005

T A L

C U E

T A S

(Reexpresado y reclasificado)

ACTIVO ACTIVO CORRIENTE DISPONIBILIDADES CUENTAS POR COBRAR POR SERVICIOS (Nota 5) CUENTAS POR COBRAR POR SERVICIOS DE INTERCONEXION (Nota 6) OTRAS CUENTAS POR COBRAR (Nota 7) SUSCRIPTORES POR COBRAR MATERIALES PARA OPERACION Y MANTENIMIENTO GASTOS PAGADOS POR ANTICIPADO TOTAL DEL ACTIVO CORRIENTE ACTIVO NO CORRIENTE OTRAS CUENTAS POR COBRAR (Nota 7) MATERIALES PARA EJECUCION DE PROYECTOS SUSCRIPTORES POR COBRAR PREVISION SUSCRIPTORES DE DUDOSA INCOBRABILIDAD INVERSIONES PERMANENTES Y OTRAS INVERSIONES CARGOS DIFERIDOS ACTIVO FIJO DEPRECIABLE (Nota 8) ACTIVOS EN TRANSITO OBRAS EN CURSO TOTAL ACTIVO NO CORRIENTE TOTAL DEL ACTIVO PASIVO Y PATRIMONIO PASIVO CORRIENTE OBLIGACIONES Y PROVISIONES VARIAS (Nota 9) DEUDAS FINANCIERAS (Nota 10) INTERESES FINANCIEROS OBLIGACIONES FISCALES Y SOCIALES OTRAS CUENTAS POR PAGAR TOTAL DEL PASIVO CORRIENTE PASIVO NO CORRIENTE OBLIGACIONES Y PROVISIONES VARIAS (Nota 9) DEUDAS FINANCIERAS (Nota 10) CERTIFICADOS DE PARTICIPACION TRABAJADORES (Nota 11) FUNDACION NOVA (Nota 12) PROVISION PARA OBRAS EN BENEFICIO DE LAS PROVINCIAS (Nota 13) PREVISION PARA INDEMNIZACIONES AL PERSONAL TOTAL DEL PASIVO NO CORRIENTE TOTAL PASIVO CORRIENTE Y NO CORRIENTE PATRIMONIO NETO FONDO SOCIAL (Nota 16) CERTIFICADOS SUSCRITOS POR COBRAR (Nota 16) PREVISIN SUSCRIPTORES DE DUDOSA COBRABILIDAD (Nota 16) RESERVAS (Nota 17) PERDIDA/EXCEDENTE DEL EJERCICIO TOTAL DEL PATRIMONIO NETO TOTAL DEL PASIVO Y PATRIMONIO NETO Las notas que se acompaan forman parte integrante de este estado.

35.894.965 108.748.189 62.344.831 66.781.728 12.332.130 36.334.764 15.209.416 337.646.023 4.503.931 18.928.818 256.239.424 (72.514.320) 780.095 5.496.012 [Link] 9.154.113 19.782.555 [Link] [Link]

13.228.381 96.540.619 33.263.226 62.599.802 14.760.113 41.218.407 15.759.777 277.370.325 6.186.444 36.660.751 260.744.898 (68.876.253) 780.169 5.279.211 [Link] 23.184.425 64.077.898 [Link] [Link]

143.648.638 164.757.394 3.359.742 22.749.962 187.645 334.703.381 6.367.068 144.227.441 28.082.631 9.560.878 2.923.228 60.649.310 251.810.556 586.513.937 [Link] 268.571.555 (72.514.318) 80.799.832 15.208.580 [Link] [Link]

99.683.857 151.687.863 3.889.726 18.144.066 64.651 273.470.163 545.317 219.725.410 25.662.279 9.560.878 2.923.228 52.989.957 311.407.069 584.877.232 [Link] 275.505.011 (68.876.252) 68.006.387 12.793.445 [Link] [Link]

GENERAL BALANCE SHEET AS OF DECEMBER 31St., 2006 AND 2005

T A I

O F

A C C O U N

T S

(Reexpressed and reclassified)

ASSETS CURRENT ASSETS CASH ACCOUNTS RECEIVABLE FOR SERVICE (Note 5) ACCOUNTS RECEIVABLE FOR SERVICES OF INTERCONNECTION (Note 6) OTHER ACCOUNTS RECEIVABLE (Note 7) SUBSCRIBERS RECEIVABLE MATERIALS FOR OPERATION AND MAINTENANCE EXPENDITURES PAID IN ADVANCE TOTAL CURRENT ASSETS NON-CURRENT ASSETS OTHER ACCOUNTS RECEIVABLE (Note 7) MATERIALS FOR EXECUTION OF PROJECTS SUBSCRIBERS RECEIVABLE PROVISION FOR SUBSCRIBERS OF DOUBTFUL COLLECTABILITY PERMANENT INVESTMENTS AND OTHER INVESTMENTS DEFERRED PAYMENTS FIXED ASSET DEPRECIABLE (Note 8) ASSETS IN TRANSIT WORKS UNDER EXCUTION TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES OBLIGATIONS AND PROVISIONS VARIOUS (Note 9) FINANCIAL DEBTS (Note 10) FINANCIAL INTERESTS FISCAL AND SOCIAL OBLIGATIONS OTHER DEBTS PAYABLE TOTAL OF CURRENT LIABILITIES NON-CURRENT LIABILITIES OBLIGATIONS AND PROVISIONS VARIOUS (Note 9) FINANCIAL DEBTS (Note 10) CERTIFICATES OF EMPLOYEES PARTICIPATION (Note 11) NOVA FOUNDATION (Note 12) PROVISION FOR WORKS IN BENEFIT OF PROVINCES (Note 13) PROVISION FOR SEVERANCE PAYMENTS TO THE PERSONNEL TOTAL OF NON-CURRENT LIABILITIES TOTAL OF CURRENT AND NON-CURRENT LIABILITIES NET EQUITY SOCIAL FUND (Note 16) CERTIFICATES SUBSCRIBERS PAYABLE (Note 16) PROVISION SUBSCRIBERS OF DOUBTFUL COLLECTABILITY (Note 16) RESERVES (Note 17) LOSS/SURPLUS OF THE PERIOD TOTAL OF THE NET EQUITY TOTAL OF LIABILITIES AND NET EQUIT The Notes that are attached make up an integrant part of this statement.

35.894.965 108.748.189 62.344.831 66.781.728 12.332.130 36.334.764 15.209.416 337.646.023 4.503.931 18.928.818 256.239.424 (72.514.320) 780.095 5.496.012 [Link] 9.154.113 19.782.555 [Link] [Link]

13.228.381 96.540.619 33.263.226 62.599.802 14.760.113 41.218.407 15.759.777 277.370.325 6.186.444 36.660.751 260.744.898 (68.876.253) 780.169 5.279.211 [Link] 23.184.425 64.077.898 [Link] [Link]

43

143.648.638 164.757.394 3.359.742 22.749.962 187.645 334.703.381 6.367.068 144.227.441 28.082.631 9.560.878 2.923.228 60.649.310 251.810.556 586.513.937 [Link] 268.571.555 (72.514.318) 80.799.832 15.208.580 [Link] [Link]

99.683.857 151.687.863 3.889.726 18.144.066 64.651 273.470.163 545.317 219.725.410 25.662.279 9.560.878 2.923.228 52.989.957 311.407.069 584.877.232 [Link] 275.505.011 (68.876.252) 68.006.387 12.793.445 [Link] [Link]

Mem or ia Anual / Annual Repo r t - 2006

ESTADO DE INGRESOS, GASTOS Y EXCEDENTES POR LOS EJERCICIOS TERMINADOS EL 31 DE DICIEMBRE DE 2006 Y 2005
DICIEMBRE D E T A L L E D E C U E N T A S 2006 Bs. 127.836.559 235.382.060 65.262.081 17.960.910 9.235.976 46.129.306 59.071.926 26.845.168 587.723.986
(Reexpresado y reclasificado)

DICIEMBRE 2005 Bs.

INGRESOS Servicios de larga distancia Servicios telefnico Servicio de Telefona Pblica Servicio de Telefona Mvil Celular Servicio Transmisin y Red de Datos Servicios de valor agregado-Internet Servicios no Bsicos (Buscapersona-Tv Cable y otros) Ingresos Ajenos a la Explotacin TOTAL INGRESOS GASTOS Servicios personales (Nota 18) Mantenimiento y Reparaciones Depreciacin activo fijo Servicios de Terceros Servicios Bsicos (Energa elctrica, agua y comunicacin) Gastos de oficina y Pasajes-Viticos de representacin Previsin y provisiones varias Tasa de regulacin Otros Costos de Explotacin (Nota 18) Costos de seales de cable Costos de trfico saliente telefona pblica Costos de telefona mvil celular Costos de gua telefnica Varios Costos Ajenos a la Explotacin Gastos Financieros Prdida en inversiones Otros costos Ajenos a la Explotacin TOTAL GASTOS DE EXPLOTACION Y ADMINISTRATIVOS RESULTADO DEL EJERCICIO

70.707.705 237.103.152 50.738.181 19.904.556 9.107.553 33.753.559 49.405.189 39.396.423 510.116.318

106.979.000 24.116.902 85.160.943 41.545.705 7.596.343 3.738.156 9.054.690 5.644.247 147.939.877 15.443.052 29.674.770 20.285.986 5.247.604 16.594.672 35.379.406 501.420 17.612.633 572.515.406 15.208.580

101.734.346 22.700.647 79.944.336 41.312.795 7.423.510 4.589.067 2.997.827 5.079.748 89.940.242 15.291.607 21.204.148 24.271.949 5.060.865 23.777.048 35.329.017 3.060.351 13.605.370 497.322.873 12.793.445

Apropiacin del excedente del ejercicio Ad-Referendum de la prxima Asamblea General de Socios: A reserva legal A reserva para educacin cooperativa A reserva para previsin y asistencia social A reserva para contingencias y renovacin tecnolgica TOTAL DE APROPIACIONES A RESERVAS Las notas que se acompaan forman parte integrante de este estado.

(1.520.858) (760.429) (760.429) (12.166.864) (15.208.580)

(1.279.345) (639.672) (639.672) (10.234.756) (12.793.445)

INCOME, EXPENDITURES AND RESIDUAL REVENUES FOR THE PERIODS ENDING ON DECEMBER 31 ST., 2006 AND 2005
DECEMBER D E T A I L O F A C C O U N T S 2006 Bs. 127.836.559 235.382.060 65.262.081 17.960.910 9.235.976 46.129.306 59.071.926 26.845.168 587.723.986
(Reexpressed y reclassified)

DECEMBER 2005 Bs.

INCOMES Long distance services Telephone services Service of Public Telephony Service of Mobile Cellular Telephony Service of data transmission and data net Value-added services - Internett Non Basic services (Pagers -Cable TV) Incomes alien to the operatio TOTAL INCOMES EXPENDITURES Personal services (Note 18) Maintenance and repairs Fixed asset depreciation Services to third parties Basic services (Electric energy, water, communication) Office expenditures and tickets -viaticum of representation Prevision and provisions various Regulation fee Other costs of operation (note 18) Costs of cable signals Costs of outgoing public telephony Costs of mobile cellular telephony Costs of telephone directory Other costs Alien to the Operation Financial costs Loss on investments Other costs Alien to the Operation TOTAL GASTOS DE EXPLOTACION Y ADMINISTRATIVOS RESULTADO DEL EJERCICIO

70.707.705 237.103.152 50.738.181 19.904.556 9.107.553 33.753.559 49.405.189 39.396.423 510.116.318

106.979.000 24.116.902 85.160.943 41.545.705 7.596.343 3.738.156 9.054.690 5.644.247 147.939.877 15.443.052 29.674.770 20.285.986 5.247.604 16.594.672 35.379.406 501.420 17.612.633 572.515.406 15.208.580

101.734.346 22.700.647 79.944.336 41.312.795 7.423.510 4.589.067 2.997.827 5.079.748 89.940.242 15.291.607 21.204.148 24.271.949 5.060.865 23.777.048 35.329.017 3.060.351 13.605.370 497.322.873 12.793.445

45

Appropiation of the residual of the period Ad-Referendum of the forthcoming General Assembly of Members: For legal reserve For reserve for Cooperaive education For reserve for prevision and assistance For reserve for contingencies and technological renovation TOTAL OF APPROPIATIONS FOR RESERVES The Notes that are attached make up an integrant part of this statement.

(1.520.858) (760.429) (760.429) (12.166.864) (15.208.580)

(1.279.345) (639.672) (639.672) (10.234.756) (12.793.445)

Mem or ia Anual / Annual Repo r t - 2006

ESTADO DE EVOLUCION DEL PATRIMONIO NETO POR LOS EJERCICIOS TERMINADOS EL 31 DE DICIEMBRE DE 2006 Y 2005
F O N D O D E S C R I P C I O N G E N E R A L S O C I A L Previsin suscriptores de dudosa cobrabilidad Bs (63.147.861) (5.728.391) R E S E R V A S Excedentes y dficit acumulado Bs 12.793.445 12.793.445 (12.793.445) 15.208.580 15.208.580 Contingencias y renovacin tecnolgica y obras beneficios de las provincias Bs 62.861.026 (55.982) -

Cobrado a suscriptores Bs

Por cobrar a suscriptores Bs 287.035.797 7.682.381 (17.497.149) (1.716.018) -

Legal Bs 2.590.530 (6.998) -

Educacin Cooperativa Bs 1.264.967 (3.461) -

Previsin y asistencia social Bs 1.359.805 (3.500) -

TOTAL Bs [Link] 7.682.381 (7.160.351) (69.941) (5.728.391) 12.793.445 [Link] [Link] 7.660.300 (6.586.767) (3.638.066) 15.208.580 [Link]

Saldo al inicio de la gestin 2005 (Reexpresado y ajustado) Nuevos suscriptores Cobranza a suscriptores por cobrar Retiro de socios Pago a INALCO Aumento de Previsin Suscriptores Incobrables Excedente del ejercicio Subtotal antes de la apropiacin del excedente Absorcin del excedente gestin 2005 Saldos al finalizar la gestin 2005 Nuevos Suscriptores Cobranza a suscriptores por cobrar Retiro de socios Disminucin de Reserva Aumento de Previsin Suscriptores Incobrables Excedente del ejercicio Subtotal antes de la apropiacin del excedente Distribucin del excedente del ejercicio 2006 ad-referendum de la prxima Asamblea Ordinara de Delegados Saldos al 31 de diciembre de 2006

[Link] 17.497.149 (5.444.333) -

[Link] [Link] 13.155.975 (5.148.986) [Link]

275.505.011 275.505.011 7.660.300 (13.155.975) (1.437.781) 268.571.555

(68.876.252) (68.876.252) (3.638.066) (72.514.318)

2.583.532 1.279.345 3.862.877 (2) 3.862.877

1.261.506 639.672 1.901.178 (2) 1.901.178

1.356.305 639.672 1.995.977 (2) 1.995.977

62.805.044 10.234.756 73.039.800 (2) 73.039.800

[Link]

268.571.555

(72.514.318)

1.520.858 5.383.735

760.429 2.661.607 (1)

760.429 2.756.406 (1)

12.166.864 85.206.664 (1)

(15.208.580) (1)

[Link]

(1) Total de reservas al 31 de diciembre de 2006: Bs 96.008.412 (2) Total de reservas al 31 de diciembre de 2005: Bs 80.799.832 Las notas que se acompaan forman parte integrante de este estado.

Ad-referendum de la prxima Asamblea Ordinaria de Delegados)

Mem o r ia Anual / Annual Repo r t - 2 0 0 6

STATEMENT OF EVOLUTION OF THE NET EQUITY FOR THE PERIODS ENDING ON DECEMBER 31 ST., OF 2006 AND 200
S O C I A L G E N E R A L D E S C R I P T I O N F U N D Prevision for subscribers of doubtful collectability Bs (63.147.861) (5.728.391) (68.876.252) (68.876.252) (3.638.066) (72.514.318) R E S E R V E S Surplus and accumulated deficit Bs 12.793.445 12.793.445 (12.793.445) 15.208.580 15.208.580

Collected from subscribers Bs

Subscribers receivable Bs 287.035.797 7.682.381 (17.497.149) (1.716.018) 275.505.011 275.505.011 7.660.300 (13.155.975) (1.437.781) 268.571.555

Legal Bs 2.590.530 (6.998) 2.583.532 1.279.345 3.862.877 (2) 3.862.877

Cooperative education Bs 1.264.967 (3.461) 1.261.506 639.672 1.901.178 (2) 1.901.178

Prevision and Social assistance Bs 1.359.805 (3.500) 1.356.305 639.672 1.995.977 (2) 1.995.977

Contingencies and technological renovation works for the benefit of provinces Bs 62.861.026 (55.982) 62.805.044 10.234.756 73.039.800 (2) 73.039.800

TOTAL Bs [Link] 7.682.381 (7.160.351) (69.941) (5.728.391) 12.793.445 [Link] [Link] 7.660.300 (6.586.767) (3.638.066) 15.208.580 [Link]

Initial balance of the 2005 administration [Link] (Re expressed and adjusted New subscribers Collections from subscribers receivable 17.497.149 Resignation of members (5.444.333) Payment to INALCO Increase of Prevision Subscribers uncollectable Surplus of the period Subtotal prior to appropiation of surplus [Link] Absorption of surplus of 2005 administration Balances at the end of the 2005 administration New subscribers Collections from subscribers receivable Resignation of members Decrease of reserve Increase of Prevision subscribers uncollectable Surplus of the period Subtotal prior to the appropiation of the surplus Distribution of surplus of the period 2006 ad-referendum of the forthcoming Ordinary assembly of Delegates Balances as of December 31 st., 2006 [Link] 13.155.975 (5.148.986) [Link]

47

[Link]

268.571.555

(72.514.318)

1.520.858 5.383.735

760.429 2.661.607 (1)

760.429 2.756.406 (1)

12.166.864 85.206.664 (1)

(15.208.580) (1)

[Link]

(1) Total of reserves as of December 31 st., 2006: Bs 96.008.412 (2) Total reserves on December 31 st., 2005: Bs 80.799.832 The Notes that are attached form an integrant part of the statement.

(Ad-referendum of the forthcoming Ordinary Assembly of Delegates)

Me mor ia A n ual / A n n ual R e po r t - 2 0 0 6

ESTADO DE FLUJO DE EFECTIVO POR LOS EJERCICIOS TERMINADOS EL 31 DE DICIEMBRE DE 2006 Y 2005
DICIEMBRE D E S C R I P C I O N G E N E R A L 2006 Bs. 15.208.580
(Reexpresado y reclasificado)

DICIEMBRE 2005 Bs.

Flujo de efectivo por actividades de operacin: Excedente del ejercicio Ajustes para reconciliar la prdida/excedente del ejercicio al efectivo generado por operaciones Depreciacin de activos fijos Previsin para indemnizaciones al personal Cambios en activos - (Incremento) Disminucin: Cuentas por cobrar por servicios Otras cuentas por cobrar e inversiones Materiales para operacin y mantenimiento Gastos pagados por anticipado y cargos diferidos Cambios en pasivos - Incremento (Disminucin): Obligaciones y provisiones varias Intereses por pagar Deudas fiscales y sociales Indemnizaciones pagadas al personal Total ajustes y cambios en activos y pasivos Efectivo generado por actividades de operacin Flujo de efectivo por actividades de inversin: Inversin neta en activo fijo Efectivo aplicado a actividades de inversin Flujo de efectivo por actividades financieras: Aportes de socios al Fondo Social Devolucin de aportes por retiro de socios Utilizacin del fondo de Educacin Cooperativa Certificado participacin trabajadores Financiamientos obtenidos Pago de deudas bancarias y financieras Efectivo aplicado a actividades financieras Aumento (Disminucin) neto en disponibilidades y certificados de depsitos a plazo fijo Disponibilidades y certificados de depsitos a plazo fijo al inicio del ejercicio Disponibilidades y certificados de depsitos a plazo fijo al cierre del perodo Las notas que se acompaan forman parte integrante de este estado.

12.793.445

85.160.943 10.100.668 (41.289.173) 11.005.312 22.615.576 333.560 49.909.526 (529.984) (8.898.755) (2.441.315) 125.966.358 141.174.938

79.944.336 8.978.093 (16.271.803) 20.385.368 (7.719.050) 3.100.744 13.961.973 1.157.769 (4.354.667) (4.847.024) 94.335.739 107.129.184

(66.507.257) (66.507.257)

(75.963.978) (75.963.978)

13.155.975 (5.148.986) 2.420.352 128.817.380 (191.245.818) (52.001.097) 22.666.584 13.228.381 35.894.965

17.497.149 (5.444.333) (69.941) 1.116.271 128.020.243 (192.521.342) (51.401.953) (20.236.747) 33.465.128 13.228.381

Me mo r ia A n ual / A n n ual R e po r t - 2 0 0 6

CASH FLOW STATEMENT FOR THE YEAR ENDED ON DECEMBER 31 ST., OF 2006 AND 2005
DECEMBER G E N E R A L D E S C R I P T I O N 2006 Bs. 15.208.580
(Reexpressed y reclassified)

DECEMBER 2005 Bs.

Effective cash flow for activities of operation: Surplus of the period Adjustments to reconcile the loss/residual of the year to cash generated by operations Depreciation of fixed assets Prevision for severance payments to the personnel Changes in assets (Increase) Decrease: Accounts receivable for services Other accounts receivable and investmentss Materials for operation and maintenance Expenditures paid in advance Changes in liabilities Increase (Decrease): Obligations and provisions various Interests payable Fiscal and social debts Severance payments made to the personnel Total adjustments and changes in assets and liabilities Cash generated by activities of operations Cash applied to investment activities Net investment in fixed asset Cash applied to investment activities Cash flow from financial activities: Contributions of members to the Social Fund Refunds of contributions due to resignation of members Utilization of the Fund of Cooperative Education Employees participation certificate Financings obtained Payment of bank and financial debts Cash applied to financial activities Net increase (Net decrease) in availabilities and certificates of fixed-time deposits Availabilities and fixed-time deposits at the beginning of the period Availabilities and fixed-time deposits at the closing of the period The Notes that are attached make up an integrant part of this statement.

12.793.445

85.160.943 10.100.668 (41.289.173) 11.005.312 22.615.576 333.560 49.909.526 (529.984) (8.898.755) (2.441.315) 125.966.358 141.174.938

79.944.336 8.978.093 (16.271.803) 20.385.368 (7.719.050) 3.100.744 13.961.973 1.157.769 (4.354.667) (4.847.024) 94.335.739 107.129.184

49

(66.507.257) (66.507.257)

(75.963.978) (75.963.978)

13.155.975 (5.148.986) 2.420.352 128.817.380 (191.245.818) (52.001.097) 22.666.584 13.228.381 35.894.965

17.497.149 (5.444.333) (69.941) 1.116.271 128.020.243 (192.521.342) (51.401.953) (20.236.747) 33.465.128 13.228.381

Me mor ia A n ual / A n n ual R e po r t - 2 0 0 6

NOTAS A LOS ESTADOS FINANCIEROS AL 31 DE DICIEMBRE DE 2006 Y 2005

NOTA 1 ACTIVIDAD Y OBJETO DE COTAS COTAS Ltda. se constituy el 16 de octubre de 1960 bajo el amparo de la Ley General de Sociedades Cooperativas del 13 de septiembre de 1958. Tiene como objeto principal la construccin, operacin, mantenimiento y suministro de ser vicios de telecomunicaciones en el Departamento de Santa Cruz. Al 31 de diciembre de 2006, la Cooperativa tena 148.687 contratos suscritos con socios (durante la gestin 2005 se mantuvo 148.523 contratos suscritos). A partir del 29 de noviembre de 2001, fecha de apertura del mercado, la subsidiaria TELEDATA S.A. prest el servicio de larga distancia nacional e internacional con el cdigo de llamada 12. Como consecuencia de la transferencia de los activos y pasivos de TELEDATA S.A., la Cooperativa ha firmado con la Superintendencia de Telecomunicaciones de la Repblica de Bolivia -SITTEL un contrato de concesin para operar las redes pblicas de telecomunicaciones ("operaciones concedidas") y proveer los servicios de telecomunicaciones al pblico ("servicios concedidos"). El plazo de la concesin es de cuarenta (40) aos contados a partir del 19 de julio de 2001, fecha en

NOTE 1 ACTIVITY AND OBJECT OF COTAS COTAS Ltd. was constituted on October 16 th., 1960 under the protection of the General Law of Cooperative Societies of September 13 th., 1958. It has, as its main objective, the construction, operation, maintenance and provision of ser vices of telecommunications, in the Department of Santa Cruz. As of December 31 st., 2006 the Cooperative had 148,687 contracts subscribed with members (during the 2005 administration, it had 148,523 subscribed contracts). As of November 29 th., 2001, date of opening of the market, the subsidiary TELEDATA share company, renders long distance service, both at the national and international levels, with the Calling code 12. As consequence of the transfer of the assets and liabilities of TELEDATA share company, the Cooperative has subscribed with the Superintendence of Telecommunications of the Republic of Bolivia - SITTEL a concession contract to operate the public nets of telecommunications (granted operations) and to provide the services of telecommunications to the public (granted services). The term of the concession is of forty (40) years, starting July 19 th., 2001, date in that the concession was originally granted to

que la concesin fue originalmente otorgada a TELEDATA S.A. El concesionario (COTAS Ltda.), debe cumplir con lo establecido en la Ley SIRESE, Ley de Telecomunicaciones, y las normas vigentes aplicables. En fecha 4 de septiembre de 2003, la Superintendencia de Telecomunicaciones mediante Resolucin Administrativa Regulatoria N 2003/0778 autoriz la fusin de las operaciones entre TELEDATA S.A. y la Cooperativa de Telecomunicaciones Santa Cruz Ltda., sobre todos los derechos concedidos a la Sociedad, incluyendo la concesin para la operacin de Redes Pblicas de Telecomunicaciones y para la prestacin de los servicios de larga distancia nacional e internacional. Las obligaciones contradas por TELEDATA S.A. quedaron a cargo de la Cooperativa de Telecomunicaciones Santa Cruz Ltda. COTAS. NOTA 2 MARCO REGULADOR Las principales disposiciones legales que regulan las actividades de COTAS Ltda. son: a) En su condicin de Sociedad Cooperativa: La Ley General de Cooperativas de 13 de septiembre de 1958. Sus Estatutos encuadrados a la Ley General de Cooperativas. Direccin General de Cooperativas y el Consejo Nacional de Cooperativas que vigilan el funcionamiento econmico y la administracin de las Sociedades Cooperativas. b) En su condicin de operador del sector de telecomunicaciones:

TELEDATA share company. The concessionaire (COTAS Ltd.) must comply with what SIRESE Law establishes, the Law of Telecommunications, and the current applicable norms. On date September 4 th., 2003, the Superintendence of Telecommunications, by means of Regulatory Administrative Resolution N'a1 2003/0778 authorized the merger between TELEDATA share company, and The Santa Cruz Telecommunications Cooperative Ltd., with all the rights granted to the Society, including the concession for the operation of Public Nets of Telecommunications, and the benefit arising from the rendering of long distance telephone services, both at the national and international levels. The obligations incurred by TELEDATA were covered by The Santa Cruz Telecommunications Cooperative Ltd., COTAS. NOTE 2 REGULATING FRAMEWORK The main legal dispositions that regulate the activities of COTAS Ltd. are: a) In its condition of a Cooperative society: The General Law of Cooperatives of September 13 th., 1958 Its amended Statutes, in accordance with the General Law of Cooperatives The General Directorship of Cooperatives, and the National Council of Cooperatives that oversee the economic operation and the administration of the Cooperative societies. b) In its condition of an operator of the sector of telecommunications:

51

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 La Ley del Sistema de Regulacin Sectorial N 1600 de 28 de octubre de 1994. La Ley de Telecomunicaciones N 1632 de 6 de julio de 1995. Reglamento a la Ley de Telecomunicaciones, aprobado mediante Decreto Supremo N 24132 de 27 de septiembre de 1995. COTAS Ltda. ha adecuado sus concesiones y/o licencias mediante la suscripcin de nuevos contratos, de acuerdo con la Ley N 1632. Los contratos de adecuacin firmados por COTAS Ltda. con la Superintendencia de Telecomunicaciones, en los cuales se establece el privilegio de exclusividad para COTAS Ltda. en la prestacin de los servicios bsicos de telecomunicaciones, respetndose adicionalmente las reas originales de concesin, fenecieron el 27 de noviembre de 2001. NOTA 3 POLITICAS CONTABLES Los presentes estados financieros han sido confeccionados de conformidad con principios contables generalmente aceptados en la Repblica de Bolivia. Las polticas contables ms significativas aplicadas por COTAS Ltda. son las siguientes: 3.1 Estimaciones incluidas en los estados financieros La preparacin de los estados financieros de acuerdo con principios contables generalmente aceptados en Bolivia, requiere que la Gerencia de la Cooperativa

The Law of the System of the Regulation of the Sector N'a1. 1600, of October 28 th., 1994. The Law of Telecommunications N'a1 1632, of July 6 th., 1995. Regulation by the Law of Telecommunications, approved by means of Supreme Decree N'a1 24132, of September 27 th., 1995. COTAS Ltd. has adapted its concessions and/or licenses by means of the subscription of new contracts, in accordance with the Law N'a1 1632. The contracts of adaptation signed by COTAS Ltd. with the Superintendence of Telecommunications, in which the exclusivity privilege is established for COTAS Ltd. in the rendering of basic ser vices of telecommunications, respecting the original areas of concession, terminated on November 27 th., 2001. NOTE 3 ACCOUNTING POLICIES The present financial statements have been performed in conformity with accounting principles generally accepted in the Republic of Bolivia. The most significant accounting policies applied by COTAS Ltd. are the following: 3.1 Estimates included in the financial statements The preparation of the financial statements are in agreement with generally accepted accounting principles in Bolivia, requires that the Management of the Cooperative carries out estimates and assumptions that affect the amounts of assets and

Me mo r ia A n ual / A n n ual R e po r t - 2 0 0 6

realice estimaciones y suposiciones que afectan los montos de activos y pasivos, y la exposicin de activos y pasivos contingentes a la fecha de los estados financieros, as como los montos de ingresos y gastos del ejercicio. Los resultados reales pueden diferir de las estimaciones realizadas. 3.2 Consideracin de los efectos de la inflacin Los estados financieros han sido preparados en moneda constante reconociendo en forma integral los efectos de la inflacin. Para ello se ha utilizado como ndice de ajuste la variacin en la cotizacin del dlar estadounidense con relacin al boliviano. Todos los ajustes que se practican para expresar a moneda constante los valores de los rubros no monetarios, tienen como contrapartida la cuenta "Ajuste por inflacin y tenencia de bienes" incluida en el estado de ingresos, gastos y excedentes como parte de "Otros costos netos de otros ingresos". 3.3 Criterios de valuacin

liabilities, and the exposition of contingent assets and liabilities at the date of the financial statements, as well as the amounts of income and expenditures of the period. The real results can differ from the estimates made. 3.2 Consideration of the effects of inflation The financial statements have been prepared in constant currency, recognizing in integral form, the effects of inflation. To achieve this, an index of adjustment of the variation in the exchange rate of the Bolivian currency has been utilized, in relation to the American Dollar. All the adjustments that are carried out are to express, to constant currency, the values of the non-monetary items, have as cross entry, the account Adjustment for inflation and holding of goods, included in the statements of incomes, expenditures and surpluses, as part of Other net costs from other Incomes. 3.3 Criteria of valuation a) Foreign currency

53

a) Moneda extranjera Los activos y pasivos en moneda extranjera se valan a los tipos de cambio vigentes a la fecha de cierre del ejercicio. Las diferencias de cambio resultantes de este procedimiento se registran en los ingresos y gastos del ejercicio. b) Suscriptores por cobrar Hasta el 31 de diciembre de 1998, el saldo por cobrar a socios por certificados de aportacin se The assets and liabilities in foreign currency are valued at the effective exchange rates at the date of closing of each fiscal period. The differences in exchange rates, resulting from this procedure, are registered in the incomes and expenditures of the period. b) Subscribers receivable Until December 31 st., 1998, the balance receivable from the members from contribution certificates was

Me mor ia A n ual / A n n ual R e po r t - 2 0 0 6

expona restando del Fondo social suscrito. A partir del ao 1999 y en virtud que la Superintendencia de Telecomunicaciones implant obligatoriamente para todas las Cooperativas telefnicas del pas, el nuevo Sistema Financiero Codificado Uniforme (SIFCU) a travs de la Resolucin N 300/98, la Cooperativa se vio obligada a exponer el saldo por cobrar a los socios por certificados de aportacin como un exigible en el activo. Al 31 de diciembre de 2006 y 2005, la Gerencia estim una previsin para suscriptores incobrables de Bs 72.514.320 y Bs 68.876.253 respectivamente. c) Materiales para operacin y mantenimiento y materiales para ejecucin de proyectos Los materiales y repuestos para operacin y mantenimiento y los materiales que sern utilizados en la ejecucin de proyectos de COTAS Ltda., se valan al precio de compra ajustado por inflacin. d) Activos fijos

exhibited, subtracting from the undersigned social fund. Since the year 1999, and in virtue that the Superintendence of Telecommunications obligatorily established, for all the telephone cooperatives of the country, the new Unified Codified Financial System (SIFCU) through the Resolution N'a1 300/98, the Cooperative was forced to exhibit the balance receivable from the members for contribution certificates, as payable on demand, on the asset. As of December 31 st., 2006 and 2005, the Management estimated a forecast for uncollectible subscribers of Bs 72,514,320 and Bs 68,876,253, respectively. c) Materials for operation and maintenance and materials for execution of projects The materials and spares for operation and maintenance, and the materials that will be used in the execution of projects of COTAS Ltd., are valued at the price of the last purchase, adjusted for inflation. d) Fixed assets

Los activos fijos estn incluidos a sus valores de costo ajustado por inflacin. En fecha 9 de diciembre de 2003, el Ministerio de Servicios y Obras Pblicas mediante Resolucin Ministerial N 160, aprueba la tabla de coeficientes de depreciacin y aos de vida til de activos fijos de propiedad de las Cooperativas de Telecomunicaciones, a ser utilizados a partir de la gestin 2003.

The fixed assets are included at their cost values, adjusted for inflation. On December 9 th., 2003, the Ministry of Services and Public Works, by means of Ministerial Resolution N'a1 160, approved the chart of depreciation coefficients, and years of useful life, of fixed assets of property of the Cooperatives of Telecommunications to be used, starting from the 2003 administration.

Me mo r ia A n ual / A n n ual R e po r t - 2 0 0 6

Los coeficientes de depreciacin se detallan a continuacin: Tipo de activo Tasa de depreciacin % Redes areas 3,33% Redes subterrneas 3,13% Canalizaciones 2,50% Equipos de radio 5% Eq. Multicanales multiplex 5% Torres de transmisin 5% Antenas de transmisin 5% Multiacceso rural 5% Est. terrestres satelitales 5% Centrales locales 4% Centrales PBX 4% Equipos de Energa 6,67% Red de microondas 5% Equipos de CATV 6,67% Mantenimientos, reparaciones, renovaciones y mejoras que no extienden la vida til de los bienes, son cargados a los ingresos y gastos del ejercicio en el que se incurren. El valor en libros de los activos fijos retirados por obsolescencia tecnolgica se carga contra la cuenta de "Reserva para Contingencias y Renovacin Tecnolgica". e) Previsin para indemnizaciones Se constituye para todo el personal por el total del pasivo devengado al cierre de cada ejercicio. Segn las disposiciones legales vigentes, transcurridos los cinco aos de antigedad en su empleo, el personal ya es acreedor a la indemnizacin, equivalente a

The depreciation coefficients are detailed next:

Type of asset Rate of depreciation % Aerial lines nets 3,33% Underground nets 3,13% Canalizations 2,50% Radio equipments 5% Multi channel multiplex equipmt. 5% Transmission Towers 5% Transmission antennas 5% Rural multi-access 5% Terrestrial Satellite station 5% Local switching stations 4% PBX switching stations 4% Energy equipments 6,67% Microwaves Net 5% CATV equipments 6,67% Maintenances, repairs, renovations and improvements that do not extend the useful life of the assets, are debited to the incomes and expenditures of the period in which they are incurred. The book value of the fixed assets withdrawn from service for technological obsolescence is debited against Reserves for Contingencies and Technological Renovation account. e) Provision for compensations It is established for the all the personnel for the total of due liability at the closing of each period. According to the legal dispositions in force, after five years of uninterrupted employment, the personnel is already worthy to the compensation, equivalent to one month

55

M e m or i a An u a l / An n u a l R e p o r t - 2 0 0 6

un mes de sueldo por ao de servicio, incluso en los casos de retiro voluntario. f) Patrimonio neto COTAS Ltda. ajusta por inflacin el total de su patrimonio con cargo a la cuenta de "Ajuste por Inflacin" dentro del estado de ingresos, gastos y excedentes. Dicho ajuste se registra en cada una de las cuentas que componen el captulo de patrimonio. g) Ingresos, gastos y excedentes COTAS Ltda. ha determinado los ingresos y gastos del ejercicio tomando en cuenta los efectos de la inflacin. No se ajustan los rubros individuales del estado de ingresos y gastos, pero se registra un ajuste global en la cuenta "Ajuste por inflacin y tenencia de bienes". Este procedimiento origina una distorsin general no significativa en los rubros individuales de dicho estado. NOTA 4 PRESENTACION Y RECLASIFICACION DE ESTADOS FINANCIEROS AL 31 DE DICIEMBRE DE 2005 Los estados financieros al 31 de diciembre de 2005 incluyen reclasificaciones con relacin a los que fueron originalmente emitidos. Dichas reclasificaciones fueron realizadas con el propsito de mejorar la exposicin contable en dichos estados financieros y hacerlos comparables con los estados financieros al 31 de diciembre de 2006.

of salary, per annum of service, even in the cases of voluntary retirement of the employee. f) Net equity COTAS Ltd. adjusts for inflation the total of its equity with debit to the account of Adjustments for Inflation within the statement of incomes, expenditures and surpluses. This adjustment is registered in each one of the accounts that make up the chapter of equity. g) Revenues, expenditures and surpluses COTAS Ltd. has determined the income and expenditures of the period taking into account the effects inflation. The individual items of the statement of income and expenditures are not adjusted, but a global adjustment is registered in the account Adjustment for inflation and holding of assets (goods). This procedure originates a non-significant general distortion in the individual items of this statement. NOTE 4 PRESENTATION AND RECLASSIFICATION OF THE FINANCIAL STATEMENTS AS OF DECEMBER 31 st., 2005 The financial statements as of December 31 st., 2005 include reclassifications, in relation with those that were originally issued. Such reclassifications were done with the purpose of improving the accounting exposition in such financial statements, and make them comparable with the financial statements as of December 31 st., 2006.

M e m o r i a An u a l / An n u a l R e p o r t - 2 0 0 6

NOTA 5 CUENTAS POR COBRAR POR SERVICIOS Las cuentas por cobrar corresponden principalmente a servicios de telecomunicaciones prestados por la Cooperativa, facturados al 31 de diciembre de 2006 y 2005 por Bs 108.748.189 y Bs 96.540.619, respectivamente. Las cuentas por cobrar por servicios al 31 de diciembre de 2006 y 2005 se encuentran expuestas netas de previsin para incobrables por Bs 24.442.804 y Bs 17.559.944 respectivamente. NOTA 6 CUENTAS POR COBRAR POR SERVICIOS DE INTERCONEXION La composicin del captulo es la siguiente: 2006 Bs ENTEL S.A. Nuevatel S.A. Telecel S.A. Unete Comunicaciones Ltda. Boliviatel S.A. Cotel Ltda. ITS S.R.L. AXS Comunications S.A. Totales 27.305.111 18.254.719 6.991.366 3.564.071 3.284.231 353.354 400.330 2.191.649 62.344.831 2005 (Reexpresado) Bs 13.545.647 4.772.864 4.094.736 2.624.185 5.983.517 270.303 340.138 1.631.836 33.263.226

NOTE 5 ACCOUNTS RECEIVABLE FOR SERVICES The accounts receivable correspond mainly for telecommunications services rendered by the Cooperative, invoiced on December 31 st., 2006 and 2005 for Bs 108,748,189 and Bs 96,540,619, respectively. The accounts receivable for services as of December 31 st., 2006 and 2005 are exposed net of forecast for uncollectible for Bs 24,442,804 and Bs 17,559,944, respectively. NOTE 6 ACCOUNTS RECEIVABLE FOR INTRECONNECTION SERVICES The composition of the chapter is the following: 2006 Bs ENTEL share company Nuevatel share company Telecel share company Unete Communications Ltd. Boliviatel share company Cotel Ltd. ITS Limited company AXS Comunications share company Totals 27.305.111 18.254.719 6.991.366 3.564.071 3.284.231 353.354 400.330 2.191.649 62.344.831 2005 (Reexpressed) Bs 13.545.647 4.772.864 4.094.736 2.624.185 5.983.517 270.303 340.138 1.631.836 33.263.226

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NOTA 7 OTRAS CUENTAS POR COBRAR La composicin del captulo es la siguiente: 2006 Bs Operaciones pendientes Anticipo proveedores varios (1) Anticipos a contratistas (1) Publicidad por cobrar gua telefnica Depsitos en garanta (2) Seguros a cobrar Anticipos y prstamos para empleados Totales Corto Plazo Largo Plazo 6.500.218 15.175.963 14.161.822 2.512.420 32.730.775 183.763 20.698 71.285.659 66.781.728 4.503.931 2005 (Reexpresado y reclasificado) Bs 6.299.792 14.519.962 13.601.431 2.149.433 31.752.644 422.714 40.270 68.786.246 62.599.802 6.186.444

NOTE 7 OTHER ACCOUNTS RECEIVABLE The composition of the chapter is the following: 2006 Bs Pending operations Advance payments suppliers various (1) Cash advances to contractors (1) Receivable for publicity telephone directory Guarantee deposits (2) Insurance claims receivable Advances and loans for employees Totals Short Term Long Term 6.500.218 2005 (Reexpressed and reclassified) Bs 6.299.792

15.175.963 14.519.962 14.161.822 13.601.431 2.512.420 2.149.433 32.730.775 31.752.644 183.763 422.714 20.698 40.270 71.285.659 68.786.246 66.781.728 62.599.802 4.503.931 6.186.444

(1) Las cuentas anticipo a contratistas y proveedores varios corresponden a diversos anticipos desembolsados por la Cooperativa para cubrir proyectos en curso. (2) La cuenta depsitos en garanta corresponde a dinero depositado en una cuenta de la Corporacin Andina de Fomento en el marco del contrato de prstamo suscrito entre partes.

(1) The accounts cash advance to contractors and various suppliers correspond to diverse advances disbursed by the Cooperative to cover projects under execution. (2) The account deposits in guarantee correspond to money deposited in an account of the Andean Development Corporation (CAF) within the framework of the contract subscribed between parties.

Mem o r ia Anual / Annual Repo r t - 2006

NOTA 8 ACTIVO FIJO DEPRECIABLE La composicin del captulo es la siguiente: 2006 Detalle Valores Revalorizados Depreciaciones Actualizados Acumuladas Bs Bs Neto Resultante Bs 2005 (Reexpresado) Neto Resultante Bs 27.144.701 38.889.014 562.728.702 123.549.463 465.823.841 21.319.230 42.656.146 2.770.843

NOTE 8 FIXED ASSET DEPRECIABLE The composition of the chapter is the following: 2006 Detail Revalued Values Actualized Bs Acumulated Depreciations Bs Net Resultant Bs 2005 (Reexpressed) Net Resultants Bs 27.144.701 38.889.014 562.728 123.549.463 465.823.841 21.319.230 42.656.146 2.770.843

Terrenos Edificios Planta externa Equipos de transmisin Equipos de conmutacin Equipos de energa Terminales telefnicas Muebles y tiles Equipos de computacin Otros activos Totales

27.144.701 - 27.144.701 62.509.166 (23.296.074) 39.213.092 932.649.370 (361.007.559) 571.641.811 253.490.673 (122.730.308) 130.760.365 733.577.863 (284.265.687) 449.312.176 79.394.960 (50.438.436) 28.956.524 48.997.753 2.401.096

157.074.230 (108.076.477) 10.182.370 (7.781.274)

55.353.036 (44.419.476) 10.933.560 12.990.583 136.412.887 (61.777.914) 74.634.973 46.451.559 [Link] ([Link]) [Link] [Link]

Lands 27.144.701 Buildings 62.509.166 External plant 932.649.370 Transmission equipments 253.490.673 Commutation equipments 733.577.863 Energy equipments 79.394.960 Telephone terminals 157.074.230 Furniture and Gear 10.182.370 Computer equipments 55.353.036 Other assets 136.412.887 Totals [Link]

- 27.144.701 (23.296.074) 39.213.092 (361.007.559) 571.641.811 (122.730.308) 130.760.365 (284.265.687) 449.312.176 (50.438.436) 28.956.524 (108.076.477) (7.781.274) 48.997.753 2.401.096

59

(44.419.476) 10.933.560 12.990.583 (61.777.914) 74.634.973 46.451.559 ([Link]) [Link] [Link]

Al 31 de diciembre de 2006 y 2005, la Cooperativa registr un cargo por depreciacin de Bs 85.160.943 y Bs 79.944.336 respectivamente.

As of December 31 st., 2006 and 2005, the Cooperative registered a depreciation debit of Bs 85,160,943 and Bs 79,944,336, respectively.

Mem or ia Anual / Annual Repo r t - 2006

NOTA 9 OBLIGACIONES Y PROVISIONES VARIAS La composicin del captulo es la siguiente: 2006 Bs Corto Plazo Cuentas por pagar a otros operadores Cuentas por pagar a proveedores Provisiones varias Otras cuentas por pagar Largo Plazo Previsin para contingencias Totales 2005 (Reexpresado) Bs

NOTE 9 LIABILITIES AND PROVISIONS VARIOUS The composition of the chapter is the following: 2006 Bs Short Term Accounts payable to other operators Accounts payable to suppliers Several provisions Other accounts payable Long Term Provision for contingencies Totals 2005 (Reexpressed) Bs

110.673.748 21.042.398 1.442.652 10.489.840 143.648.638

60.960.205 25.761.440 5.708.484 7.253.728 99.683.857

110.673.748 21.042.398 1.442.652 10.489.840 143.648.638

60.960.205 25.761.440 5.708.484 7.253.728 99.683.857

6.367.068 6.367.068 150.015.706

545.317 545.317 100.229.174

6.367.068 6.367.068 150.015.706

545.317 545.317 100.229.174

Mem o r ia Anual / Annual Repo r t - 2006

NOTA 10 DEUDAS FINANCIERAS La composicin del captulo es la siguiente: 2006 Detalle Banco Nacional de Bolivia S.A. Banco Santa Cruz S.A. Banco Unin S.A. BISA Banco Econmico S.A. Banco Ganadero S.A. Banco Mercantil S.A. Banco de Crdito First International Bank Banco Bilbao Vizcaya Argentaria Corporacin Andina Fomento Intelligent Networking Gilat Totales Menos: Porcin Corriente Porcin no Corriente Bs 46.251.250 16.105.000 29.350.164 42.716.934 20.890.326 24.188.833 31.894.468 24.306.497 977.588 495.499 70.262.500 1.545.775 308.984.834 164.757.394 144.227.441 2005 (Reexpresado) Bs 39.065.880 22.573.436 29.711.000 55.627.760 29.129.083 22.811.892 49.707.948 16.060.000 2.932.754 1.224.567 2006 US$ 5.759.807 2.005.604 3.655.064 5.319.668 2.601.535 3.012.308 3.971.914 3.026.961 121.742 61.706

NOTE 10 FINANCIAL DEBTS The composition of the chapter is the following: 2006 Detail Bank Nacional de Bolivia S.A. Bank Santa Cruz S.A. Bank Union S.A. Bank BISA Bank Econmico S.A. Bank Ganadero S.A. Bank Mercantil S.A. Bank de Crdito First International Bank Bank Bilbao Viscaya Argentaria Corporacin Andina de Fomento (CAF) Intelligent Networking Gilat Totals Minus: Current portion Non-current portion Bs 46.251.250 16.105.000 29.350.164 42.716.934 20.890.326 24.188.833 31.894.468 24.306.497 977.588 495.499 2005 (Reexpressed) Bs 39.065.880 22.573.436 29.711.000 55.627.760 29.129.083 22.811.892 49.707.948 16.060.000 2.932.754 1.224.567 2006 US$ 5.759.807 2.005.604 3.655.064 5.319.668 2.601.535 3.012.308 3.971.914 3.026.961 121.742 61.706

61

94.352.500 8.750.000 8.216.453 192.500 371.413.273 38.478.809 151.687.863 20.517.733 219.725.410 17.961.076

70.262.500 94.352.500 8.750.000 8.216.453 1.545.775 192.500 308.984.834 371.413.273 38.478.809 164.757.394 151.687.863 20.517.733 144.227.441 219.725.410 17.961.076

Una porcin de los prstamos otorgados por los Bancos Nacional, Bisa y Mercantil, adems del otorgado por la CAF, fueron utilizados para cancelar la deuda con NEC Do Brasil, con vencimientos a corto, mediano y largo plazo y tasas de inters variables con base en la tasa libor o tasa de referencia (TRE).

A portion of the loans granted by the Banks Nacional, BISA and Mercantil, besides the one granted by the Andean Development Corporation (Corporaci'97n Andina de Fomento, CAF), were used to pay the debt with NEC Do Brazil, with maturity at the short, medium and long term, and variable interest rates, based on Libor rate, or reference rate (TRE).

Mem or ia Anual / Annual Repo r t - 2006

Los prstamos otorgados por los Bancos Santa Cruz, Econmico, Ganadero, Unin y de Crdito fueron utilizados para capital de operaciones, inversiones en activos fijos e inversiones en proyectos, y del Banco Nacional de Bolivia para compra de pasivo a diferentes bancos. El proveedor de equipos Gilat Satellite Networks Ltda. financi directamente la compra de Hub y Estaciones Satelitales VSATs. NOTA 11 CERTIFICADOS DE PARTICIPACION TRABAJADORES El saldo de esta cuenta que al 31 de diciembre de 2006 y 2005 asciende a Bs 28.082.631 y Bs 25.662.279 respectivamente; corresponde a aportes que han sido retenidos por COTAS Ltda. sobre el sueldo de sus trabajadores ms un aporte voluntario equivalente realizado por la Cooperativa. Dichas retenciones y aportes as como el rendimiento proveniente de la inversin de los mismos, se contabilizan en esta cuenta al amparo del convenio firmado con el Sindicato de Trabajadores. Dicho convenio tiene como objetivo final la creacin de un fondo de retiro para los trabajadores, razn por la cual COTAS Ltda. administra los fondos tratando de maximizar el retor no sobre los mismos. NOTA 12 FUNDACION NOVA La asamblea general de socios, celebrada el 15 de abril de 1995, resolvi crear y sostener una Fundacin de Estudio y Desarrollo Cooperativo con los objetivos

The loans granted by the Banks Santa Cruz, Econ'97mico, Ganadero, Unions and de Cr'8edito were used for operating capital, investments in fixed assets and investments in projects, and those of the Bank Nacional de Bolivia to purchase liabilities from different banks. The supplier of equipments Gilat Satellite Networks Ltda. directly financed the purchase of Hub and VSAT'abs Satellite Stations. NOTE 11 CERTIFICATES OF PARTICIPATION OF EMPLOYEES The balance of this account amounts to Bs 28,082,631 and Bs 25,662,279, respectively as of December 31 st., 2006 and 2005; it corresponds to contributions that have been retained by COTAS Ltd. on the salary of its employees, in addition to an equivalent voluntary contribution carried out by the Cooperative. These retentions and contribution, as well as the yield arising from the investment of the same funds, are accounted for in this account, under the protection of the agreement signed with the Labor Union of Workers. This agreement has, as final objective, the creation of a retirement fund for the workers. For this reason COTAS Ltd. administers the funds, trying to maximize the return on the funds mentioned. NOTE 12 THE NOVA FOUNDATION The General Assembly of Members, held on April 15 th., 1995 determined to create and to sustain a Foundation of Study and Cooperative Development

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de: a) contar con una institucin encargada de efectuar estudios cooperativos, b) capacitar a la comunidad en materia cooperativa, y c) promover la defensa del cooperativismo. Segn Convenio firmado con Fundacin NOVA en fecha 5 de diciembre de 2001, COTAS Ltda. devengar un inters del 8.5% anual sobre el capital adeudado. El saldo impago al 31 de diciembre de 2006 y 2005, es de Bs 9.560.878. NOTA 13 PROVISION PARA OBRAS EN BENEFICIO DE LAS PROVINCIAS La Asamblea de Delegados mediante Acta de fecha 29 de abril de 1998, resolvi que a partir de la gestin 1998, se asigne a favor de las Provincias, el 20% de los excedentes de percepcin que estaban destinados a la Fundacin NOVA, estos recursos sern aplicados no en dinero sino en obras. Al 31 de diciembre de 2006 y 2005 el saldo de esta cuenta asciende a Bs 2.923.228, correspondiente a gestiones anteriores al 2004. NOTA 14 ACTIVOS GRAVADOS Como consecuencia de las obligaciones mencionadas en la Nota 10 "Deudas Financieras", se han constituido hipotecas y prendas sobre algunos activos de COTAS Ltda., en favor de bancos y otros acreedores.

with the objectives of: a) to have an institution in charge of carrying out cooperative studies, b) to qualify the community in cooperative matter, and c) to promote the defense of the cooperative system. According to the Agreement signed with the NOVA Foundation on date December 5 th., 2001, COTAS Ltd. will set aside an annual interest of 8.51% on the outstanding liability. The unpaid balance as of December 31 st., 2006 and 2005, is of Bs 9,560,878. NOTE 13 PROVISION FOR WORKS IN BENEFIT OF THE PROVINCES The Assembly of Delegates, as stated on the Record of Proceedings of April 29 th., 1998 determined that as of the 1998 administration, be assigned in favor of the Provinces, 20% of the surpluses of perception, that were assigned to the NOVA Foundation, not in cash, but in kind. As of December 31 st., 2006 and 2005, the balance of this account amounts to Bs 2,923,228, corresponding to administrations, previous to the year 2004. NOTE 14 BURDENED ASSETS As consequence of the liabilities mentioned in Note 10 Financial Debts, mortgages and pledges on some assets of COTSAS Ltd. have been committed in favor of banks and other creditors. NOTE 15

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NOTA 15 MONEDA EXTRANJERA Los estados financieros expresados en bolivianos, incluyen el equivalente de saldos en moneda extranjera que al 31 de diciembre de 2006 y 2005 representan una posicin neta pasiva de Bs 96.203.042 y Bs 147.163.795, respectivamente. Los activos y pasivos en moneda extranjera han sido convertidos a bolivianos al tipo de cambio oficial vigente al 31 de diciembre de 2006 de Bs8,03 por US$ 1. NOTA 16 FONDO SOCIAL Tal como lo sealan los Estatutos de COTAS Ltda., el Fondo Social est formado por Certificados de Aportaciones que equivalen al valor de una lnea telefnica y otorga a su poseedor, el derecho de ser socio. Los Certificados de Aportacin son nominativos, individuales, transferibles y pasibles de devolucin de acuerdo con condiciones establecidas por los Estatutos y Reglamentos aprobados por los rganos competentes de COTAS Ltda. Al 31 de diciembre de 2006 y 2005, los Certificados de Aportacin que componen el Fondo Social de la Cooperativa ascienden a 148.687 y 148.523 contratos con valores nominales que van desde US$ 350 a US$ 1.300, haciendo un total de Bs [Link] y Bs1.352.931.138 respectivamente, de los cuales Bs268.571.555 y Bs 275.505.011, respectivamente corresponden a montos aun no cobrados y para los que se han constituido previsiones

FOREIGN CURRENCY The financial statements expressed in Bolivian currency, include the equivalent of balances in foreign currency that as of December 31 st., 2006 and 2005 represent a net liability position of Bs 96,203,042 and Bs 147,163,795, respectively. The assets and liabilities in foreign currency have been converted to Bolivian currency to the effective official exchange rate as of December 31 st., 2006 of Bs 8.03 per one United States Dollar.

NOTE 16 SOCIAL FUND Just as the Statutes of COTAS Ltd. determine, the Social Fund is made up by Certificates of Contributions that are equivalent to the value of one, and it grants its owner, the right to be a member. The Certificates of Contribution are nominative, personal and transferable and subject to devolution, according to the conditions established by the Statutes and Regulations, as approved by the competent organs of COTAS Ltd. At of December 31 st., 2006 and 2005, the Certificates of Contribution that make up the Social Fund of the Cooperative, amount to 148,687 and 148,523 contracts, with nominal values range from US$ 350 to US $1, 300, making a total of Bs 1,354,004,671 and Bs1,352,931,138, respectively, of which Bs 268,571,555 and Bs 275,505,011, respectively correspond for amounts not yet collected and for which provisions have been constituted for

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por Bs 72.514.318 y Bs 68.876.252 al 31 de diciembre de 2006 y 2005. NOTA 17 RESERVAS De acuerdo con lo establecido por el artculo 26 de los estatutos y el artculo 82 de la Ley General de Sociedades Cooperativas deben asignarse a reserva los siguientes porcentajes de los excedentes de percepcin obtenidos anualmente: a) Legal.- 10 % de los excedentes de percepcin obtenidos anualmente a un fondo de reserva legal. b) Para educacin cooperativa.- 5% de los excedentes de percepcin a la constitucin de esta reserva. c) Para previsin y asistencia social.- 5% de los excedentes de percepcin para cubrir necesidades de asistencia social. d) Reservas para contingencias y renovacin tecnolgica.- 80% de los excedentes de percepcin. Los fondos de esta reserva se utilizarn para financiar inversiones en activos fijos que permitan la integracin del sistema telefnico en una sola unidad. Adems, los costos de la adecuacin de los equipos obsoletos se aplicarn contra el saldo de esta reserva, as como cualquier otro monto proveniente de la resolucin de contingencias.

Bs 72,514,318 and Bs 68,876,252, as of December 31 st., 2006 and 2005, respectively. NOTE 17 RESERVES In accordance with that established by the article 26 of the Statutes and by the article 82 of the General Law of Cooperative societies, the following percentages of the collected surpluses of perception must be destined annually, as follows: a) Legal.- 10% of the collected surpluses of perception obtained annually to a legal reserve fund. b) For cooperative education.- 5% of the surpluses of perception to the constitution of this reserve. c) For forecast and welfare.- 5% of the surpluses of perception to cover the needs of social assistance. d) Reserves for contingencies and technological renovation.- 80% of the surpluses of perception. The funds of this reserve will be used to finance investments in fixed assets which would allow the integration of the telephone system in a single unit. Furthermore, the costs of the adaptation of the obsolete equipments will be applied against the balance of this reserve, as well as any other amount arising from the determination of contingencies.

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NOTA 18 GASTOS DE SERVICIOS PERSONALES Y OTROS COSTOS DE EXPLOTACION La composicin de la cuenta es la siguiente: 2006 Detalle Bs Servicios Personales Gastos del personal Gastos personal eventual Otros gastos de personal Incidencias sociales Totales 2005 (Reexpresado) Bs

NOTE 18 EXPENDITURES OF PERSONNEL SERVICES AND OTHER COSTS OF OPERATION The composition of the account is the following: 2006 Detail Bs Personnel services Expenditures of the personnel Expenditures of the part-time personnel Other expenditures of the personnel Social incidences Totales Other costs of operation Interconnection costs Taxes Joint use of posts Legal Discounts Other costs Totales 2005 (Reexpressed) Bs

69.310.715 65.213.370 64.004 111.921 2.498.814 2.608.377 35.105.467 33.800.678 106.979.000 101.734.346

69.310.715 65.213.370 64.004 111.921

Otros costos de explotacin Costos de interconexin 19.059.844 Impuestos 19.861.640 Uso conjunto de postes 5.854.299 Legales 349.827 Descuentos 6.420.913 Otros costos 96.393.354 Totales 147.939.877

2.498.814 2.608.377 35.105.467 33.800.678 106.979.000 101.734.346

24.183.148 20.597.935 5.714.134 291.366 2.972.659 36.181.000 89.940.242

19.059.844 24.183.148 19.861.640 20.597.935 5.854.299 5.714.134 349.827 291.366 6.420.913 2.972.659 96.393.354 36.181.000 147.939.877 89.940.242

NOTA 19 SITUACION IMPOSITIVA Al 31 de diciembre de 2006 y 2005, la provisin por IUE asciende a Bs 13.504.651 y Bs 9.464.954 (reexpresado), respectivamente, con cargo a la cuenta de activo "Anticipo de IT" en ambos casos.

NOTE 19 TAX SITUATION As of December 31 st., 2006 and 2005, the provision for Tax on Profits of Businesses amounts to Bs 13,504,651 and Bs 9,464,954 (reexpressed), respectively, with debit to the asset account of Advance of Taxes to Transactions in both cases.

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NOTA 20 COMPROMISOS Resoluciones emitidas por la Superintendencia de Telecomunicaciones La Resolucin Administrativa Regulatoria N 2002/0249 de la Superintendencia de Telecomunicaciones (SITTEL) resolvi aceptar el Plan de Devoluciones presentado por Cotas Ltda., como respuesta a la resolucin N 2001/1188, en el que prev hacer la devolucin bajo la modalidad de impulsos libres a reconocer a sus abonados y usuarios hasta un total de 13.803.021 impulsos desde el ao 2003 hasta el ao 2007. NOTA 21 ASPECTOS LEGALES La Cooperativa tiene los siguientes procesos judiciales interpuestos por terceros: Proceso laboral por pago de beneficios sociales, seguido por Ral Lpez Fras contra COTAS Ltda. para la reliquidacin de beneficios sociales. La suma de la demanda es de Bs 369.103 Proceso laboral por pago de beneficios sociales, seguido por Jos Luis Roca Parejas contra COTAS Ltda. La suma de la demanda es de Bs 98.518, la misma que fue cancelada en su totalidad. Proceso laboral por pago de beneficios sociales, seguido por Fanny Salvatierra Vilches contra COTAS Ltda. La suma de la demanda es de Bs 16.455. Accesoriamente, se tramita ante el juzgado de origen, la ejecucin provisional del

NOTE 20 PLEDGES Resolutions emitted by the Superintendence of Telecommunications The Regulatory Administrative Resolution N'a1 2002/0249 of the Superintendence of Telecommunications (SITTEL) determined to accept the Plan of Refunds presented by Cotas Ltd., in reply to the Resolution N'a1 2001/1188, in which it is foreseen to make the refund under the free modality of impulses to recognize its subscribers and users, up to a total of 13,803,021 impulses, from the year 2003 until the year 2007. NOTE 21 LEGAL ASPECTS The Cooperative has the following lawsuits filed against it by third parties: Labor lawsuit demanding the payment of social benefits, filed by Ral Lpez Fras against COTAS Ltd. for the recalculation of social benefits. The sum of the claim is of Bs 369,103. Labor lawsuit for payment of social benefits, filed by Jos Luis Roca Parejas against Cotas Ltd. The sum of the claim is of Bs 98,518, the same one that was canceled in its entirety. Labor lawsuit for payment of social benefits, filed by Fanny Salvatierra Vilches against Cotas Ltd. The sum of the demand is of Bs 16,455. Accessorily, it is processed before the original tribunal, the provisional execution of the judicial

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Auto de Vista que confirm la Sentencia por la cual se declar probada la demanda, condenando a COTAS a pagar a la demandante un monto de Bs 29.161. Proceso civil comercial por daos y perjuicios seguido por Eliana Vargas Arriaga contra COTAS Ltda., la suma de la demanda es de Bs 80.300. Proceso laboral por pago de beneficios sociales, seguido por Jimmy Alfredo Limn Cuellar, Luigi Israel Meja Contreras y otros, representados por Luis Zegada Saavedra contra COTAS Ltda., la suma de la demanda es de Bs 4.833.774. Proceso laboral por pago de beneficios sociales, seguido por el Sindicato de Trabajadores de COTAS Ltda., representado por Miguel Velsquez Ordoez y Rmulo Isaas Mercado contra COTAS Ltda., la suma de la demanda es de Bs 1.631.960. Asimismo, COTAS se ha subrogado diferentes procesos de carcter laboral y ejecutivo derivado de los procesos de transferencia de activos de las empresas subsidiarias, Teledata y Editorial Oriente. NOTA 22 HECHOS POSTERIORES En fecha 1ro. de enero de 2007, la Presidencia de la Repblica de Bolivia promulg el Decreto Supremo N 28994, el cual entre sus puntos relevantes establece modificaciones a los Artculos 140, 141, 144, 159, 362 y 371 del Reglamento de Telecomunicaciones aprobado por el Decreto Supremo N 24132 de 27

decree that confirmed the Sentence for which the claim was declared accepted, compelling COTAS to pay the plaintiff an amount of Bs 29,161. Civil commercial lawsuit for damages and detriments filed by Eliana Vargas Arriaga against Cotas Ltd. The sum of the claim is of Bs 80,300. Labor lawsuit for the payment of social benefits, filed by Jimmy Alfredo Lim'97n Cuellar, Luigi Israel Mej'92a Contreras and others, represented by Luis Zegada Saavedra against Cotas Ltd. The sum of the claim is of Bs 4,833,774. Labor lawsuit for payment of social benefits, filed by the Union of Workers of Cotas Ltd. represented by Miguel Vel'87squez Ordo'96ez and R'97mulo Isa'92as Mercado against Cotas Ltd. The sum of the claim is of Bs 1,631,960. Also, COTAS have been subrogated different lawsuits of labor and executive character, as a result of the absorption and sale its subsidiary companies, Teledata and Editorial Oriente. NOTE 22 POSTERIOR EVENTS On date January 1 st., 2007, the Presidency of the Republic of Bolivia promulgated the Supreme Decree No. 28994, in which, in its relevant points establishes modifications to the Articles 140, 141, 144, 159, 362 and 371 of the approved Regulation of Telecommunications by the Supreme Decree No. 24132 of September 27 th., 1995 and its modifications by means of Supreme Decree N'a1

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de septiembre de 1995 y sus modificaciones mediante Decretos Supremos N 24778 de 31 de julio de 1997 y N 26011 de 1 de diciembre de 2000, respectivamente, a fin de establecer condiciones tendientes a originar tarifas de inclusin social para priorizar y favorecer la igualdad, equidad y mayor accesibilidad a los ser vicios pblicos de telecomunicaciones, especialmente para los sectores ms deprimidos de la poblacin nacional. Entre las modificaciones ms relevantes introducidas mediante el Decreto Supremo mencionado se encuentran: - En los servicios bsicos de telecomunicaciones, en los que los proveedores realizan la facturacin por tiempo de consumo o por pulso de duracin limitada, la tasacin, tarifacin y facturacin se realizar por el tiempo efectivo de la comunicacin y con fraccionamiento al segundo. - Un proveedor no podr discriminar ni dar ninguna preferencia en la aplicacin de tarifas o condiciones a abonados de una misma categora tarifaria o que se encuentren en circunstancias similares. - Los proveedores de servicios de telecomunicaciones no podrn exigir a los abonados ningn tipo de garanta prendaria o hipotecaria, para la provisin del servicio ni para asegurar el pago del mismo. - Los proveedores de servicios, incluyendo las cooperativas de telecomunicaciones, no podrn condicionar la provisin de sus servicios a la adquisicin de acciones, cuotas de participacin, equipos terminales, otros bienes o servicios u otro tipo de aportacin o pago que no sea parte de la estructura tarifaria del servicio.

24778 of July 31 st., 1997 and No. 26011 of December 1 st., 2000, respectively, in order to establish conditions tending to originate tariffs of social inclusion to prioritize and to favor the equality, justness and greater accessibility to the public services of telecommunications, especially for the economically poorest sectors of the national population. Among the most outstanding modifications introduced by means of the aforementioned Supreme Decree are: - In the basic services of telecommunications, in which the suppliers of telephone services invoice for time of consumption, or for pulse of limited duration, the appraisal, tariff and invoicing will be carried for the effective time of the communication, considering the payment based on fractions of seconds. - A supplier would not be able to discriminate against nor give any preference in the application of tariffs or conditions to subscribers of on given category or if they find themselves in similar circumstances. - The suppliers of services of telecommunications would not be able to demand the subscribers any type of collateral or hypothecary guarantee, for the provision of the service, nor to assure the payment of the same one. - The suppliers of services, including the cooperatives of telecommunications, would not be able to condition the provision of their services to the purchase of shares, participation quotas, terminal equipments, other goods or services, or another type of contribution or payment that it is not part of the structure of the tariff of the service.

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