INVITATION OF EXPRESSION OF INTEREST FOR SHORTLISTING OF INFRASTRUCTURE PROVIDERS CATEGORY-I REGISTERED WITH DoT FOR SETTING UP AND MANAGING

INFRASTRUCTURE SITES FOR PROVISION OF MOBILE SERVICES IN THE SPECIFIED RURAL & REMOTE AREAS

(SECOND PHASE)

No. 30-156/2008-USF (Vol. IV)

GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS & IT DEPARTMENT OF TELECOMMUNICATIONS UNIVERSAL SERVICE OBLIGATION FUND

USOF CELL ROOM NO. 1405, SANCHAR BHAWAN, 20, ASHOKA ROAD, NEW DELHI -110 001, INDIA
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Invitation of Expression of Interest (EoI) from Infrastructure Providers Category-I (IP-I) registered with DoT for setting up and managing infrastructure sites for provision of mobile services in the specified rural and remote areas

A scheme has already been launched by USO Fund to provide subsidy support for setting up and managing 7871 number of infrastructure sites (towers) in 500 districts spread across 27 states for provision of mobile services in the specified rural and remote areas, where there was no existing fixed wireless or mobile coverage. Tender document and outcome of the bidding process for this scheme are available under the Heading Tenders on DoT website www.dot.gov.in. The agreements effective from 01.06.2007 were signed with the successful IPs/ USPs in May 2007. Mobile services through these shared towers are targeted to be made operational in a phased manner by the end of year 2008.

It has now been proposed to set up about 11,000 additional towers to cover the other uncovered areas through mobile services in the Second Phase of the Scheme. The number of towers to be installed may undergo a change depending upon the rationale adopted and the feedback received in this regard. The Telecom Service Providers and the Shortlisted Infrastructure Providers shall be eligible to create the said infrastructure while provision of mobile services would be taken up by the Telecom Service Providers only. The support for the scheme is being structured in two parts:

Part A - Passive Infrastructure comprising of components like Land, Tower, Electrical connection, Power back up, Boundary wall and Security cabin.

Part B - Active Infrastructure comprising of components like Base Transceiver Station (BTS) equipment with associated antennas and part of the backhaul. Administrator, USO Fund on behalf of President of India invites Expression of

Interest (EoI) from reputed companies registered in India for Part A of the above said scheme. The detailed document inviting Expression of Interest is available on the Department of Telecommunications website www.dot.gov.in (under Whats New).

No charges shall be payable by the applicants towards the cost of the EoI. The applicants are not required to submit any earnest money while submitting the EoI. In case of any query, please send an E-mail at the address [email protected]. The applicant must be registered as Infrastructure Provider Category-I (IP-I) with Department of Telecommunications and should meet the Technical and Financial criteria enumerated in Clause 4.2. Unified Access Services Licensees (UASLs), Cellular Mobile Service Providers (CMSPs) and Basic Service Operators (BSOs) automatically qualify for Part A of the scheme for their respective license areas and are not required to submit the EoI. The Infrastructure Providers, who have already been shortlisted under Second Phase of the Scheme against the Expression of Interest invited earlier in August 2008, are not required to submit fresh EoI against this advertisement. From the EoIs received, Administrator USO Fund would shortlist companies which would be entitled to participate in Part A of the scheme as described above. The Administrator, USO Fund reserves the right to accept or reject any or all applications without assigning any reason thereof. The last date for submission of EOI is 08.12.2008 by 1600 Hrs.

Jt. Administrator (Tech), USOF

Notes: 1. Though adequate care has been taken while preparing this document, the Applicant shall satisfy himself that document is complete in all respects. Intimation of any discrepancy shall be given to this office by E-mail at the address [email protected] immediately. If no intimation is received from any Applicant within ten (10) days from the date of issue of this document, it shall be considered that the issued document is complete in all respects and has been received by the Applicant. While this Expression of Interest has been prepared in good faith, USOF does not make any representation or warranty, express or implied, or accept any responsibility or liability, whatsoever, in respect of any statements or omissions herein, or the accuracy, completeness or reliability of information contained herein, and shall incur no liability under any law, statute, rules or regulations as to the accuracy, reliability or completeness of this request, even if any loss or damage is caused by any act or omission on its part. The details of the scheme envisaged by USOF Administration to provide support for creation of infrastructure in rural and remote areas, as given in the EoI document are indicative and are under finalization. Administrator, USOF reserves the right to change the terms and conditions of the scheme.

2.

3.

4.

Background

1.1

The Universal Service Support Policy came into force from April 1, 2002. The Universal Service Obligation Fund (USOF) was established under the Indian Telegraph Act as amended by Indian Telegraph (Amendment) Act, 2003. The fundamental objective of USOF is to provide access to basic telecommunication services to people in the rural and remote areas at affordable and reasonable prices. The financial resources for meeting this Universal Service Obligation (USO) are realized and collected by way of Universal Service Levy (USL), which is a specified percentage of the revenue earned by all Telecom Service Providers except the pure value added Service Providers like internet, voice mail, e-mail Service Providers etc. The activities presently supported by the Universal Service Obligation Fund (USOF) include provision of Village Public Telephones (VPTs), Rural Community Phones (RCPs), Replacement of MARR based VPTs, installation of Individual Rural Household Direct Exchange Lines (RDELs) and creation of infrastructure for provision of mobile services in specified rural and remote areas of the country.

1.2

A scheme has already been launched by USO Fund to provide subsidy support for setting up and managing 7871 number of infrastructure sites (tower sites) in 500 districts spread over 27 states for provision of mobile services in the specified rural and remote areas, where there was no existing fixed wireless or mobile coverage. Details of the scheme and its outcome are available on DoT website (www.dot.gov.in).

1.3

The USOF Administration (hereinafter referred to as USOFA) is considering extending financial support for setting up and managing infrastructure sites (towers) comprising both passive and active infrastructure for provision of mobile services in other specified rural and remote areas (about 11,000 additional towers) under the second phase of the scheme (hereinafter referred to as the Scheme).

2. 2.1

Components of Support The proposed scheme by the USOFA is in two parts viz. Part A and Part B.

2.2

Part A comprises of infrastructure components (i) (ii) (iii) (iv) (v) (vi) Land Tower Electrical connection to cater to the requirement of three operators Engine Alternator of sufficient capacity for three operators Boundary wall Security cabin

2.3

Part B comprises of Components like (i) (ii) BTS equipment with associated antennas A part of the backhaul

2.4 The USOFA intends to support both passive and active infrastructure. 3 3.1 Scope of work for Part A of the proposed Scheme USOFA intends to provide subsidy support for creation of infrastructure for provision of mobile services in the specified rural areas to the short listed Infrastructure Providers (hereinafter referred to as IP) having expertise and experience in setting up projects of a similar nature. The proposed scheme intends to encourage Infrastructure Providers Category-I registered with DoT (IPIs) for creation of infrastructure to facilitate faster roll out of mobile services in uncovered rural and remote areas of the country by Telecom Service Providers. Facilitation by USOFA shall be in form of subsidy support on capital expenditure incurred in setting up the infrastructure in the uncovered areas where there is no existing wireless coverage. The Infrastructure Providers will be required to take up the following activities as specified by USOFA. (i) Installation of telecom towers on the land acquired for this purpose in the villages specified by USOFA spread across the country, (ii) Provision of electrical connection and engine alternator as per specifications, (iii) Construction of boundary wall/security cabins etc. as proposed in the scheme, 6

(iv) 3.2

Operation and maintenance of the created infrastructure.

About 11,000 number of such infrastructure sites would be required to be set up across the country.

3.3

The subsidy support for the activities specified in para 3.1 above shall comprise of an annual equated subsidy spread over a period of five years. The amount of subsidy support shall be arrived at through a bidding process against the benchmark rates arrived at by USOFA.

3.4

Responsibilities of the Infrastructure Providers The Infrastructure Providers would be required to, interalia, create the requisite infrastructure for provision of mobile services covering the following activities. The detailed specifications for the components shall be provided in the Tender Document of the proposed scheme to be issued shortly. (i) Acquisition of land of specified dimensions on lease basis/ outright purchase from any agency in the specified villages. In case the land is taken on lease basis, the lease agreement should be signed for a minimum period of six and a half years. The infrastructure created on the acquired land will be shared by three Telecom Service Providers based on the outcome of the current bidding process and a Broadband Service Provider, as identified by USOFA. (ii) Procure, install, test, commission and maintain Ground Based Towers of the specified height and design to accommodate the individual antennas and the microwave links of the three Telecom Service Providers and a Broadband Service Provider at such heights on the towers as specified by USOFA in the final Tender Document. (iii) Arrange Electrical power connection, of a specified capacity from the concerned State Electricity Boards/ Corporations etc. with provision of independent sub-meters to cater to the requirement of three Telecom Service Providers and a Broadband Service Provider. The same is 7

required to be operated and maintained in accordance with agreements entered into with the Telecom Service Providers. (iv) Procure, install, test and commission Engine Alternators of a specified capacity for providing power backup with changeover arrangements. The same is required to be operated and maintained in accordance with agreements entered into with the Telecom Service Providers. (v) Construct Boundary wall, Security cabin and execute associated civil and electrical works as per the prescribed specifications. (vi) Operate and maintain the created infrastructure for a five years subsidy period of IP plus the roll out period of the Service Providers as specified in the Tender Document (Referred as Rent Free Period). The Infrastructure Provider and the three Service Providers shall enter into commercial agreements for continued operation of services after the end of Rent free period on mutually acceptable terms and conditions. 3.5 Salient features of the Scheme (i) Both short listed Infrastructure Providers (IP-Is) and Licensed Telecom Service Providers shall be eligible to bid for Part A of the proposed scheme whereas only Licensed Telecom Service Providers shall be eligible to bid for Part B of the proposed scheme. (ii) Bids shall be invited for a district or group of districts for covering specified villages. The list of districts and the specific villages to be covered in these districts shall be provided in the Tender Document. (iii) The Tender Document will indicate technical specifications and tentative placement of sites for creation of infrastructure for provision of mobile services in the uncovered areas. Bidders for Part A shall submit their bids on the basis of annual subsidy per tower for setting up infrastructure sites in a district or a group of districts. (iv) USOFA shall provide benchmark annual subsidy per tower for a district or 8

group of districts. Bidders will be required to quote at or below such benchmark value indicated in the Tender Document. Successful Bidders for Part A would be identified through a transparent bidding process. (v) Support to the Infrastructure Provider shall be in form of subsidy, which shall be the least quoted value of the annual subsidy arrived at after bidding process and shall be known as the Representative Rate. The subsidy support for Part A shall comprise of such annual subsidy for a period of 5 years. (vi) Validation and acceptance of the infrastructure shall be carried out by the agencies as nominated by USOFA. (vii) The infrastructure shall be shareable by at least three Telecom Service Providers selected by the USOFA for Part B through a similar tendering process. (viii) Administrator, USOF reserves the right to accommodate a fourth operator during the validity period of the Agreement for any other future requirement on the shared infrastructure for promoting socio-economic development in rural areas. The IP shall not charge any rental from the Broadband Provider during the validity period of the Agreement. (ix) During the rent free period, the IP shall not charge any rental from the Telecom Service Providers. (x) The IP shall recover the charges for certain services offered like Electricity, Diesel, Security, routine maintenance etc. from the Telecom Service Providers and the Broadband Provider. (xi) The USOFA requires the IP to enter into a Service Level Agreement (SLA) with the Service Providers during the period of the agreement to ensure continued provisioning of services to the rural subscribers. Broad parameters for the service level agreement shall be specified by the USOFA in the Tender Document.

3.6

Roll out plan The successful bidder for Part A shall have to install all the towers in the district or group of districts within 12 months period of the signing of the agreement or as roll out plan indicated in the Tender Document.

4. 4.1

Information and instructions to the Applicants USOFA invites Expression of Interest (EoI) from companies (hereinafter referred to as "Applicants") who have the necessary technical competence, experience and financial strength for setting up of infrastructure and to operate and maintain all such infrastructure, as described in clauses 3.1 to 3.4. To submit an EoI, the Applicant should meet the eligibility criteria outlined in clause 4.2.

4.1.1

Unified Access Services Licensees (UASLs), Cellular Mobile Service Providers (CMSPs) and Basic Service Operators (BSOs) qualify for both Part A and B and are not required to submit an Expression of Interest. In Part B, only licensed Telecom Service Providers are allowed to participate.

4.1.2

The Infrastructure Providers registered with DoT as Infrastructure Providers Category-I shall be required to apply afresh for shortlisting irrespective of the fact that they were declared shortlisted or not shortlisted for the First Phase of the scheme against the EoI issued in year 2006.

4.1.3

However, the Infrastructure Providers, who have recently been shortlisted for participation in the Second Phase of the Scheme against the EoI earlier invited in August 2008, are not required to submit fresh Expression of Interest against this advertisement.

4.2

Eligibility Criteria

4.2.1

The Applicant should be registered as an Infrastructure Provider CategoryI

(IP-I) with

Department of Telecommunications, Government of India. The Applicant should furnish a copy of valid registration certificate issued by DoT as documentary evidence in support of its registration.

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4.2.2

The Applicant must have experience of setting up of a minimum of 100 (One hundred) ground based towers of more than 25 meters height.

4.2.3

Applicants shall furnish documentary evidence in support of the experience in the form of completion certificate from the company for which it has installed the tower along with a letter of certification by qualified auditors in the format given at Annexure-I. In case of completion certificate, the certificate should clearly mention number of ground based towers of 25 meters height or more erected by the applicant for that company.

4.2.4

The Applicant must fulfill following minimum eligibility requirements Net Worth: Minimum net worth of Rs. 150 Crore (Rupees Three Hundred Crore only) as per the audited annual report of the last financial year. = Add: Subtract: Subtract: Subtract: Subtract: Net Worth Subscribed and Paid-up Equity share capital Reserves Revaluation Reserves Intangible Assets Miscellaneous Expenditures to the extent not written off Any other Accrued Liabilities

4.2.5

For the purposes of the financial criteria only unconsolidated audited annual accounts of the Applicant (Bidding Company) shall be used. Applicants shall furnish documentary evidence of their financial capability as defined in clause 4.2.4 in the format enclosed at Annexure-II to this document. A copy of the Audited Annual Accounts of the Applicant and Parent Company (if applicable) as per Schedule VI of the Companies Act, shall also be submitted alongwith the EoI (Annexure-III).

4.2.6

An Applicant can take 100% benefit of the technical capability (mentioned in clause 4.2.2) and financial capability (mentioned in clause 4.2.4) of its Parent Company for the purpose of evaluation. Any company will be required to have at least 26% equity either directly or indirectly in the Applicant Company to be considered as its Parent Company. If an Applicant wishes to draw upon the technical and financial capability of its Parent company, it will have to submit legally binding undertaking supported by a board resolution from its Parent 11

company as per Annexure-IV at the time of the submission of the Tender Document (on qualification) that all the equity investment obligations of the Applicant shall be deemed to be equity investment obligations of the Parent Company and in the event of any default the same shall be met by the Parent Company. 4.2.7 The determination of the relationship of parent with the Applicant Company shall be as on 31st March 2008. The documentary evidence to establish such relationship shall be furnished by the Bidder along with the response to EoI. 4.3 4.3.1 Other conditions The responses to this EoI shall be valid for not less than six (6) months from last date of submission. 4.3.2 Applicants who are shortlisted after this EoI stage shall be under no obligation to participate in the Tender Document issued by the USOFA. 4.3.3 Administrator, USOF would shortlist Applicants on the basis of EOIs received. The shortlisted Applicants would be entitled to bid for setting up the passive infrastructure sites. 4.3.4 The shortlisting of the applicants shall be completed within 30 days of the opening of the EOIs and the successful applicants shall be informed. 4.3.5 The Applicant should designate one person to represent it in its dealings with the USOF. The person should be authorized to perform all tasks including, but not limited to providing information, responding to enquiries, etc. 4.3.6 The Applicant should submit a Power of Attorney authorizing the signatory of the Application to commit the Applicant to the response. The draft format is attached at AnnexureV. 4.4 4.4.1 Formats for submission of the required information The information in response to this EoI will be submitted by the Applicant as per 12

Annexures attached in this document. 4.4.2 Strict adherence to the formats wherever specified, is required. Non-adherence to formats and/or submission of incomplete information or conditional information may be grounds for declaring the EoI non-responsive. Each format has to be duly signed by the Applicant. 4.5 4.5.1 The Applicant should note that: If the Applicant deliberately gives wrong information in its response to Expression of Interest, Administrator USOF reserves the right to reject such EoI and/or cancel the award, if made. 4.5.2 Responses submitted by the Applicant will become the property of USOFA and USOFA will have no obligation to return the same to the Applicant. 4.5.3 The Applicant will be responsible for bearing all the costs associated with the preparation of the response and participation in discussions. USOFA will not be responsible in any way for such costs, regardless of the conduct or outcome of this process. 4.6 Applicants may note that: (i) Applicants shall mention the name of the contact person, phone no., email id, fax no. and complete address of the Applicant in the covering letter. (ii) Responses that are incomplete, which do not substantially meet the requirements prescribed in this EoI, are liable to be rejected by the Administrator, USOF. (iii) (iv) (v) (vi) Responses containing incomplete information in the specified formats would be liable for rejection. All pages of the responses submitted must be initialed by the authorized signatory on behalf of the Applicant. Applicants, not furnishing additional information or clarifications sought within the stipulated time, may be liable for rejection. If in response to this EoI, the Applicant makes any claim, which does not reflect the truth or is material misrepresentation of facts, then the EoI 13

would be liable for rejection. (vii) Administrator, USOF reserves the right to reject all or any of the responses without assigning any reasons whatsoever. 4.7 4.7.1 Submission of Responses The responses are to be submitted in a sealed envelope by 1600 Hrs on 08.12.2008, which should be transcripted in the following way: Expression of Interest for shortlisting of Infrastructure Providers Category-I for setting up and managing infrastructure sites Shri Ravinder Kumar, ADG (T), USF, Department of Telecommunications, 1405, Sanchar Bhawan, 20, Ashoka Road, New Delhi - 110 001 Name of the Applicant Applicants contact address, phone, fax, e-mail 4.7.2 The Applicant has the option of sending his response by post, courier or submitting the EoI in person so as to reach the designated address by the time and date as stipulated by USOFA. The acknowledgement of delivery of the EoIs to USOFA is to be ensured by the Applicant Company. Responses submitted by telex/ telegram/ fax/ e-mail will not be considered under any circumstances. The USOFA shall not be responsible for any delay in receipt of the EoIs. Any response received by the USOFA after the deadline for submission of the responses stipulated by USOFA will not be opened. 4.7.3 The response will be submitted in 4 copies (placed in one envelope as mentioned in clause 4.7.1). The first copy shall be marked as original. All pages of this copy must be initialed by the authorized signatory on behalf of the Applicant. The other three photocopies of the original copy shall be marked as COPY No. _______. 14

4.7.4

No change or supplemental information to an EoI will be accepted after the scheduled time of submission. Administrator, USOF reserves the right to seek additional information from the Applicants, if found necessary, during the course of evaluation of the EoI.

4.7.5

If the envelope is not sealed and not marked as per the requirement, the USOFA will assume no responsibility for the EoI's misplacement or premature opening.

4.7.6

EoIs should reach the address indicated in Clause 4.7.1 by 1600 Hrs on 08.12.2008.

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ANNEXURE-I FORMATS FOR TECHNICAL REQUIREMENT To, Insert Address

Dear Sir I certify that the Applicant has experience of setting up a minimum of 100 ground based towers of more than 25 meters height. This Technical Requirement has been determined on the basis of following projects: Name of Applicant or their Parent Company Relationship with Applicant Company Brief details of project where ground based towers were installed Number of ground based towers installed Height of ground based towers installed Year of Completion

Total

Signature of Company Secretary (Please also affix company seal) Date: Note:

Signature and Seal of Auditors

The above response sheet should be signed and certified as true by the Company Secretary and Auditor appointed by the Applicant. The Auditor must be a qualified Chartered Accountant. 16

ANNEXURE-II FORMAT FOR FINANCIAL REQUIREMENT - NET WORTH To, Insert Address Dear Sir, I certify that the Applicant has a minimum net worth of Rs. 150 Crore in the last financial years audited annual accounts. This net worth has been calculated as per the instructions provided in the EoI document. For the above calculations, we have considered the following companies for the Financial Year ___________: Name of Applicant or Relationship Applicant with Net Worth (Rs. Crore)

their Parent Company

Total Sl. No.

Item

Value in Rs.

Schedule, items and page number of the Annual Accounts

Subscribed and Paid-up Equity share capital

2 3 4 5 6 7

Add: Reserves Subtract: Revaluation Reserves Subtract: Intangible Assets Subtract: Miscellaneous Expenditures to the extent not written off and Subtract: Any other Accrued Liabilities Net Worth = 1 + 2 - 3 - 4 - 5 - 6

Signature of Company Secretary (Please also affix company seal) Date: 17

Note: 1. The above response sheet should be signed and certified as true by the Company Secretary. 2. Along with the above format, in a separate sheet in the table as shown below, please provide details of computation of net worth indicating the schedules and items of the annual accounts from which the figures have been obtained.

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ANNEXURE-III

Audited Annual Accounts of the Applicant and Parent Company, if applicable, as per Schedule VI of the Companies Act

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ANNEXURE-IV FORMAT FOR BOARD RESOLUTION OF PARENT COMPANY (To be submitted on the letterhead of the Company) The Board, after discussion, at the duly convened Meeting on _________ [insert date], with the consent of all the Directors present and in compliance of the provisions of the Companies Act, 1956, passed the following Resolution: RESOLVED THAT pursuant to the provisions of the Companies Act, 1956 and compliance thereof and as permitted under the Memorandum and Articles of Association of the Company and in view of the fact that (Name of the parent company) holds -----% of the equity in (name of the bidder), the Board of (Name of the parent company) hereby undertakes to invest the entire amount proposed to be invested by (Name of the bidder) in the project envisaged in the tender no. ---------- FOR SUPPORT FROM USO FUND TOWARDS SETTING UP AND MANAGING INFRASTRUCTURE SITES AND PROVISION OF MOBILE SERVICES IN SPECIFIED RURAL AND REMOTE AREAS issued by USO Fund, in case of failure of [insert the name of the Bidder] to make such investment. FURTHER RESOLVED THAT ___________, whose signatures are attested hereunder, be and is hereby authorized to enter into and take all the steps required to be taken by (Name of the parent company) in this regard, including in particular, signing and issuing of all the related documents, certified copy of this Board resolution or letter, undertakings etc, required to be submitted to the USO fund as part of the Tender or such other documents as may be necessary in this regard. Certified True Copy Notes: This certified true copy should be submitted on the letterhead of the Company, signed by the Company Secretary or any of the authorized Directors of the Company and the Common Seal of the Company shall be affixed.

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ANNEXURE-V FORMAT FOR POWER OF ATTORNEY Know all men by these presents, We.(name and address of the registered office) do hereby constitute, appoint and authorize Mr. / Ms(name and residential address) as our true and lawful attorney, to do in our name and on our behalf, all such acts, deeds and things necessary in connection with or incidental to submission of our EoI for the envisaged project Setting up and Managing Infrastructure Sites for Provision of Mobile Services in the Specified Rural and Remote Areas of the Country, including signing and submission of the EoI and all documents specified in the Expression of Interest, including, undertakings, letters, certificates, acceptances, clarifications, guarantees, etc, making representations to the USOF and providing information / responses to the USOF, representing us in all matters before the USOF, and generally dealing with the USOF in all matters in connection with our EoI for the said Project. We hereby agree to ratify all acts, deeds and things lawfully done by our said attorney pursuant to this Power of Attorney and that all acts, deeds and things done by our aforesaid attorney shall and shall always be deemed to have been done by us. All the terms used herein but not defined shall have the meaning ascribed to such terms under the Tender Document. Signed by the within named _____________________ [Insert the name of the executants] Through the hand of Mr._____________________ Duly authorized signatory Dated this ___ day of 2008 Before me,

Notary 21

Accepted .. (Signature) (Name, Title and Address of the Attorney)

Note: The mode of execution of the Power of Attorney should be in accordance with the procedure, if any, laid down by the applicable law and the charter documents of the executants and when it is so required the same should be under common seal affixed in accordance with the required procedure.

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