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<TITLE>GRUPO IUSACELL, S.A. DE C.V.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

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<B><FONT size="4">SECURITIES AND EXCHANGE COMMISSION</FONT></B>

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<B>WASHINGTON, D.C. 20549</B>
</DIV>

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<B><FONT size="5">Form 20-F</FONT></B>

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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2"><FONT face="wingdings">&#111;</FONT>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">REGISTRATION STATEMENT PURSUANT TO SECTION
    12(b) or (g)<BR>
    OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD colspan="3" align="center" valign="top">
    <B><FONT size="2">or</FONT></B></TD>
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    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2"><FONT face="wingdings">&#254;</FONT></FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)<BR>
    OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">For the fiscal year ended December&nbsp;31,
    2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B><FONT size="2">or</FONT></B></TD>
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    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2"><FONT face="wingdings">&#111;</FONT></FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">TRANSITION REPORT PURSUANT TO SECTION&nbsp;13
    or 15(d)<BR>
    OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <B><FONT size="2">for the transition period
    from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</FONT></B></TD>
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<P align="center">
<B><FONT size="2">COMMISSION FILE NUMBER 1-12500</FONT></B>

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<B><FONT size="6">Grupo Iusacell, S.A. de C.V.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of Registrant as specified in its
charter)</FONT></I>
</DIV>

<P align="center">
<B><FONT size="2">Iusacell Group, Inc.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Translation of Registrant&#146;s name into
English)</FONT></I>
</DIV>

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<B><FONT size="2">United Mexican States</FONT></B>

<DIV align="center">
<I><FONT size="2">(Jurisdiction of incorporation or
organization)</FONT></I>
</DIV>

<P align="center">
<B><FONT size="2">Prolongaci&#243;n Paseo de la Reforma
1236</FONT></B>

<DIV align="center">
<B><FONT size="2">Colonia Santa Fe</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Delegaci&#243;n Cuajimalpa</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">05348 Mexico, D.F.</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address of principal executive
offices)</FONT></I>
</DIV>

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<B><FONT size="2">Securities registered or to be registered
pursuant to Section&nbsp;12(b) of the Act.</FONT></B>

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    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
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<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of each class</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Name of each exchange on which registered</FONT></B></TD>
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    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
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    <FONT size="2">American depositary shares,<BR>
    each representing 10 series V shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">New York Stock Exchange
    </FONT></TD>
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    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="center" valign="top">
    <FONT size="2">Series&nbsp;V shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">New York Stock Exchange*
    </FONT></TD>
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<P>

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    <TD width="2%"></TD>
    <TD width="98%"></TD>
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    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Not for trading, but only in connection with the
    registration of American depositary shares, pursuant to the
    requirements of the Securities and Exchange Commission.
    </FONT></TD>
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<B><FONT size="2">Securities registered or to be registered
pursuant to Section&nbsp;12(g) of the Act:</FONT></B>

<DIV align="center">
<B><FONT size="2">None</FONT></B>
</DIV>

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<B><FONT size="2">Securities for which there is a reporting
obligation pursuant to Section&nbsp;15(d) of the Act:</FONT></B>

<DIV align="center">
<B><FONT size="2">None</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate the number of outstanding shares of each
of the issuer&#146;s classes of capital or common stock as of
the close of the period covered by the Annual Report:
</FONT>

<P align="center">
<FONT size="2">Series&nbsp;A Capital
Stock&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;961,292,484
shares
</FONT>

<DIV align="center">
<FONT size="2">Series&nbsp;V Capital
Stock&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;900,732,310
shares
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark whether the registrant
(1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to file such reports), and
(2)&nbsp;has been subject to such filing requirements for the
past
90&nbsp;days.&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark which financial statement
item the registrant has elected to follow:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Item&nbsp;17&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;18&nbsp;<FONT face="wingdings">&#254;</FONT>
</FONT>

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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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<TR><TD></TD><TD colspan="8"><A HREF="#000">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">ITEM 3. KEY INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">ITEM 4. INFORMATION ON THE COMPANY</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">ITEM 8. FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">ITEM 9. THE OFFER AND LISTING</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">ITEM 10. ADDITIONAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">ITEM 15. RESERVED</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">ITEM 16. RESERVED</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">ITEM 17. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">ITEM 18. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">CONSOLIDATED BALANCE SHEETS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">CONSOLIDATED INCOME STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#025">ITEM 19. EXHIBITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="y61801exv4w3.txt">1ST AMENDMENT AND WAIVER TO A/R CREDIT AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y61801exv7w1.txt">COMPUTATION OF EARNINGS TO FIXED CHARGES</A></TD></TR>
<TR><TD colspan="9"><A HREF="y61801exv8w1.txt">LIST OF SUBSIDIARIES</A></TD></TR>
</TABLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
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    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
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<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">PART I</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 1.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 2.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">OFFER STATISTICS AND EXPECTED TIMETABLE
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 3.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">KEY INFORMATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 4.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">INFORMATION ON THE COMPANY
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 5.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 6.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 7.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 8.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">FINANCIAL INFORMATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 9.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">THE OFFER AND LISTING
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 10.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">ADDITIONAL INFORMATION
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 11.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 12.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">PART II</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 13.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 14.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 15.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">RESERVED
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 16.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">RESERVED
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">PART III</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 17.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">FINANCIAL STATEMENTS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 18.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">FINANCIAL STATEMENTS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ITEM 19.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">EXHIBITS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">i
</FONT>

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<P align="center">
<B><FONT size="2">FORWARD-LOOKING INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Annual Report contains various
forward-looking statements within the meaning of
Section&nbsp;27A of the Securities Act of 1933 as amended (the
&#147;Act&#148;), and Section&nbsp;21E of the Securities
Exchange Act of 1934 as amended (the &#147;Exchange Act&#148;),
including statements regarding, among other things, the
financial performance and operating plans for Grupo Iusacell,
S.A. de C.V. These statements are based upon the current beliefs
of our management, as well as on assumptions made by management
based upon information currently available to it. The words
&#147;believe,&#148; &#147;expect,&#148; &#147;likely&#148; and
&#147;anticipate&#148; and similar expressions identify some of
these forward-looking statements. These statements are subject
to various risks and uncertainties and other factors which may
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Should management&#146;s assumptions prove
incorrect, actual results may vary materially and adversely from
those anticipated or projected. Readers are cautioned not to
place undue reliance on such forward-looking statements, which
speak only as of their respective dates. We undertake no
obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following factors, as well as other factors
described in this Annual Report, could cause actual results to
differ materially from such forward-looking statements:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Material adverse changes in the business
    environment in Mexico, such as a change in value of the peso,
    the imposition of exchange controls, an increase in inflation
    levels and economic downturns;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Material adverse changes in the regulatory
    environment in Mexico;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our ability to adapt to rapid technological
    change, develop new technologies and hire and retain qualified
    personnel;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our ability to obtain debt or equity financing
    necessary to pursue business opportunities; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Our ability to compete against other
    telecommunications service providers.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&#147;Iusacell&#148; means Grupo Iusacell,
S.A. de C.V. This company was formerly known as Nuevo Grupo
Iusacell, S.A. de C.V.</FONT></B>

<P align="left">
<B><FONT size="2">&#147;Iusacell Celular&#148; means Grupo
Iusacell Celular, S.A. de C.V. This company was formerly known
as Grupo Iusacell, S.A. de C.V. Iusacell owns 100% of the
capital stock of Iusacell Celular.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2000, Bell Atlantic Corporation,
our principal shareholder, which holds its interest in Iusacell
through various subsidiaries, acquired GTE Corporation in a
merger of equals, renaming itself as &#147;Verizon
Communications Inc.&#148; The subsidiaries which directly hold
Iusacell capital stock remained unchanged. As a result of the
foregoing, the term &#147;Verizon&#148; in this Annual Report
refers to Verizon Communications Inc. or its subsidiaries, as
the context requires. We continue to use the term &#147;Bell
Atlantic&#148; in this Annual Report to refer to Bell Atlantic
Corporation and its subsidiaries in connection with events prior
to June&nbsp;30, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s equity securities trade on the
New York and Mexican stock exchanges. Both Iusacell and Iusacell
Celular have publicly traded debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise specified, all references to
&#147;U.S. dollars,&#148; &#147;dollars,&#148; &#147;U.S.$&#148;
or &#147;$&#148; are to United States dollars, and references to
&#147;Ps.&#148; and &#147;pesos&#148; are to Mexican pesos. We
publish our financial statements in pesos that are adjusted to
reflect changes in purchasing power due to inflation. Thus,
unless otherwise specified, our financial data is presented in
constant pesos with purchasing power as of December&nbsp;31,
2001. Amounts presented in this Annual Report may not add up or
may be slightly inconsistent due to rounding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise specified, this Annual Report
contains translations of peso amounts into U.S. dollars solely
for the convenience of the reader based on the exchange rate
reported by the Federal Reserve Bank of New York as its noon
buying rate for pesos, which we refer to as the Noon Buying
Rate, at December&nbsp;31, 2001, which was Ps.9.156 per
U.S.$1.00. These currency conversions should not be construed as
representations that the peso amounts actually represent such
dollar amounts. Additionally, these conversions should not
</FONT>

<P align="center"><FONT size="2">ii
</FONT>

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<DIV align="left">
<FONT size="2">be construed as representations that these peso
amounts have been, could have been or could be converted into
U.S. dollars at those or any other rates of exchange.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will provide without charge to each person to
whom this Annual Report is delivered, upon written or oral
request, a copy of any or all of the documents incorporated by
reference into this Annual Report (other than exhibits, unless
such exhibits are specifically incorporated by reference in such
documents). Written requests for such copies should be directed
to Grupo Iusacell, S.A. de C.V., Prolongaci&#243;n Paseo de la
Reforma 1236, Colonia Santa Fe, Delegaci&#243;n Cuajimalpa,
05348 Mexico, D.F., Attention: Carlos Moctezuma, Investor
Relations Manager. E-mail requests may be directed to
investor.relations@iusacell.com.mx. Telephone requests may be
directed to 011-52-55-5109-5759.
</FONT>

<P align="center"><FONT size="2">iii
</FONT>

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<P align="center">
<B><FONT size="2">PART I</FONT></B>

<!-- link2 "ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">ITEM 1.</FONT></B></TD>
    <TD>
    <B><FONT size="2">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS</FONT></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors and
Senior Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auditors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<!-- link2 "ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">ITEM&nbsp;2.</FONT></B></TD>
    <TD>
    <B><FONT size="2">OFFER STATISTICS AND EXPECTED
    TIMETABLE</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">1
</FONT>

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<!-- link2 "ITEM 3. KEY INFORMATION" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">ITEM&nbsp;3.</FONT></B></TD>
    <TD>
    <B><FONT size="2">KEY INFORMATION</FONT></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selected
Financial Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables present selected
consolidated financial data of Iusacell and its consolidated
subsidiaries. We have derived this data from the audited
consolidated financial statements of Iusacell as of
December&nbsp;31, 2001, 2000, 1999, 1998 and 1997 and for each
of the five years in the period then ended including the audited
consolidated financial statements of Iusacell as of
December&nbsp;31, 2001 and 2000 and for each of the three years
in the period ended December&nbsp;31, 2001, which we refer to as
the Consolidated Financial Statements, appearing elsewhere in
this Annual Report, and you should read this information in
conjunction with the Consolidated Financial Statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to August&nbsp;10, 1999, when Iusacell
completed a corporate restructuring, Iusacell had minimal assets
and liabilities and no operations or contingent liabilities. For
accounting purposes, Iusacell is the successor business to Grupo
Iusacell, S.A. de&nbsp;C.V., the holding and operating company
prior to the restructuring. Iusacell currently owns 100% of the
capital stock of Iusacell Celular.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Consolidated Financial Statements have been
prepared in accordance with Mexican generally accepted
accounting principles, which we refer to as Mexican GAAP, which
differs in certain significant respects from United States
generally accepted accounting principles, which we refer to as
U.S.&nbsp;GAAP. Pursuant to Mexican GAAP, we have prepared the
Consolidated Financial Statements and the selected financial
data presented below in accordance with Bulletin&nbsp;B-10 of
the Mexican Institute of Public Accountants (&#147;MIPA&#148;),
which provides for the recognition of certain effects of
inflation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until December&nbsp;31, 1996, Bulletin&nbsp;B-10
required Iusacell to restate non-monetary assets at current
replacement cost, and to restate non-monetary liabilities using
the National Consumer Price Index (<I>Indice Nacional de Precios
al Consumidor</I>), also referred to as the INPC. Beginning on
January&nbsp;1, 1997 and throughout the periods presented in
this Annual Report, Bulletin&nbsp;B-10 has required Iusacell to
restate non-monetary assets (other than inventory) using the
INPC. Throughout the periods presented in this Annual Report,
Bulletin&nbsp;B-10 has also required Iusacell to restate the
components of shareholders&#146; equity using the INPC and to
record gains or losses in purchasing power from holding monetary
liabilities or assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Bulletin&nbsp;B-10 requires
restatement of all financial statements to constant pesos as of
the date of the most recent balance sheet presented.
Accordingly, we have restated all data in the Consolidated
Financial Statements and in the selected financial data set
forth below in constant pesos with purchasing power as of
December&nbsp;31, 2001. We have not reversed the effect of these
inflation accounting principles in the reconciliation of
Iusacell&#146;s net profit (loss)&nbsp;and stockholders&#146;
equity to U.S.&nbsp;GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Note&nbsp;23 to the Consolidated Financial
Statements presents the principal differences, other than
inflation accounting, between Mexican GAAP and U.S.&nbsp;GAAP
applicable to us and contains a reconciliation of
Iusacell&#146;s net profit (loss)&nbsp;and stockholders&#146;
equity to U.S.&nbsp;GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.&nbsp;dollar amounts provided in the
selected financial data below are translations from the
corresponding peso amounts, solely for the convenience of the
reader, at the Noon Buying Rate at December&nbsp;31, 2001, which
was Ps.&nbsp;9.156 per U.S.$1.00. You should not construe these
translations as representations that the peso amounts actually
represent such U.S.&nbsp;dollar amounts or could be converted
into U.S.&nbsp;dollars at the rate indicated as of any dates
mentioned in this Annual Report or at all.
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">As of and for the Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Thousands of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Thousands of constant pesos as of December&nbsp;31, 2001,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.&nbsp;dollars,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">except per share and operating data)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">except per share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and operating</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">data)(2)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Income Statement Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Mexican
    GAAP</FONT></I><FONT size="2">:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,338,563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,129,223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,285,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,200,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,634,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">615,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephone equipment sales and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">480,939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">479,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">528,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">607,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,819,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,608,735</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,782,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">681,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">779,275</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">979,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,221,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,464,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,532,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of telephone equipment sales and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">305,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,570</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">378,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,084,560</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235,790</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,528,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,820,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,910,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">208,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,734,942</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,372,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,254,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,909,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,330,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">473,021</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,127,168</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,377,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,643,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,923,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,076,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">226,813</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">881,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,015,655</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,621,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,408,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">450&nbsp;project write-down
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,254,028</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other operating income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">307,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,627</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(274,115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,273,779</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,067</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(423,318</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57,059</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Integral financing cost (gain):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">331,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">982,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">808,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange loss (gain), net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,068,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(180,953</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(224,793</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,551</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Gain) on net monetary position
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(443,613</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(867,468</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(752,903</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(450,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(266,625</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(29,120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">486,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(602,357</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity participation in net income (loss)&nbsp;of
    associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">238,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54,160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,647</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for equipment impairment(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,406,352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) income before asset tax, income tax,
    minority interest, extraordinary item and discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,447,467</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,559,071</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">511,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(991,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(367,801</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40,170</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">611,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) from continuing operations before minority
    interest, extraordinary item and discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,516,172</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,641,119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(99,473</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,147,839</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(514,205</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56,160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) from continuing operations before
    extraordinary item and discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,515,858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,633,905</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(79,073</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,131,378</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(493,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(53,900</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Extraordinary item(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of the adoption of the new
    accounting pronouncement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss (gain)&nbsp;from discontinued operations(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,565</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,748</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss) profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,515,858</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,657,470</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54,608</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) per share from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(1.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(1.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.04</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average number of shares outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,070,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,121,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">As of and for the Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Thousands of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(Thousands of constant pesos as of December&nbsp;31, 2001,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.&nbsp;dollars,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">except per share and operating data)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">except per share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and operating</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">data)(2)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">U.S.
    GAAP</FONT></I><FONT size="2">:(6)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,950,592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,631,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,782,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,104,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">666,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating (loss)&nbsp;profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,879,991</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,077,832</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88,589</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(433,547</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(470,668</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51,405</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss) income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,029,047</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,646,622</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">272,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,135,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(809,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88,367</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted (loss) profit per share(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.86</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(1.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">(0.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Mexican
    GAAP</FONT></I><FONT size="2">:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(394,759</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,535,455</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">920,845</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(680,873</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">348,812</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,097</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,568,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,781,945</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,702,422</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,550,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,469,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,034,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,116,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,685,133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,874,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,474,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,571,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,809,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,366,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,690,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,005,212</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,982,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,348,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">802,565</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,043,988</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,684,706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,964,543</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,630,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,162,908</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">782,318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,673,373</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,031,253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,378,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,822,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,754,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">737,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">U.S.
    GAAP:</FONT></I><FONT size="2">(6)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(636,312</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,725,717</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">688,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(959,202</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">147,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,568,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,568,881</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,702,812</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,337,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,236,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,008,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,121,148</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,194,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,372,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,000,588</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,077,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,865,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,366,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,703,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,011,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,982,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,348,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">802,565</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,615</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,989,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,687,426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,839,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,314,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,253,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">683,008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Financial Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Mexican
    GAAP</FONT></I><FONT size="2">:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">607,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">995,904</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,610,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,985,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,562,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">279,835</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA margin(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures(10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,071,452</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,135,522</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,949,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,150,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,981,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">216,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376,139</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">331,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">982,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">808,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ratio of earnings to fixed charges(11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">2.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">U.S.
    GAAP</FONT></I><FONT size="2">:(6)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(998,103</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,198,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,532,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,975,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,125,262</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232,117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash Flow Data:(12)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Mexican
    GAAP</FONT></I><FONT size="2">:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net resources (used)&nbsp;provided by operating
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(341,860</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">870,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,305,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,488,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,059,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net resources used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,750,251</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,404,047</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,499,631</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,889,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,706,468</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(295,595</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net resources provided by financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,110,769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,681,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,178,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">777,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">U.S.
    GAAP</FONT></I><FONT size="2">:(6)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,178,802</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">864,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,211,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,087,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,550,729</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,190,986</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,978,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,181,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,814,441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(307,388</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,450,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,160,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,137,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,501,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,033</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Operating Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Covered POPs(13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,847,614</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,712,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,591,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,376,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,917,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Subscribers(14)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Postpaid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199,964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">442,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">478,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">970,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,238,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,451,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total subscribers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">400,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">755,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,322,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,681,219</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,855,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross subscriber additions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">406,353</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">747,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">788,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,092,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,051,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average subscribers(15)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">742,601</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,290,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,637,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,721,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average monthly postpaid churn(16)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.94%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">2.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">2.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">3.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">3.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Penetration(17)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.61%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">1.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">1.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">2.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">2.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average monthly MOUs per subscriber(18)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nominal average monthly mobile wireless revenue
    per subscriber(19)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">464</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nominal cost to acquire a new subscriber(20)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In accordance with Mexican GAAP, financial data
    for all periods covered by the Consolidated Financial Statements
    as well as the other financial data presented in this Annual
    Report, unless otherwise indicated, has been restated in
    constant pesos with purchasing power as of December&nbsp;31,
    2001. Restatement of peso amounts is made by multiplying the
    relevant nominal peso amount for the relevant period by the
    inflation index for the period from the end of the period to
    which such nominal peso amount relates through December&nbsp;31,
    2001. The inflation indices used in this Annual Report are
    1.5155 for 1997, 1.2777 for 1998, 1.1376 for 1999 and 1.0440 for
    2000.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Peso amounts were converted to U.S.&nbsp;dollars
    at the Noon Buying Rate for December&nbsp;31, 2001, which was
    Ps.&nbsp;9.156 per U.S.$1.00. Such conversions should not be
    construed as representations that the peso amounts actually
    represent such U.S.&nbsp;dollar amounts or could be converted
    into U.S.&nbsp;dollars at the rate indicated, or at all.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">In determining the peso amounts of our
    U.S.&nbsp;dollar-denominated obligations at December&nbsp;31,
    2001 in the Consolidated Financial Statements, under Mexican
    GAAP, however, we applied the exchange rate published by Banco
    de M&#233;xico (the Mexican Central Bank) on December&nbsp;31,
    2001 which was Ps.&nbsp;9.1695 per U.S.$1.00. The difference
    between the Noon Buying Rate and the Banco de M&#233;xico
    exchange rate causes certain inconsistencies between references
    to U.S.&nbsp;dollar amounts in this Annual Report and the actual
    outstanding U.S.&nbsp;dollar amounts of our
    U.S.&nbsp;dollar-denominated obligations. For example, our
    actual total debt outstanding, excluding trade notes payable, at
    December&nbsp;31, 2001 was U.S.$801.4&nbsp;million. In preparing
    the Consolidated Financial Statements, we multiplied this dollar
    amount by Ps.&nbsp;9.1695; (the Banco de M&#233;xico exchange
    rate at December&nbsp;31, 2001) to arrive at
    Ps.&nbsp;7,348.3&nbsp;million of total debt, excluding trade
    notes payable. For purposes of this Annual Report, we have
    converted this peso amount to U.S.&nbsp;dollars for the
    convenience of the reader by dividing it by Ps.&nbsp;9.156 (the
    Noon Buying Rate at December&nbsp;31, 2001) to arrive at
    U.S.$802.6&nbsp;million of total debt, excluding trade notes
    payable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">As a result of the combined effect of the
    restatement of the financial data in constant pesos with
    purchasing power as of December&nbsp;31, 2001 and the
    convenience translation of peso amounts into U.S.&nbsp;dollars,
    the amounts shown for certain balance sheet items are not equal
    to the actual amounts outstanding.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For U.S.&nbsp;GAAP purposes, the impairment
    charge relating to the analog communications equipment is
    recorded as an operating expense.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For 1999, the extraordinary item represents the
    utilization of tax loss carryforwards available to us which,
    under Mexican GAAP, is required to be classified as an
    extraordinary item. Under U.S.&nbsp;GAAP, the utilization of tax
    loss carryforwards is recorded as a component of tax expense.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In December 1998, we discontinued the operations
    of our subsidiary Cellular Solutions de M&#233;xico, S.A.
    de&nbsp;C.V., which sold cellular handset accessories. This
    company transferred all its existing inventories as of
    December&nbsp;31, 1998 to another of our subsidiaries and
    terminated all its employees during January and February 1999.
    See Note&nbsp;19 to the Consolidated Financial Statements. Under
    U.S.&nbsp;GAAP, the closing of this subsidiary does not
    constitute a discontinued operation under APB&nbsp;No.30.
    Accordingly, the gain (loss)&nbsp;from discontinued operations
    is recorded as operating income (expense).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">See Note&nbsp;23 to the Consolidated Financial
    Statements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Diluted (loss)&nbsp;profit per share for the
    years ended December&nbsp;31, 1997, 1998, 2000 and 2001 is equal
    to basic (loss) income per share because the potential drawdowns
    and conversions under the subordinated convertible facility with
    Bell Atlantic and the shares outstanding under the executive
    employee stock purchase plan are excluded from the computation
    of diluted (loss) profit per share because to include them would
    have been antidilutive for the periods presented. For the years
    ended December&nbsp;31, 1997 and 1998, the number of potentially
    antidilutive shares that were excluded from the computation of
    diluted (loss) profit per share to account for the drawdowns and
    conversions under the facility with Bell Atlantic were
    214,285,714 and 69,285,714&nbsp;shares, respectively, and for
    the years ended December&nbsp;31, 1997, 1998, 2000 and 2001 for
    the shares outstanding under the executive employee stock
    purchase plan were 6,485,124, 6,485,124, 7,969,894 and
    7,812,5000 respectively.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Diluted (loss)&nbsp;profit per share for the year
    ended December&nbsp;31, 1999 is equal to basic
    (loss)&nbsp;profit per share.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA as used in this Annual Report is operating
    (loss) plus the sum of depreciation and amortization and, in
    1997 under U.S.&nbsp;GAAP the 450&nbsp;project non-cash
    write-down and is presented because we believe that EBITDA
    provides useful information regarding our debt service ability.
    EBITDA should not be considered in isolation or as a substitute
    for our consolidated income statements or the consolidated
    statements of changes in financial position prepared in
    accordance with Mexican GAAP or as a measure of profitability or
    liquidity. EBITDA as presented in this Annual Report (under both
    Mexican GAAP and U.S.&nbsp;GAAP) differs from EBITDA as defined
    in the instruments governing Iusacell and Iusacell
    Celular&#146;s senior notes and Iusacell Celular&#146;s senior
    refinancing secured loan (as described herein). In particular,
    EBITDA in this Annual Report has not been reduced to reflect the
    additional expenses that Iusacell Celular would have incurred
    had it expensed the cost of cellular telephones it gives to its
    postpaid customers rather than amortized such cost over
    12&nbsp;months, in accordance with its current practice under
    Mexican GAAP, as permitted under U.S.&nbsp;GAAP. EBITDA is not
    (i)&nbsp;a measure determined under U.S.&nbsp;GAAP, (ii)&nbsp;an
    alternative to U.S.&nbsp;GAAP operating income (loss) or net
    income (loss), or (iii)&nbsp;a measure of liquidity or cash
    flows as determined under U.S.&nbsp;GAAP. EBITDA does not
    represent discretionary funds. EBITDA, as calculated by us, may
    not be comparable to similarly titled measures reported by other
    companies.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA margin is calculated by dividing EBITDA by
    the total revenues for the respective period.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Capital expenditures include fixed asset
    purchases, capitalized labor costs, the capitalization of
    interest costs related to long-term debt incurred in connection
    with the acquisition of property, plant and equipment, trade-in
    credits received from Lucent Technologies for exchanging our
    previous analog network for a digital and analog network
    supplied by Lucent Technologies and, in some cases, the net
    value of long distance fiber acquired in swaps for Iusacell long
    distance fiber. In 1999 and 2000, pursuant to a waiver from its
    bank lenders, and beginning in 2001, pursuant to the terms of
    its senior refinancing secured loan, Iusacell Celular excluded
    capitalized interest cost from capital expenditures in
    determining its compliance with capital expenditure limitations
    set forth in its debt covenants. For 1998 and 1999, pursuant to
    waivers from its lenders, Iusacell Celular excluded Lucent
    trade-in credits from capital expenditures in determining its
    compliance with the capital expenditures limitations set forth
    in its debt covenants. Beginning in 2001, pursuant to the terms
    of Iusacell Celular&#146;s senior refinancing secured loan, all
    Lucent trade-in credits have been excluded from capital
    expenditures in determining compliance with such debt covenants.
    See Item&nbsp;5, &#147;Operating and Financial Review and
    Prospects&nbsp;&#151; Liquidity and Capital
    Resources&nbsp;&#151; Capital Expenditures.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ratio of earnings to fixed charges covers
    continuing operations. For this purpose, earnings are calculated
    as income or loss before taxes plus (i)&nbsp;integral financing
    cost, including amortization of capitalized interest,
    (ii)&nbsp;the interest portion of annual rent expense and
    (iii)&nbsp;losses from less than 50%-owned affiliates. Fixed
    charges include the expensed and capitalized portions of
    integral financing cost. Earnings were inadequate to cover fixed
    charges in 1997, 1998, 2000 and 2001. The fixed charge coverage
    deficiency for the years ended December&nbsp;31, 1997, 1998,
    2000 and 2001 amounted to Ps.&nbsp;1,517.8&nbsp;million
    (U.S.$165.8&nbsp;million), Ps.&nbsp;2,588.5&nbsp;million
    (U.S.$288.7&nbsp;million), Ps.&nbsp;914.0&nbsp;million
    (U.S.$99.8&nbsp;million) and Ps.&nbsp;279.6&nbsp;million
    (U.S.$30.5), respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Under Mexican GAAP, the cash flow data represents
    changes in financial position and has been adjusted for
    inflation and includes certain non-cash items, such as monetary
    gains and losses and foreign exchange gains and losses and, as a
    result, is not comparable with the respective U.S.&nbsp;GAAP
    cash flow data. Under U.S.&nbsp;GAAP, the effect of inflation
    adjustments has been included in the separate line item
    &#147;Gain on net monetary position and foreign exchange
    losses&#148; in Note&nbsp;23 to the Consolidated Financial
    Statements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Covered POPs is the aggregate number of POPs in
    the geographic regions in which we provide mobile wireless
    services for whom our mobile wireless signal is accessible and
    whom we therefore have the potential to serve. POPs means points
    of presence, or population, for a given area based on census
    data published by Mexico&#146;s National Institute of
    Statistics, Geography and Information Processing <I>(Instituto
    Nacional de Estad&#237;stica, Geograf&#237;a e
    Inform&#225;tica)</I>.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unless otherwise indicated, subscribers refer to
    the total number of mobile wireless customers included in our
    subscriber base in the geographic regions we cover at the end of
    the respective periods. Mobile wireless subscribers for the
    periods presented include cellular subscribers and PCS
    subscribers. In
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">6
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">December 2001, we began providing limited
    commercial PCS services in Monterey and Tijuana. A prepay
    customer is included as a subscriber if, at the end of the
    period, such customer&#146;s telephone number has not yet been
    deactivated. See Item&nbsp;4, &#147;Information on the
    Company&nbsp;&#151; Business Overview&nbsp;&#151; Mobile
    Wireless Services&nbsp;&#151; Prepay Customers.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(15)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Average subscribers represents the rolling
    monthly average number of subscribers for the respective periods.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(16)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Effective January&nbsp;1, 1998, we changed the
    methodology by which we determine average monthly postpaid
    churn. Average monthly postpaid churn for a given period is now
    calculated by dividing the sum of all postpaid subscribers
    disconnected during such period by the sum of the
    beginning-of-month postpaid subscribers for each of the months
    in such period, expressed as a percentage. Average monthly
    postpaid churn for 1997, which was 2.88% under the old
    methodology, has been restated under the new methodology. See
    Item&nbsp;4, &#147;Information on the Company&nbsp;&#151;
    Business Overview&nbsp;&#151; Mobile Wireless
    Services&nbsp;&#151; Postpaid Churn&#148; and Item&nbsp;5,
    &#147;Operating and Financial Review and Prospects&nbsp;&#151;
    Results of Operations.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(17)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Penetration represents the end-of-period
    subscribers divided by the end-of-period population in the
    geographic regions we cover, expressed as a percentage.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(18)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Effective January&nbsp;1, 1998, we changed the
    methodology by which we determine average monthly minutes of use
    (MOUs) per subscriber. Average monthly MOUs per subscriber for a
    given period are now calculated by dividing total MOUs for the
    period by the sum of the monthly average number of subscribers
    for each of the months in such period. Average monthly MOUs per
    subscriber for 1997, which was 98 under the old methodology, has
    been restated under this methodology. Effective January&nbsp;1,
    2000, we again changed the methodology by which we determine
    average monthly MOUs in order to conform to standards applied by
    other Verizon international affiliates. Under the current
    methodology, average monthly MOUs now include minutes of use
    from incoming calls to postpaid customers, which had previously
    been excluded. Both the previous and the current methodologies
    include minutes of use from incoming calls to prepay customers.
    Average monthly MOUs for 1999, which were 77 under the
    methodology effective in 1998 and 1999, have been restated under
    the current methodology. See Item&nbsp;5, &#147;Operating and
    Financial Review and Current Prospects&nbsp;&#151; Results of
    Operations.&#148; When reporting average monthly MOUs per
    subscriber, we exclude &#147;incoming calls only&#148; prepay
    subscribers and the MOUs they generate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(19)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Effective January&nbsp;1, 1998, we changed the
    methodology by which we determine nominal average monthly mobile
    wireless revenue per subscriber (ARPU). ARPU for a given period
    is now calculated by dividing the sum of the monthly revenue and
    other cellular revenues for each of the months in the period by
    the sum of the monthly average mobile wireless subscribers for
    each of the months in such period. ARPU for 1997, which was
    Ps.&nbsp;451 under the old methodology, has been restated under
    this methodology. Effective January&nbsp;1, 2000, we again
    changed the methodology by which we determine ARPU in order to
    conform to standards applied by other Verizon international
    affiliates. Under the current methodology, ARPU now excludes
    revenues generated from the sale of handsets and accessories to
    postpaid customers. Both the previous and the current
    methodologies exclude revenues generated from the sale of
    handsets and accessories to prepay customers. ARPU for 1999,
    which was Ps.&nbsp;346 under the methodology effective in 1998
    and 1999, has been restated under the current methodology. See
    Item&nbsp;5, &#147;Operating and Financial Review and
    Prospects&nbsp;&#151; Results of Operations.&#148; When
    reporting ARPU, we exclude &#147;incoming calls only&#148;
    prepay subscribers and the revenue they generate.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(20)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Through December&nbsp;31, 1999, nominal cost to
    acquire a new subscriber represented sales, marketing and
    advertising costs associated with postpaid plans, plus the costs
    of cellular phones we gave to postpaid customers, for the
    respective period (in nominal pesos) divided by the gross
    postpaid customer additions for such period. Effective
    January&nbsp;1, 2000, we changed the methodology by which we
    determine nominal cost to acquire a new subscriber in order to
    conform to standards used by other Verizon international
    affiliates and more accurately reflect postpaid customer
    acquisition costs. The new methodology includes only handset
    subsidies and sales commissions and excludes allocations of
    advertising and overhead costs. Nominal cost to acquire a new
    subscriber for 1999, which was Ps.&nbsp;3,527 under the old
    methodology, has been restated under the new methodology.
    Nominal cost to acquire a new subscriber for 1997 and 1998 have
    not been restated under the new methodology.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">7
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange
Rates</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for the periods
indicated, the period-end, average, high and low Noon Buying
Rates expressed in nominal pesos per U.S. dollar. The Noon
Buying Rate on June&nbsp;20<B>, </B>2002 was Ps.&nbsp;9.785 per
U.S.$1.00.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Noon Buying Rate(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period End</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 1997
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.410</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.563</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.618</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.972</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended January&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.164</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended February&nbsp;28, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended March&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.064</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended April&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.3750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Month ended May&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.653</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Source:</FONT></I><FONT size="2"> Federal
    Reserve Bank of New York
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Average of month-end rates for annual data.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalization
and Indebtedness</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reasons for
the Offer and Use of Proceeds</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk
Factors</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Risk Factors Relating to
    Iusacell</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We are a holding company and depend on our
    subsidiaries to pay our liabilities.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a holding company with no significant
assets other than the stock of our subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to pay our obligations, we rely on
income from dividends and other cash flow from our subsidiaries.
Because we are a holding company, the claims of all holders of
our subsidiaries&#146; debt rank senior to our obligations. At
December&nbsp;31, 2001, our consolidated subsidiaries&#146;
total indebtedness, including trade notes payable, was
Ps.&nbsp;4,320.9&nbsp;million (U.S.$471.9&nbsp;million) and may
increase in the future. Claims of other creditors of our
subsidiaries will also generally have priority over our
obligations. For a description of some of our obligations and
liabilities, see Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Liquidity.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our current debt agreements prevent our
subsidiaries from paying dividends or making cash available to
us until at least December 2006, except for those payments of
dividends or loans or advances at such times and in such amounts
as shall be necessary to permit Iusacell to pay
(i)&nbsp;scheduled interest (including any tax gross-up) and
principal payments as and when due in respect of our
14&nbsp;1/4% senior notes due 2006, which we refer to as the
Iusacell senior notes, (ii)&nbsp;so long as no event of default
has occurred and is continuing, scheduled interest (including
any tax gross-up) as and when due in respect of any notes issued
to refinance the Iusacell senior notes, and (iii)&nbsp;so long
as no event of default has occurred and is continuing in an
aggregate amount of up to U.S.$5.0&nbsp;million to discharge our
liabilities incurred in the ordinary course of business. In
addition, substantially all of our subsidiaries&#146; assets are
pledged to secure their obligations under their existing debt
instruments. Dividends and cash flow from our subsidiaries are
therefore severely restricted by the terms of the outstanding
debt of our subsidiaries and the restrictive covenants that
govern the debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to pay our obligations before
December 2006 will depend on our ability to raise either equity
or debt and our subsidiaries&#146; ability to generate
sufficient cash flow to make dividend payments to us in
compliance with their applicable restrictive covenants. After
December 2006, our ability to pay our liabilities will depend on
our ability to generate sufficient cash flow and/or to access
equity or debt financing. We cannot assure you that we will be
able to raise equity or debt or that our subsidiaries will
generate sufficient cash flow to pay dividends to enable us to
pay our obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Furthermore, the ability of our subsidiaries to
pay dividends is subject to Mexican legal requirements, which in
general terms provide that a Mexican corporation may declare and
pay dividends only out of the profits reflected in its year-end
financial statements, if such payment is approved by its
stockholders and after the creation of required legal reserves
and the absorption or satisfaction of losses suffered in
previous fiscal years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, in the event we engage in business
activities at the holding company level and incur associated
liabilities, or otherwise incur liabilities at the holding
company level, we may not have the resources available to
satisfy those liabilities for the reasons discussed above. In
the event that we incur such liabilities, we could be required
to turn to the capital markets or to our principal shareholders
to help us satisfy those liabilities. At that time, we may not
have access to equity or debt financing. In addition, our
principal shareholders are under no obligation to provide
financial resources to us, and there can be no assurance that
they would do so. A material unsatisfied liability at the
holding company level could lead us to bankruptcy or
reorganization or otherwise make it difficult or impossible for
us to comply with our obligations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We may be unable to service our debt, access
    credit or pursue business opportunities because our subsidiaries
    are highly leveraged and have insufficient cash flow.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, our cash generated from operating
activities has not been sufficient to meet our debt service,
working capital and capital expenditure requirements. We have
relied on the capital markets for new equity and debt financing,
vendor financing, borrowings and equity contributions from our
principal shareholders to meet such funding needs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, our total
consolidated indebtedness, including trade notes payable, was
Ps.&nbsp;7,601.8&nbsp;million (U.S.$830.3&nbsp;million), or
approximately 51.5% of our total capitalization.
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the years ended December&nbsp;31, 2000 and
December&nbsp;31, 2001, our earnings were insufficient to cover
our fixed charges by Ps.&nbsp;914.0&nbsp;million (U.S.$99.8
million) and Ps.&nbsp;279.6&nbsp;million (U.S.$30.5),
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The degree to which we are leveraged and the
covenants with which we must comply under our various financing
agreements may adversely affect our ability to finance future
operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better
capitalized competitors and to withstand downturns in our
business or the Mexican economy generally. Our high level of
indebtedness could limit our ability to pursue business
opportunities that may be in our interest and that of holders of
our securities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We are subject to restrictive
    covenants.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terms of our and our subsidiaries&#146; debt
impose significant operating and financial restrictions. These
restrictions will affect, and in many respects significantly
limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">borrow money;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends on stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make capital expenditures and other investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use assets as security in other transactions; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell certain assets or merge with or into other
    companies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we do not comply with these restrictions, we
could be in default even if we can currently pay our debt. In
addition, under our senior refinancing secured loan, we are
required to remain in compliance with certain financial ratios,
and the failure to do so could result in a default under the
facility. In the event of a default under any of our debt which
remains uncured after any applicable grace period, holders of
the relevant debt could demand immediate payment of the
aggregate amount of that debt. Furthermore, this could trigger a
default under certain of our other debt agreements which may
entitle the holders of such debt to accelerate that debt as
well. We may not be able to make such payments. This could lead
to a <I>concurso mercantil</I>, a two-stage procedure under
Mexican law commencing with negotiations with our creditors and,
if such negotiations fail to reach an agreement, we would be
declared bankrupt.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We may lose money because of devaluation or
    fluctuation of the peso relative to the U.S. dollar.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While our sales are almost entirely denominated
in pesos, the vast majority of our obligations, and all of our
long-term debt, are denominated in U.S. dollars. As a result,
except for those obligations for which we have hedging
arrangements in place, we are exposed to the risk of devaluation
of the peso relative to the U.S. dollar. The peso appreciated by
4.8% relative to the U.S. dollar during 2001, remained almost
flat during 2000 and appreciated 4.3% against the U.S. dollar in
1999. However, in the past, the peso has depreciated
substantially against the U.S. dollar and may depreciate
significantly in the future. For example, in 1998, the value of
the peso depreciated 22.7% relative to the U.S. dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Declines in the value of the peso relative to the
U.S. dollar could adversely affect our ability to meet U.S.
dollar-denominated obligations, including those under our debt
securities. In addition, any devaluation of the peso may
negatively affect the value of the securities of a Mexican
company with sales in pesos and debt denominated in U.S.
dollars, such as our company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We face increasing competition which may
    reduce our operating margins.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We face significant competition in our core
mobile wireless services business from Radiom&#243;vil Dipsa,
S.A. de C.V., commonly known as Telcel, in each region in which
we operate. As a subsidiary of Am&#233;rica M&#243;vil, S.A. de
C.V., a company spun off from Tel&#233;fonos de M&#233;xico,
S.A. de C.V., the former state telephone monopoly known as
Telmex, Telcel has significantly greater internal financial and
other resources than those available to us, nationwide cellular
and personal communications services (PCS) concessions, a
nationwide cellular network and the ability to use Telmex&#146;s
installed telecommunications systems. Competition in the Mexican
wireless industry is substantial and we, like Telcel, bear
significant promotional expenses, including the cost of
providing cellular telephones to postpaid subscribers free of
charge or at a substantial discount. In
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<DIV align="left">
<FONT size="2">addition, competition from Telcel has not always
allowed us to implement price increases to keep pace with
inflation and has occasionally caused us to implement price
rollbacks and reductions. We also face competition from Pegaso
Comunicaciones y Sistemas, S.A. de C.V., which we refer to as
Pegaso, a consortium which includes Leap Communications
International, Inc. (&#147;Leap&#148;), Sprint PCS and a group
of Mexican investors, and from Servicios Profesionales de
Comunicaci&#243;n, S.A. de C.V., which we refer to as
Unef&#243;n, an affiliate of TV Azteca, S.A. de C.V. and
Elektra, S.A. de C.V. Telef&#243;nica M&#243;viles, S.A.
(&#147;Telef&#243;nica&#148;), a Spanish telecommunications
service provider, recently announced that it entered into an
agreement to acquire a 65% stake in Pegaso, including the
interests held by Leap and Sprint PCS. Both these service
providers own concessions in all nine wireless service regions
in Mexico and have begun to provide service in Mexico&#146;s
principal cities.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also face increasing competition from Nextel
de M&#233;xico, S.A. de C.V., a provider of enhanced specialized
mobile radio services and satellite telephony.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, we face increasing competition in
providing long distance, paging, wireless local telephony and
data transmission services. The Mexican government may grant
additional concessions to other companies to provide services
similar to or the same as those that we provide.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Besides Telcel and Telef&#243;nica, some other
competitors may also have greater financial and other resources,
which may limit our ability to compete effectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">If we do not obtain significant capital from
    outside sources, we will have to defer the building of our
    wireless infrastructure and our pursuit of long distance and
    data opportunities and may lose the opportunity to generate
    revenues.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to implement our operating strategy
through 2004, we will have to incur significant capital
expenditures. We expect our aggregate capital expenditures for
2002, 2003 and 2004, not including capitalized interest, to
total approximately U.S.$600.0&nbsp;million. We anticipate that
approximately U.S.$250.0&nbsp;million of such capital
expenditures will be invested during 2002, including capital
expenditures to build out our PCS network in Regions&nbsp;1 and
4 in northern Mexico (where we acquired concessions to provide
PCS services in 1998) and to increase the quality and coverage
of our cellular network in Region&nbsp;8 in southern Mexico. We
expect capital expenditures to build out our PCS network in
northern Mexico and to increase the quality and coverage of our
cellular network in southern Mexico not to exceed
U.S.$100.0&nbsp;million and U.S.$17.0&nbsp;million in the
aggregate in 2002 and 2003, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will need additional external funding in 2002
in order to acquire, build out and operate our PCS network in
northern Mexico. As we make additional investments in our
cellular network and pursue long distance and data
opportunities, we will also need additional external funding in
2003 and beyond. The terms of our PCS concession require us to
expand our network to cover specified portions of the population
of our service regions within certain time periods. The terms of
our concessions may, in the future, require us to make other
significant network investments for which additional funds would
be required. Furthermore, the investments required to keep pace
with technological change, such as third-generation wireless
telecommunication equipment, will require additional capital
resources. We cannot assure you that we will be able to obtain
such additional funds, including funds from either of our
principal shareholders, the capital markets or bank or vendor
financing, on acceptable terms or at all.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Factors over which we have limited or no
    control could impair our ability to implement new services and
    maintain our existing services and, as a result, we may lose
    business to our competitors.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to extend the implementation of our
wireless cellular and PCS services and to expand our long
distance and data services in accordance with our strategic plan
will depend on a number of factors over which we have limited or
no control. These factors include, among others, our ability to
acquire or renew concessions for spectrum at commercially
acceptable prices, raise sufficient capital, obtain required
governmental approvals, negotiate reasonable interconnection
agreements, obtain rights of way for fiber optic cables,
successfully deploy technologies, secure leases and permits for
cell sites, hire and retain additional qualified personnel and
develop an adequate customer base. Any of these factors could
delay, impede or reduce the
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<DIV align="left">
<FONT size="2">scope of the implementation of new services and
have a material adverse effect on our existing business,
financial condition and results of operations.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">The technology we use may be made obsolete by
    the technology used by our competitors.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All companies in the global telecommunications
industry must adapt to rapid and significant changes in
technology. The technology that we have selected in our wireless
business may be challenged by competition from new or improved
digital technologies supporting wireless service or other
services in the near future. Technological changes may adversely
affect our competitive position, require substantial new capital
expenditures and/or require write-downs of obsolete technology.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">We may not have enough management resources to
    be able to expand our business in accordance with our
    plans.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We plan to continue to access additional
opportunities in the wireless business in Mexico. In May 1998,
we won auctions for concessions for a range of frequencies in
the 1.9 GHz band to provide PCS services in Regions&nbsp;1 and 4
in northern Mexico. In December 2001, we launched commercial PCS
services in Tijuana and Monterrey, the two major cities in those
regions. In February 2002, we completed the acquisition of a
100% ownership interest in Grupo Portatel, S.A. de C.V. and its
subsidiaries, which we refer to collectively as Portatel.
Portatel holds the Cellular A-Band concession and provides
cellular services in Region&nbsp;8 in southern Mexico. We will
have to devote substantial management resources to take
advantage of these new opportunities and business ventures. In
so doing, we will have to attract and retain qualified
management personnel to keep pace with our rate of growth. If we
are unable to attract and retain qualified management personnel,
our existing business, financial condition and results of
operations could be harmed.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Our strategy to expand our wireless footprint
    in Mexico leads us to consider significant acquisitions from
    time to time that may adversely affect our business, financial
    condition and results of operations.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">One of our business strategies is to provide our
customers with access to reliable and high-quality wireless
service throughout Mexico. Providing access in regions where we
do not own concessions through roaming agreements with other
operators does not afford us optimal control over the coverage,
quality and pricing of our service. As a result, from time to
time we explore possibilities of expanding our wireless
footprint in Mexico. For example, we recently acquired Portatel.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although we believe that transactions such as
acquisitions or joint ventures would significantly strengthen
our competitive position, at the same time they pose a number of
risks and uncertainties for us and for the holders of our
securities. These risks include the possibility that such
acquisitions or joint ventures could involve (i)&nbsp;additional
debt or other liabilities, or the acquisition of operational,
financial, legal, labor or other liabilities, risks or financial
needs, which we may not discover until after the acquisition or
joint venture has been consummated and (ii)&nbsp;an increase in
our capital expenditure requirements. Any of these risks could
result in a material adverse change in our financial condition
and/or ability to service debt. In addition, any acquisition
made with our shares could be dilutive to our shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because we cannot foresee all of the risks that
one or more of these acquisitions might involve, should they
occur, it is not possible for us to describe all these risks. As
a result, holders of our securities must be prepared to accept
any deterioration in our prospects, business, financial
condition, results of operations or cash flow stemming from one
or more of these acquisitions.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Mobile wireless fraud increases our
    expenses.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fraudulent use of mobile wireless
telecommunications networks imposes a significant cost upon
mobile wireless service providers who must bear the cost of
services provided to fraudulent users. We suffer losses of
revenue as a result of fraudulent use and also incur cash costs
due to our obligation to reimburse carriers for the cost of
services provided to some fraudulent users. These cash costs
approximated Ps.&nbsp;39.5&nbsp;million (U.S.$4.3&nbsp;million)
and Ps.&nbsp;42.8&nbsp;million (U.S.$4.7&nbsp;million) in 2000
and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although technology has been developed to combat
the fraudulent use of telecommunications networks, this
technology does not eliminate fraudulent use entirely. We must
make expenditures periodically to acquire and use anti-fraud
technology. In 1998, we spent Ps.&nbsp;39.9&nbsp;million
(U.S.$4.4&nbsp;million) to acquire anti-fraud technology and
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<FONT size="2">to cover other costs related to fraud detection
and prevention. In 1999, 2000 and 2001, we incurred minimal
expenses for these purposes. However, we cannot assure you that
the anti-fraud technology that we have purchased will continue
to be effective in detecting and preventing fraud. If our
anti-fraud technology becomes obsolete, we will need again to
make expenditures to acquire and use new anti-fraud technology.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">A significant portion of our accounts
    receivable is represented by a small number of
    distributors.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, our three largest distributors accounted
for 44% and 24% of our net trade accounts receivable as of
December&nbsp;31, 2001 and 2000, respectively. We have
established certain measures to reduce the risk associated with
this concentration, such as certain guarantees and liens.
Although we believe that this distributor concentration will be
reduced over time as the size of our operations grow, our
results of operations could be negatively affected, at least in
the short-term, if any payment defaults occur with respect to
these distributors.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk Factors
Relating to Our Shareholders</FONT></I></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">If Verizon sold all or a substantial part of
    its interest in us, that sale could result in Verizon no longer
    managing our operations, in which case we would have to make an
    offer to repurchase a substantial majority of our debt
    securities.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Verizon currently has the right and power to
elect a majority of the members of our Board of Directors and,
with certain exceptions, unilaterally determine our policies and
strategy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Verizon were to sell all or a substantial part
of its direct interest in Iusacell, the sale would cause Verizon
to lose its ability to manage us. Verizon would then no longer
be in a position to determine our policies and strategies,
manage our operations or provide the technical and financial
support that we have historically relied on. It is not possible
for us to describe the strategy that Iusacell would implement
following any such management change.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, any substantial sale by Verizon
would constitute a change of control under Iusacell and Iusacell
Celular debt instruments relating to up to approximately
U.S.$765.6&nbsp;million of indebtedness. In the event of any
such change of control, Iusacell or Iusacell Celular, as the
case may be, would have to make an offer to repurchase that
indebtedness. We cannot assure you that either Iusacell or
Iusacell Celular, or both, would have sufficient funds or have
the ability to obtain sufficient funds on a timely basis to pay
for any or all of the indebtedness that we may have to
repurchase if that happened.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">We rely on Verizon and Vodafone personnel; if
    either Verizon or Vodafone recalled them, we would have fewer
    qualified employees.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our President and Director General, Chief
Financial Officer, Vice President, Technical Operations, Vice
President, Sales, and Vice President, Long Distance and Data,
are employees of Verizon, and our Senior Vice President,
Marketing, is an employee of Vodafone Group Plc, which we refer
to as Vodafone. The services of each such employee are provided
to us on a secondment basis. We also use the services of a
number of Verizon and Vodafone employees on a consulting basis,
primarily in the areas of network operations, information
systems, strategic planning, marketing and customer care
operations. So long as Verizon controls Iusacell and Vodafone
holds a significant equity interest in Iusacell, we expect these
or other seconded employees and consultants to continue to
provide services to us. If Verizon and Vodafone did not make
these employees available to us, our results of operations and
financial condition could be materially adversely affected.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk Factors
Relating to Doing Business in Mexico</FONT></I></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">The Mexican government may impose additional
    conditions on our concessions or may take them away.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide our services pursuant to concessions
granted by the Mexican government. Our activities are subject to
significant government regulation and supervision. The
concessions may be subject to additional conditions or may not
be renewed when they expire. The Mexican government also
reserves the right to revoke, temporarily seize or expropriate
concessions or assets related to a concession for reasons, among
others, of public interest or order such as war, national
disaster or significant public disturbances. Moreover, the
Mexican government may grant additional concessions to potential
competitors to provide services similar to those that we
provide. Any of these developments or other government action
could harm the value of Iusacell&#146;s concessions and our
financial condition and results of operations.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Our financial statements may not give you the
    same information as financial statements prepared under U.S.
    generally accepted accounting principles.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexican companies listed on the Mexican Stock
Exchange, including Iusacell, must prepare their financial
statements in accordance with Mexican GAAP. Mexican GAAP differs
in certain significant respects from U.S. GAAP, including, but
not limited to, the treatment of minority interest, purchase
accounting, deferred income taxes, capitalization of
pre-operating costs, derivatives financial instruments, gains
from the exchange of non-monetary assets, the provisioning for
the consolidation of facilities and sale-leaseback transactions.
In particular, all such Mexican companies must incorporate the
effects of inflation directly in their accounting records and in
published financial statements. The effects of inflation
accounting under Mexican GAAP are not eliminated in the
reconciliation to U.S. GAAP, as these inflation-adjusted figures
are considered a more meaningful presentation than historical
cost-based financial reporting for both Mexican and U.S.
accounting purposes. For this and other reasons, the
presentation of Mexican financial statements and reported
earnings may differ from that of companies in other countries.
See Note&nbsp;23 to our Consolidated Financial Statements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">If Mexico experiences political and economic
    crises, we may lose money.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a Mexican company, and all of our
operations are in Mexico. Accordingly, the political and
economic environment in Mexico has a significant impact on our
financial condition and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican government has exercised, and
continues to exercise, significant influence over the Mexican
economy. Mexican governmental actions concerning the economy and
state-owned enterprises could have a significant impact on
Mexican private sector entities in general and on us in
particular, and on market conditions, prices and returns on
Mexican securities, including our securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2000, Mexico held national elections,
which were won by Vicente Fox Quezada, the candidate of the
National Action Party (<I>Partido Acci&#243;n Nacional</I>).
This represents the first time that a party other than the
Institutional Revolutionary Party (<I>Partido Revolucionario
Institucional</I>) has won the Presidency in more than
70&nbsp;years. In addition, no single party currently has a
majority in the National Congress. We cannot predict the impact
that this change in administration will have on the Mexican
economy in the years to come.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past, Mexico has experienced economic
crises, caused by internal and external factors, characterized
by exchange rate instability, high inflation, high domestic
interest rates, economic contraction, a reduction of
international capital flows, a reduction of liquidity in the
banking sector and high unemployment. These economic conditions
substantially reduced the purchasing power of the Mexican
population and, as a result, the demand for telephony services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crises such as these could harm our financial
condition and results of operations and the market value of our
securities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">If the Mexican government imposes exchange
    controls, we may not be able to purchase imported goods or make
    dividend, principal and interest payments in U.S.
    dollars.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past, the Mexican economy has experienced
balance of payment deficits and shortages in foreign exchange
reserves. While the Mexican government does not currently
restrict the ability of Mexican or foreign persons or entities
to convert pesos to foreign currencies generally, and U.S.
dollars in particular, it has done so in the past and could do
so again in the future. We cannot assure you that the Mexican
government will not institute a restrictive exchange control
policy in the future. Any such restrictive exchange control
policy could prevent or restrict access to U.S. dollars or other
foreign currencies to purchase imported goods and to meet our
U.S. dollar obligations, such as the payment of dividends or
principal and interest under any debt securities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Payment of judgments entered against us will
    be in pesos, which may expose holders of our debt securities to
    exchange rate risks.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a proceeding to enforce our obligations under
any debt securities is brought in Mexico, Mexican law permits us
to pay a resulting judgment in pesos. Under the Mexican Monetary
Law, an obligation payable in
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left">
<FONT size="2">Mexico in a currency other than pesos may be
satisfied in pesos at the exchange rate in effect on the date
when payment is made.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a Mexican court declares us to be in
<I>concurso mercantil,</I> our obligations under any debt
securities:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">would be converted into pesos at the exchange
    rate prevailing at the time of the court&#146;s declaration of
    <I>concurso mercantil </I>and then to <I>unidades de
    inversi&#243;n</I> (UDIs) which are denominated in pesos and
    adjusted periodically for inflation by Banco de M&#233;xico, and
    payment would occur at the time claims of the court-recognized
    creditors are satisfied subject to the priority established by
    law; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">would not be otherwise adjusted to take into
    account devaluation of the peso against the U.S. dollar
    occurring after the court&#146;s declaration.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">The 10% tax on telecommunications services
    approved by the Mexican Congress may adversely affect the
    ability of wireless companies, including Iusacell, to add new
    postpaid customers.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2002, the Mexican Congress
approved a surcharge that assesses an additional 10% federal
excise tax on certain wireless telecommunications services. In
February 2002, we filed an injunctive action (<I>amparo</I>)
challenging the Mexican government&#146;s implementation of the
tax. According to local media reports and government statements,
several other members of the industry have initiated similar
proceedings. The tax has resulted in a 10% increase in the
monthly bills of postpaid mobile wireless customers and in the
cost of prepay cards in denominations of Ps.200 or more.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">High inflation rates in Mexico may decrease
    demand for our services while increasing our costs.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In recent years, Mexico has experienced high
levels of inflation. The annual rate of inflation, as measured
by the Mexican National Consumer Price Index, was 12.3%, 9.0%,
4.4% and 1.4% in 1999, 2000, 2001 and the three-month period
ended March&nbsp;31, 2002, respectively. High inflation rates
can adversely affect our business and results of operations in
the following ways:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Inflation can adversely affect consumer
    purchasing power, thereby adversely affecting consumer demand
    for our services and products; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To the extent inflation exceeds our price
    increases, our prices and revenues will be adversely affected in
    &#147;real&#148; terms.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">High interest rates in Mexico could increase
    our financing costs</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico has, and is expected to continue to have,
high real and nominal interest rates. The interest rates on
28-day Mexican government treasury securities averaged 21.4%,
15.2%, 11.3% and 7.4% for 1999, 2000, 2001 and the three month
period ended March&nbsp;31, 2002, respectively. Accordingly, if
we need to incur peso-denominated debt in the future, it will
likely be at high interest rates.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Risk
Factors</FONT></I></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">The terrorist attacks in the United States
    adversely affected the price and liquidity of our shares and our
    ADSs.</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the terrorist attacks in the United
States on September&nbsp;11, 2001, there has been substantial
volatility in the international equity markets. The attacks have
also affected the price of our series V shares on the Mexican
Stock Exchange and our series&nbsp;V share American depositary
shares, which we refer to as ADSs, on the New York Stock
Exchange. Any future terrorist attacks or the anticipation of
any such actions may have a further adverse impact on the U.S.
and world economies and thus on demand for our services and on
the liquidity and price of our shares and ADSs in the secondary
market.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<!-- link2 "ITEM 4. INFORMATION ON THE COMPANY" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM
4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INFORMATION ON THE
COMPANY</FONT></B>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;History and
Development of the Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Grupo Iusacell, S.A. de C.V., which was known as
Nuevo Grupo Iusacell, S.A. de C.V. until February&nbsp;29, 2000,
is a <I>sociedad an&#243;nima de capital variable </I>with
indefinite life organized under the laws of Mexico on
August&nbsp;6, 1998. Iusacell was formed for the purpose of
acquiring and holding the shares of Grupo Iusacell Celular, S.A.
de C.V., which was known as Grupo Iusacell, S.A. de C.V. until
February&nbsp;29, 2000, a <I>sociedad an&#243;nima de capital
variable</I> with indefinite life organized under the laws of
Mexico on October&nbsp;6, 1992.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s commercial name is &#147;Grupo
Iusacell,&#148; but our operating subsidiaries market their
products under the single <I>Iusacell Digital</I><SUP>TM</SUP>
brand name. Iusacell currently operates entirely in Mexico under
Mexican legislation, although our participation in the U.S.
capital markets makes us also subject to certain securities laws
of the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular was formed in 1992 to hold the
principal telecommunications interests of the Peralta Group,
which primarily comprises securities and entities controlled by
Mr.&nbsp;Carlos Peralta. Iusacell Celular&#146;s subsidiaries
are primarily engaged in the wireless telecommunications
business and hold concessions to operate cellular telephone
systems in five contiguous market regions in central and
southern Mexico. Mexico is divided into nine geographic regions
for the provision of mobile wireless service. Iusacell Celular
was granted an authorization to provide cellular service in
Region&nbsp;9 (which includes Mexico City) in 1989 and, in a
series of transactions from 1990 to 2002, purchased the
companies holding concessions to provide cellular service in
Region&nbsp;5 (which includes the city of Guadalajara),
Region&nbsp;6 (which includes the city of Le&#243;n),
Region&nbsp;7 (which includes the city of Puebla) and
Region&nbsp;8 (which includes the cities of Canc&#250;n and
M&#233;rida). In October 1995, a Iusacell Celular subsidiary
received a concession to provide long distance service and began
providing such service in August 1996. Also in August 1996, we
began to provide paging services through a joint venture between
Iusacell Celular and a third party concessionaire.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1998, a separate subsidiary of Iusacell
acquired in an auction concessions for frequencies to provide
PCS services in Region&nbsp;1 (which includes the city of
Tijuana) and Region&nbsp;4 (which includes the city of
Monterrey) in northern Mexico for approximately
Ps.493.2&nbsp;million (in nominal terms)
(U.S.$49.8&nbsp;million, using the applicable exchange rate as
of the date of the purchase). Iusacell started to offer
commercial services in those two cities in December 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1993 and August 1994, Bell Atlantic
acquired a 42.0% equity interest in Iusacell Celular for
U.S.$1.04&nbsp;billion. In June 1994, Iusacell Celular completed
an initial public offering of two of its four series of ordinary
shares and of American depositary shares representing two series
of its shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 1997, Bell Atlantic assumed
management control of Iusacell Celular. This change of control
was implemented when Bell Atlantic and the Peralta Group
effected certain conversions of shares from one series into
another that gave Bell Atlantic a majority of the Iusacell
Celular series A shares and control over the Iusacell Celular
Board of Directors. All these conversions were effected on a
one-for-one basis. In August 1997, Bell Atlantic acquired NYNEX
Corporation in a merger of equals to form the new Bell Atlantic.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1997, in order to focus exclusively
on its core Mexican market, Iusacell Celular sold its direct and
indirect interests in Ecuadorian cellular and paging companies
for approximately U.S.$31.4&nbsp;million, net of taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1997, Iusacell Celular entered into
an agreement with subsidiaries of Lucent Technologies, Inc.
pursuant to which Iusacell Celular agreed (i)&nbsp;to replace
its existing analog wireless cellular network with a new Lucent
Technologies digital and analog network for a minimum
consideration of U.S.$188.0&nbsp;million which was completed in
August 1999 and (ii)&nbsp;to continue acquiring network
equipment and services under the agreement in order to improve
its digital and analog network. Through December&nbsp;31, 2001,
Iusacell Celular has purchased approximately
U.S.$409.9&nbsp;million of network equipment and services under
this agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;6, 1999, Iusacell launched an offer
to exchange two classes of Iusacell voting ordinary shares for
the four classes of Iusacell Celular ordinary shares then
outstanding on a one-for-one basis. We completed this offer on
August&nbsp;10, 1999 and, as a result, Iusacell acquired 99.5%
of the outstanding Iusacell Celular shares.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<DIV align="left">
<FONT size="2">On January&nbsp;31, 2000, Iusacell launched a
second exchange offer for the purpose of exchanging American
depositary shares representing Iusacell&#146;s series&nbsp;V
shares for the balance of American depositary shares
representing Iusacell Celular&#146;s series&nbsp;D and series L
shares on a one-for-one basis. We completed this offer on
February&nbsp;29, 2000 and, as a result, Iusacell held 99.9% of
the outstanding Iusacell Celular shares. In May 2001, Iusacell
Celular effected a reverse stock split of 1 new Iusacell Celular
share for every 30,000 old Iusacell Celular shares. As a result
of this reverse split, Iusacell now holds 100% of the capital
stock of Iusacell Celular.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, as a first step toward
minimizing its involvement in real estate management and tower
maintenance, Iusacell Celular entered into an agreement with
MATC Celular S. de R.L. de C.V., the Mexican subsidiary of
American Tower Corporation, which we refer to as MATC Celular,
pursuant to which MATC Celular could acquire the majority of
towers owned and/or operated by Iusacell Celular. In return,
Iusacell Arrendadora S.A. de C.V., a subsidiary of Iusacell,
would lease space on those towers and sublease it to the
operating subsidiaries of Iusacell Celular. Iusacell Celular
sold approximately 244 towers to MATC Celular in 2001, and an
additional 25 towers in May 2002. We expect to sell up to 61
additional towers to MATC Celular in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2000, Bell Atlantic acquired GTE
Corporation, one of the world&#146;s largest telecommunications
companies, in a merger of equals, renaming itself as Verizon
Communications Inc. The subsidiaries which directly hold
Iusacell capital stock remained unchanged. In April 2001,
Vodafone acquired the Peralta Group&#146;s 34.5% equity interest
in Iusacell for U.S.$973.4&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Over our last three full fiscal years, excluding
the effects of inflation accounting, capitalized interest and
certain non-cash trade-in credits, we have invested
approximately U.S.$575.4&nbsp;million in capital expenditures,
primarily for our cellular communications network, long distance
network and billing, customer care and administrative systems.
See Item&nbsp;5, &#147;Operating and Financial Review and
Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Capital Expenditures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;19, 2001, we completed the
acquisition of a 78.3% ownership interest in Portatel for
Ps.&nbsp;522.5&nbsp;million (U.S.$57.1&nbsp;million). We reached
an agreement to acquire the remaining 21.7% ownership in
Portatel for Ps.&nbsp;148.1 million (U.S.$16.2&nbsp;million) and
closed the acquisition of this remaining ownership interest on
February&nbsp;8, 2002. Portatel is engaged in the wireless
communications business and holds the concession to provide
cellular services in Region&nbsp;8, which covers the states of
Yucatan, Campeche, Quintana Roo, Chiapas and Tabasco in southern
Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, we plan to invest at least
U.S.$150.0&nbsp;million in capital expenditures, not including
capitalized interest, to increase the coverage and improve the
quality of and enhance the features available through our
cellular and long distance networks, and to improve our billing
and customer care systems. In addition, subject to obtaining
financing, we plan to spend approximately U.S.$79.0&nbsp;million
in 2002 to complete the build-out of our PCS networks and
continue the deployment of non-network PCS infrastructure in
Regions&nbsp;1 and 4 in northern Mexico. Additionally, we plan
to spend approximately U.S.$21.0&nbsp;million in 2002 to expand
the coverage and increase the quality of our cellular network in
Region 8 in southern Mexico. All of this capital equipment will
be deployed in Mexico. We expect to finance our 2002 capital
expenditure plan through funds from our operations, vendor and
project financing, the capital markets and the net proceeds from
the sale of our cellular towers to MATC Celular. See
Item&nbsp;5, &#147;Operating and Financial Review and
Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Capital Expenditures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive offices are located at
Prolongaci&#243;n Paseo de la Reforma 1236, Colonia Santa Fe,
Delegaci&#243;n Cuajimalpa, 05348, Mexico, D.F. Our telephone
number is (5255)&nbsp;5109-4400. Our agent in the United States
is Puglisi&nbsp;&#38; Associates, 850&nbsp;Library Avenue,
Suite&nbsp;204, P.O.&nbsp;Box 885, Newark, Delaware 19715. Our
internet website address is http://www.iusacell.com.mx. The
information on our website is not incorporated into this
document.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business
Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a leading wireless telecommunications
services provider in Mexico with nearly 1.9&nbsp;million mobile
wireless customers at December&nbsp;31, 2001. We hold and
operate concessions in the 800 megahertz (MHz) band to provide
cellular wireless services in five contiguous geographic regions
comprising all of central and
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">southern Mexico, and in the 1900&nbsp;MHz band to
provide PCS wireless services in two of the four regions in
northern Mexico. Our service regions include Mexico City, one of
the world&#146;s most populous cities, and the cities of
Monterrey, Tijuana, Guadalajara, Le&#243;n, Puebla, Canc&#250;n
and M&#233;rida, and combined represent approximately
90&nbsp;million points of presence (POPs) comprising 90% of
Mexico&#146;s total population.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since February 1997, Iusacell has been under the
management control of subsidiaries of Bell Atlantic (now
Verizon). From late 1993 through February 1997, Bell Atlantic
participated substantially in the financial and technological
operations of Iusacell. Since Bell Atlantic assumed control of
our Board of Directors and management, Bell Atlantic (now
Verizon) personnel seconded to Iusacell and Bell Atlantic (now
Verizon) consultants have been integrally involved in managing
our day-to-day operations and defining and implementing our
long-term strategy. Through December&nbsp;31, 2001, Bell
Atlantic has invested approximately U.S.$1.3&nbsp;billion for
its current 39.4% economic and voting interest in Iusacell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since Bell Atlantic took control of
Iusacell&#146;s management, our subscriber base has grown from
approximately 245,000 subscribers in February 1997 to 1,855,166
subscribers as of December&nbsp;31, 2001. Of these subscribers,
as of December&nbsp;31, 2001, 404,075 were postpaid customers
who purchase cellular services pursuant to fixed-term contracts,
and the remaining 1,451,091 were customers who pay for their
cellular services in advance primarily through the purchase of
prepay calling cards. As of December&nbsp;31, 2001,
approximately 768,000 of these prepay customers were
&#147;incoming calls only&#148; customers who are only able to
receive incoming calls and not to make outgoing calls. These
customers generate little or no revenue. Iusacell&#146;s
postpaid and prepay subscribers who can both make outgoing calls
and receive incoming calls had an average monthly cellular
revenue per subscriber (ARPU)&nbsp;during 2001 of Ps.&nbsp;370.0
(approximately U.S.$40.0), with prepay subscribers in this group
having an ARPU of Ps.&nbsp;146.0 (approximately U.S.$16.0)
during 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1998, we launched digital service using
Code Division Multiple Access (CDMA)&nbsp;technology, the
highest-capacity commercial digital technology available, in the
800 MHz frequency band in the Mexico City area. Since August
1999, we have offered digital coverage and services in almost
all areas where we provide mobile wireless services. In addition
to our core mobile wireless services, we also provide a wide
range of other telecommunications services, including long
distance, paging, wireless local telephony and data transmission
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The management team at Iusacell is able to draw
extensively upon Verizon&#146;s expertise in the development and
implementation of our operating strategy. Fares F. Salloum,
Iusacell&#146;s Chairman of the Board, has 29&nbsp;years of
global telecommunications experience. In addition,
Mr.&nbsp;Salloum is currently responsible for Verizon&#146;s
international wireline and wireless operations in the western
hemisphere, including Telus Corporation (Telus) in Canada,
Codetel, C. por A. (Codetel) in the Dominican Republic,
Compa&#241;&#237;a An&#243;nima Nacional Tel&#233;fonos de
Venezuela (CANTV)&nbsp;in Venezuela, Telecomunicaciones de
Puerto Rico Inc. (TELPRI)&nbsp;in Puerto Rico and CTI Holdings,
S.A. (CTI)&nbsp;in Argentina. Iusacell&#146;s President and
Director General, Peter H. Burrowes, has nine years of
telecommunications experience, having served as President and
Chief Executive Officer of Comunicaci&#243;n Celular, S.A.
(Comcel), a cellular service provider in Colombia, for nearly
eight years prior to joining Iusacell in April 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The management team is supported by an
experienced group of Mexican executives and other personnel from
Verizon and Vodafone.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Verizon</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Verizon is one of the largest telecommunications
companies in the world, with extensive participation in and
knowledge of the wireless telecommunications business. In August
1997, Bell Atlantic and NYNEX Corporation, two of the original
seven regional Bell operating companies formed as a result of
the break-up of AT&#38;T in 1984, and completed their merger of
equals to form the new Bell Atlantic. On June&nbsp;30, 2000, the
new Bell Atlantic and GTE Corporation consummated a merger of
equals, in which GTE shareholders received 1.22 shares of Bell
Atlantic common stock for each GTE share they owned, and Bell
Atlantic renamed itself Verizon. Verizon had operating revenues
and net income of approximately U.S.$67.2&nbsp;billion and
U.S.$389&nbsp;million, respectively, for the fiscal year ended
December&nbsp;31, 2001, and total assets of approximately
U.S.$170.8&nbsp;billion at such date.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, Verizon provides local
exchange telephone service in 31 states and the District of
Columbia, reaching 33&nbsp;million households, utilizing nearly
132&nbsp;million access lines and employing more than 261,000
people. Verizon Wireless, a partnership between Verizon (which
owns 55%) and Vodafone (which owns 45%) established in April
2000, is the largest wireless operator in the United States,
with more than 29&nbsp;million subscribers. Verizon Wireless has
a presence in 49 states and the District of Columbia, and it
covers 232&nbsp;million POPs, nearly 90% of the United States
population, including 49 of the top 50 U.S. markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Outside the United States, Verizon has wireline
and/or wireless operations in 23 countries and territories in
the Americas, Europe, Asia and the Pacific, with
3.2&nbsp;million attributable access lines and 9.6&nbsp;million
attributable wireless customers as of December&nbsp;31, 2001.
Through its interest in FLAG, the world&#146;s longest undersea
fiber optic cable, Verizon&#146;s global presence extends to 45
countries. Verizon is also the world&#146;s largest provider of
print and on-line directory information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Verizon is a reporting company under the Exchange
Act. Bell Atlantic and GTE were reporting companies under the
Exchange Act. Reports and information filed by Verizon, Bell
Atlantic and GTE with the Commission may be inspected and copied
at the public reference facility maintained by the Commission at
Room&nbsp;1024, 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. Copies of such material may be
obtained by mail at prescribed rates by calling the SEC at
1-800-SEC-0330.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vodafone</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;4, 2001, Vodafone acquired a 34.5%
equity interest in Iusacell from the Peralta Group for
U.S.$973.4&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Vodafone is the largest wireless operator in the
world, with more than 101&nbsp;million proportionate subscribers
(subscribers proportionate to Vodafone&#146;s stake in the
relevant wireless companies) and a presence in 28 countries.
Vodafone also owns stakes in wireless carriers in Europe, the
United States, the Asia/ Pacific region, the Middle East and
Africa. Vodafone companies are the leading mobile phone
operators in the United States (with a 45% ownership interest in
Verizon Wireless), Germany (Vodafone D2) and the United Kingdom
(Vodafone), among others. Vodafone has grown substantially with
its recent acquisition of Mannesmann AG and is expanding its
wireless data services.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competitive
Strengths</FONT></I></B>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leading Digital
Technology Platform in All Our Markets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we are the Mexican market leader
in technology. In August 1999, upon completion of our deployment
of a CDMA digital network in nearly all areas where we provide
cellular service, we became the first company in Mexico to make
digital voice service broadly available to all of our customers.
Our PCS network is also deploying CDMA technology. Our digital
network currently provides service to areas with approximately
60&nbsp;million inhabitants, representing approximately 59% of
Mexico&#146;s total population.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Compared with analog cellular technology, our
digital technology increases system capacity by approximately
six to 10 times, offers better call quality and clarity, enables
significantly longer telephone battery life, ensures greater
call confidentiality and fraud protection and provides a wider
variety of advanced features and applications, such as short
messaging service. Our network technology provides superior
switching and transmission capabilities. These features allow
for lower capital expenditures per subscriber and reduced
network operating costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From January&nbsp;1, 1997 through
December&nbsp;31, 2001, we made approximately
U.S.$908.4&nbsp;million in capital expenditures, most of which
was spent on our cellular, PCS and fiber optic
telecommunications network. For additional information regarding
capital expenditures, see Item&nbsp;5, &#147;Operating and
Financial Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Capital Expenditures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to take advantage of the benefits of our
new digital network, we have stopped purchasing and providing
analog-only handsets to customers and have accelerated our
efforts to migrate existing higher-usage customers to digital
service. At December&nbsp;31, 2000 and December&nbsp;31, 2001,
Iusacell had 519,639 and 849,046 digital customers,
respectively. In December 2001, our digital customers in the
aggregate generated approximately 65% of our total mobile
wireless traffic.
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our analog service will continue
to operate in the near future because a significant number of
our prepay subscribers have analog-only telephones.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the Mexican telecommunications
regulator, the <I>Comisi&#243;n Federal de Telecomunicaciones
</I>(Mexican Federal Telecommunications Commission or COFETEL),
performed technical audits in the country&#146;s largest cities
in order to determine whether wireless carriers are offering
acceptable network quality. In these audits, we significantly
bettered COFETEL minimum standards for lost calls and
ineffective attempts of 6% and 5%, respectively, in all audited
cities in our core cellular regions, including Mexico City.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Verizon and
Vodafone Wireless Expertise and Support</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our management team draws extensively upon
Verizon&#146;s and Vodafone&#146;s expertise to develop and
implement our operating strategy. Verizon and Vodafone are the
managing partners in Verizon Wireless, the largest wireless
carrier in the United States. Verizon also has substantial
investments in other wireless telecommunications companies in
the Americas, Europe, Asia and the Pacific. Vodafone is the
largest wireless operator in the world. We believe that
Verizon&#146;s and Vodafone&#146;s extensive experience in the
development and implementation of marketing programs designed to
promote substantial subscriber growth provide us with a
competitive advantage in the Mexican mobile wireless market.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Experienced
Management Team</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The senior management team of Iusacell has an
aggregate of almost 100 years of experience in the
telecommunications industry. Individually, Iusacell&#146;s
operating managers have established track records of producing
subscriber growth, penetrating new markets and developing new
telecommunications product offerings. Iusacell&#146;s management
team is complemented by experienced Verizon and Vodafone
telecommunications executives and consultants.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Well-Recognized
Brand Name</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the services that we offer use the well
recognized <I>Iusacell Digital</I> brand name to increase
consumer awareness and customer loyalty. We believe that the
high &#147;top of mind&#148; and &#147;share of voice&#148; held
by the <I>Iusacell Digital</I> brand name has allowed us to make
more cost-efficient marketing investments compared with those of
our competitors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The <I>IUSACELL Digital </I>brand name is well
recognized not only in the regions where we currently provide
service, but also in the regions where we do not yet provide
service. We believe that this recognition has facilitated our
entry into Regions 1 and 4 in northern Mexico, where we hold PCS
concessions, and Region 8 in southern Mexico, and will
facilitate our entry into other markets if and when we are able
to do so.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large Mobile
Wireless Subscriber Base</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, we had 1,855,166
mobile wireless subscribers, including both postpaid and prepay
subscribers. Of our mobile wireless subscriber base, 21.8%
consisted of customers that purchase cellular services pursuant
to fixed-term contracts and the remaining 78.2% of our cellular
customers purchase their services in advance, primarily through
prepay calling cards. Prepay customers include both those who
can receive and make calls and those who are only able to
receive incoming calls. We believe that our postpaid customers
seek the convenience of uninterrupted mobile wireless service
and access to high quality customer service and are willing to
pay a monthly fee for the choice of value-added services such as
wireless Internet, call waiting, emergency service (*911), short
messaging, voice-mail, three-way calling and caller
identification. On the other hand, prepay subscribers are also
attractive to us because of their higher average per-minute
airtime charges, lower acquisition costs and the absence of
billing costs, credit concerns and collection risk related to
their business.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business
Strategy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s strategic and operating plan is
based on the wireless operating model that Verizon has
successfully deployed in the Americas, Europe, Asia and the
Pacific. This model focuses on:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">state-of-the-art network technology and
    performance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">delivery of products and services which customers
    consider valuable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">strong distribution; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">superior customer service.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">We believe that our strategic and operating plan
will enable us to increase our subscriber base, subscriber
usage, revenues and profitability in our core mobile wireless
businesses. This strategic plan incorporates the following key
elements:
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Nationwide
Wireless Coverage</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that it is important to provide
reliable and high quality wireless service to our customers
throughout Mexico. We intend to continue doing so by holding
concessions in each region of Mexico or, in those areas where we
are unable to secure concessions, by enabling seamless roaming
services and offering our customers telephones that can access
nationwide services on different frequencies. As part of this
strategy, we acquired concessions to provide PCS services in two
regions in northern Mexico in May 1998 and acquired Portatel,
which provides cellular services in southern Mexico, in a
two-part transaction on October&nbsp;19, 2001 and
February&nbsp;8, 2002 for Ps.&nbsp;670.6&nbsp;million
(U.S.$73.3&nbsp;million). Iusacell now holds concessions
covering approximately 90&nbsp;million inhabitants, or 90% of
Mexico&#146;s total population.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also believe that it is important for our
customers to be able to access wireless services throughout
North, Central and South America. Currently, Iusacell&#146;s
customers are able to roam in over 2,000 municipalities in the
United States, Canada and Europe, as well as in 85 other
countries in the Americas, Europe, Asia, Africa and the Pacific.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significantly
Strengthen our Distribution Channels</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to strengthen our product
distribution system to emphasize consistent, standardized
merchandising through a well-balanced mix of company-owned
stores and independent distributors conveniently located
throughout all of our operating regions. We continue to develop
additional long-term relationships with our distributors to
encourage them to sell our products and services, and seek to
make these relationships exclusive. We intend to continue to
increase our distribution system primarily by expanding the
number of locations where customers can purchase prepay cards.
To further this strategy, we or our distributors have entered
into agreements to allow our prepay cards to be marketed by or
at distributors of Mexico&#146;s national lottery tickets, PEMEX
franchise gas stations, NADRO pharmacies, one of the largest
drugstore chains in Mexico, OXXO and Seven Eleven franchise
convenience stores, BBVA Bancomer, Bital and Bancrecer automatic
teller machines, nationwide newsstands, CIFRA (Walmart) and
Comercial Mexicana stores, two of the largest retail chains in
Mexico, and Mexico City subway stations. In the past year, we
also launched a distribution program called &#147;Los
Rojos,&#148; implemented in Mexico City, Guadalajara, Toluca,
Cuernavaca, Puebla and Veracruz. The program, implemented
through a distributor, recruits existing street vendors and
provides them with an opportunity to directly sell our
VIVA<SUP>TM</SUP> cards and pre-activated prepaid handsets to
drivers and pedestrians. In its initial stage the program
employed approximately 1,200 people. Since Verizon took control
of our management, we have increased our points of distribution
from approximately 230 in February 1997 to more than 46,100 at
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also opened or remodeled 22 customer sales and
service centers in 1998, 17 in 1999, 8 in 2000 and 29 in 2001,
bringing the total number of customer sales and service centers
owned and operated by us at December&nbsp;31, 2001 to 135. All
of these centers present Iusacell&#146;s new store image, an
environment which emphasizes retail merchandising rather than
transaction processing. In the second half of 2002, we intend to
open 10 new customer sales and service centers.
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Superior Network
and Customer Service</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that superior network technology and
proactive and timely customer service help us to attract and
retain customers. To build a superior network, we swapped out
our previous analog network for an analog and CDMA digital
network supplied by Lucent Technologies and, upon completion of
the swap-out in August 1999, became the first company in Mexico
to make digital voice services broadly available to all of our
customers. For our customers, our digital technology offers
better call quality and clarity, ensures greater call
confidentiality and fraud protection, enables significantly
longer telephone battery life, and provides a wider variety of
advanced features and applications as compared with analog
cellular technology. Over the last three years, Iusacell has
experienced rapid growth in digital subscribers. As a result,
and in anticipation of further growth in digital subscribers and
digital usage, we decided to accelerate our capital expenditure
program in 1999 and 2000 to expand digital capacity and improve
digital service quality.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To provide proactive and timely customer service,
we operate two call centers that provide automated and efficient
service to our customers. Our call center service quality and
response speed has further improved with the implementation of
state-of-the-art customer service software in Region 9 in 2000
and in our other service regions in 2001. We also use welcome
packages, customer satisfaction calls, special programs for
corporate customers and customized billing to communicate our
commitment to our customers. Our customer service centers offer
&#147;one-stop shopping&#148; for cellular, long distance,
paging and data transmission services as a convenience to our
customers. Our customer service representatives undergo ongoing
rigorous training and are continually monitored and evaluated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 1999, Iusacell completed the
installation of a new prepay operating system in its then four
cellular regions. The prepay operating system improved customer
satisfaction through automated card activation and account
information and by providing voice mail and other value-added
services. It has also lowered both the cost of support for
prepay services and prepay turnover and facilitated increased
per subscriber usage.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Committed to offering world class customer
service, in 2001 we began the implementation of a special
program called Customer Relationship Management, which we refer
as CRM. The program aimed to gather information from our various
systems to allow us to better tailor our services and strategies
to each of our customers. Following implementation of the CRM
strategy, we deployed the following applications to fulfill
customer needs: customer autoservice channels such as invoice
presentment, payments and airtime sales through the Internet, MQ
Series from IBM, a software tool that integrates new postpaid
customer information between our point of sale system and
billing system and some other administrative systems to enhance
the functionality of our call centers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we also implemented a preferred customer
retention program targeting high-value postpaid customers in
order to improve customer loyalty and thereby reduce churn by
offering dedicated phone lines and customer care
representatives. We also implemented a high-value customer
campaign which consists of proactively contacting customers, to
assure that the provided service meet their needs and find out
how it can be improved. To strengthen the antichurn program for
all postpaid customers, we introduced a proactive contract
renewal program. A permanent outbound program was introduced to
contact those customers who have reported their phone stolen or
lost in order to arrange for a replacement. We are designing
similar programs for our higher-usage prepay customers and
expect to implement these programs during 2002.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer
Segmentation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We design our products and services for each
customer segment. For postpaid customers, we offer six pricing
packages tailored to meet the needs of high and mid-usage
customers and two additional pricing packages with a prepay
component tailored to lower-usage customers. We believe that our
postpaid customers seek the convenience of uninterrupted mobile
service and access to high quality customer service and wish to
purchase their long distance, paging, and other
telecommunications services bundled together as a single product.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also sell prepay cards to penetrate the
segment of lower-usage customers. We believe our prepay
customers seek service without a fixed financial commitment and
monthly billing.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1999, we introduced &#147;one-single
rate&#148; plans for postpaid customers who seek the convenience
of paying a single per-minute rate for local, national long
distance and long distance service to the United States. In
October 1999, we introduced a &#147;one-single rate&#148; plan
for prepay customers and extended coverage of all
&#147;one-single rate&#148; plans to include international long
distance service to Canada. In November 2000, we extended our
&#147;one-single rate&#148; plans to include most of western
Europe and Israel. At December&nbsp;31, 2001, we had 858,800
&#147;one-single rate customers,&#148; 72,323 of whom were
postpaid customers, representing 17.9% of our total postpaid
customer base, and 786,477 of whom were VIVA<SUP>TM</SUP> prepay
customers, representing 54.2% of the total prepay customer base.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Value-Added
Services</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our network permits us to provide our digital and
analog customers with a wide range of value-added services,
including caller identification, voice mail, and three-way
calling. To encourage our customers to migrate to digital
service, we offer short messaging service, Internet access,
mobile banking, and mobile e-mail accounts only to our digital
postpaid customers through wireless application protocol
(WAP)&nbsp;enabled handsets, Lap Top computers and Pocket PCs
(PDAs).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2001, Iusacell and Banco Santander
launched the first joint brand credit card in the wireless
service industry. This credit card will help Iusacell&#146;s
customers finance the acquisition of a handset, facilitate the
credit and collection process and build customer loyalty.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales Force
Incentives</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With the objective of increasing the size and
quality of our subscriber base, we have a sales force
compensation plan which is largely performance-based. Our
compensation plan is based on sales volume and product mix and
rewards our sales force for upgrading analog postpaid customers
to digital service and qualified prepay customers to postpaid
plans. The compensation plan is also designed to encourage
salespersons to sell bundled products and value-added services.
During 2001, we implemented an incentive program for our
customer care representatives to promote customer retention. In
2002, the sales force compensation plan was restructured to
better reward individual performance.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Telecommunications Industry in Mexico</FONT></I></B>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
Liberalization</FONT></I>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cellular
Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican government initiated its efforts to
liberalize the telecommunications industry in 1989, dividing
Mexico into nine geographic regions for the provision of
cellular service. In order to provide an alternative for
cellular customers, two concessions were granted in each region,
one to Telcel, the cellular subsidiary of Telmex, and the other
to an independent operator. In addition, Telmex was required to
interconnect all cellular operators to its network in an effort
to facilitate competition. The nine geographic Regions are
described in the table below.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Region</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Geographical Coverage</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Major Cities in the Region</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Baja California and Baja California
    Sur and the municipality of San Luis Rio Colorado in
    northwestern Sonora state.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Tijuana, Mexicali, Ensenada, Tecate and
    La&nbsp;Paz.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Sonora and Sinaloa (except for the
    municipality of San Luis Rio Colorado in northwestern Sonora).
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Hermosillo, Ciudad Obreg&#243;n, Culiac&#225;n
    and Mazatl&#225;n.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Chihuahua and Durango and the
    municipalities of Torre&#243;n, Francisco&nbsp;I. Madero,
    Matamoros, San Pedro and Viesca in the state of Coahuila.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Ciudad Ju&#225;rez, Chihuahua, Durango,
    G&#243;mez Palacio and Torre&#243;n.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Tamaulipas, Nuevo Le&#243;n and
    Coahuila. (except for the municipalities of Torre&#243;n,
    Francisco&nbsp;I. Madero, Matamoros, San Pedro and Viesca).
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Monterrey, Saltillo, Tampico, Ciudad Victoria,
    Nuevo Laredo, Reynosa and Matamoros.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">23
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Region</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Geographical Coverage</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Major Cities in the Region</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Colima, Jalisco (except for
    12&nbsp;municipalities in northeastern Jalisco), Michoacan and
    Nayarit.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Guadalajara (Mexico&#146;s second largest city),
    Morelia, Tepic, Colima and Manzanillo.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Aguascalientes, Guanajuato,
    Quer&#233;taro, San Luis Potos&#237; and Zacatecas and
    12&nbsp;municipalities in northeastern Jalisco.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Le&#243;n, Quer&#233;taro, Aguascalientes, San
    Luis Potos&#237; and Zacatecas.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Guerrero, Oaxaca, Puebla, Tlaxcala
    and Veracruz.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Puebla, Acapulco, Veracruz and Oaxaca.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Yucat&#225;n, Quintana Roo,
    Campeche, Chiapas and Tabasco.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">M&#233;rida, Canc&#250;n, Villahermosa, Campeche,
    Tuxtla Guti&#233;rrez and San Cristobal de las Casas.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The states of Mexico, Hidalgo and Morelos and the
    Federal District.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Mexico City, Toluca, Cuernavaca and Pachuca.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1990, the Mexican government
initiated the privatization of Telmex, then the sole provider of
landline local, long distance and Cellular B-Band cellular
services, when it sold 20.4% of the equity and 50.1% of the
voting power in Telmex to a private consortium for
U.S.$1.76&nbsp;billion. The winning consortium consisted of
Grupo Carso, S.A. de C.V., a Mexican conglomerate which owns or
otherwise controls a majority of the consortium&#146;s voting
interest, SBC Communications Inc. and France Telecom S.A.
Subsequent to the original privatization, the Mexican government
further reduced its holdings in Telmex through additional
transactions and completed the privatization process in June
1994. In 2001, Telcel and other wireless international
subsidiaries of Telmex were spun-off from Telmex to form a new
company named Am&#233;rica M&#243;vil, S.A. de C.V., known as
Am&#233;rica M&#243;vil.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Telcel holds the Cellular B-Band concession in
each of the nine cellular regions and is Mexico&#146;s largest
cellular operator. Our subsidiaries hold the Cellular A-Band
concession in each of Regions&nbsp;5, 6, 7, 8 and&nbsp;9, and
entities in which Telef&#243;nica is a controlling shareholder
hold the Cellular A-Band concession in Regions&nbsp;1, 2, 3
and&nbsp;4.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wireless
Local Loop and PCS Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1998, COFETEL completed auctions for
concessions for a range of spectrum frequencies in the
1.9&nbsp;gigahertz (GHz) band to provide PCS wireless services
and the 3.4-3.7&nbsp;GHz Wireless Local Loop band to provide
local wireless services in substantially the same nine
geographic Regions established for the provision of cellular
service. Four companies won nationwide concessions in the
Wireless Local Loop frequencies:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Telmex;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Axtel;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Midicel, S.A. de C.V. (Midicel); and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unef&#243;n.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Three companies won nationwide concessions to
provide PCS services in the 1.9&nbsp;GHz frequencies.
Unef&#243;n won the 30&nbsp;MHz PCS A-Band auction on a
nationwide level. Pegaso won a mix of 30&nbsp;MHz PCS B-Band and
10&nbsp;MHz PCS E-Band concessions across all nine regions.
Telcel won the 10&nbsp;MHz PCS D-Band auction on a nationwide
level. Grupo Hermes, S.A. de C.V. and Midicel won auctions for
seven of the remaining nine PCS B-Band and PCS E-Band
properties. Each of these concessions has a 20-year term and
authorizes the provision of mobile and fixed wireless service
and other value-added services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Formal concessions for Wireless Local Loop and
PCS frequencies were issued in late 1998 to all auction winners,
except Unef&#243;n and Midicel, which received extensions to
May&nbsp;15, 1999 to pay accrued interest and to June&nbsp;15,
1999 to pay the balance of their concession fees. Midicel did
not meet its interest payment requirements in May 1999 and
forfeited its Wireless Local Loop and PCS concessions and
approximately U.S.$50&nbsp;million in deposits, letters of
credit and surety bonds. Midicel later offered full payment and
petitioned for a review (<I>recurso de revisi&#243;n</I>) of the
forfeiture order. After additional legal proceedings, the
</FONT>

<P align="center"><FONT size="2">24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<I><FONT size="2">Secretar&#237;a de Comunicaciones y
Transportes </FONT></I><FONT size="2">(Mexican
Telecommunications and Transport Ministry or SCT), affirmed the
forfeiture order and is also assessing whether Midicel has
complied with its commitments under its long distance and public
telephony concessions in order to determine whether these
concessions should also be revoked. Unef&#243;n did meet its May
1999 and June 1999 payment requirements and received its
Wireless Local Loop and PCS concessions. Pegaso initiated
wireless PCS services in Tijuana, Monterrey, Guadalajara and
Mexico City in 1999, and now has coverage in 12&nbsp;cities.
Unef&#243;n commercially launched mobile prepay wireless
services in Acapulco, Toluca, Mexico City and Aguascalientes in
early 2000, and now has coverage in 15&nbsp;cities throughout
Mexico.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also face wireless competition from companies
providing mobile wireless telecommunications services utilizing
alternative existing technologies. Nextel de M&#233;xico, S.A.
de C.V., known as Nextel, began marketing its enhanced
specialized mobile radio services in 1998. We believe that
Nextel provides three types of services: trunking, access to the
telephone network and short messaging. It currently covers 17
cities principally in central Mexico.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long
Distance Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the privatization of Telmex in
1990, the Mexican government granted Telmex a concession to
provide public domestic and international long distance
telephone service with an exclusivity period of six years. In
August 1996, the exclusivity period expired, and competition
with proprietary infrastructure commenced in January 1997. A
presubscription balloting process was conducted in Mexico&#146;s
150 largest cities, covering 85% of Mexico&#146;s total POPs, to
enable customers to choose a long distance provider.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SCT has granted a total of 22 long distance
concessions, including the one held by us. Long distance
concessionaires include, among others:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Telmex;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Alestra S. de R.L., in which AT&#38;T Corporation
    is a shareholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Avantel, S.A. de C.V., in which MCI WorldCom Inc.
    and Citigroup Inc. are shareholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Telinor, S.A. de C.V. (Axtel), in which The Bell
    Telephone Company of Canada, commonly known as Bell Canada, is a
    shareholder; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Iusatel, S.A. de C.V., a subsidiary of Iusacell
    Celular which we refer to as Iusatel.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each concession has a nationwide scope and a
30-year term. Concession holders are authorized to offer
domestic, international and value-added services, including
voice and data transmission services.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Local
Telephone Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican government has also initiated the
liberalization process for competition in local telephony
service. Accordingly, the SCT has already granted
13&nbsp;concessions for wireline local telephone service. Maxcom
Telecomunicaciones, S.A. de C.V., MetroRed, S.A. de C.V. and
Megacable MCM, S.A. de C.V. have initiated service in the Mexico
City area.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underserved
Telephony Market</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Despite the significant increase in wireline and
wireless penetration in Mexico over the last three years, we
believe that there still is a substantial unmet demand for
telephone services in Mexico. According to the International
Telecommunication Union, an agency of the United Nations, as of
December&nbsp;31, 2001, there were approximately 13.5 wireline
telephone lines per 100 inhabitants in Mexico, which is lower
than the teledensity rates of some other Latin American
countries and substantially lower than those of developed
countries such as the United States. Due to the relatively low
wireline penetration in developing countries such as Mexico,
increases in the level of wireless penetration in these
countries may be partly attributable to users who purchase
wireless services as a principal means of telecommunications.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents, for selected Latin
American countries and the United States, wireline telephone
lines in service per 100 inhabitants as of December&nbsp;31,
2000 and December&nbsp;31, 2001:
</FONT>

<P align="center">
<B><FONT size="2">Selected Wireline Telephony
Penetration</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="78%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Lines in service</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">per 100</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">inhabitants(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Country</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">United States
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Uruguay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chile
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brazil
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Argentina
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Colombia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Venezuela
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peru
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Source:&nbsp;</FONT></I><FONT size="2">International
    Telecommunication Union 2002 Website
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents, for selected Latin
American countries and the United States, the number of
subscribers of wireless telephone services per 100 inhabitants
as of December&nbsp;31, 2000 and December&nbsp;31, 2001:
</FONT>

<P align="center">
<B><FONT size="2">Selected Wireless Telephony
Penetration</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Wireless</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">subscribers</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">per 100</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">inhabitants(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Country</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">United States
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Chile
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Venezuela
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Argentina
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brazil
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Uruguay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Colombia
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peru
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Source:&nbsp;</FONT></I><FONT size="2">International
    Telecommunication Union 2002 Website
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Calling
Party Pays</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;1, 1999, Mexico implemented the
&#147;calling party pays&#148; modality, or CPP, which had
already been implemented in some other Latin American and
European countries. Calling party pays is a wireless telephony
payment structure in which the party that places a call to a
wireless telephone is billed for interconnection access, and the
recipient is not billed for the airtime charges corresponding to
that call. The introduction of CPP triggered growth in wireless
penetration, particularly in the prepay segment and wireless
traffic.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mobile
Wireless Services</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">History
and Overview</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We became the first Mexican provider of cellular
telecommunications services in 1989, when we commenced operation
of our Cellular A-Band network in Region&nbsp;9. Through a
series of transactions from
</FONT>

<P align="center"><FONT size="2">26
</FONT>

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<DIV align="left">
<FONT size="2">1990 to 2002, we acquired 100% beneficial
ownership interests in the entities which hold the Cellular
A-Band concessions in Regions&nbsp;5, 6, 7, and 8. In December
2001, we initiated the commercial launch of our PCS services in
the cities of Tijuana and Monterrey in Regions&nbsp;1 and 4 in
northern Mexico. The regions we serve cover a contiguous
geographic area comprising all of the regions in central and
southern Mexico, and two of the four regions in northern Mexico,
which allows Iusacell to achieve economies of scale.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s service regions are home to a
variety of industries. Region 9 includes Mexico City, which has
the greatest concentration of service and manufacturing
industries in Mexico and is also the center of Mexico&#146;s
public and financial services sectors. Region 5 includes
Guadalajara, Mexico&#146;s second largest city and the
commercial and service center of western Mexico, which has
recently begun to develop as a center for the maquiladora
industry. Region&nbsp;6 includes Le&#243;n, Quer&#233;taro,
Aguascalientes and San Luis Potos&#237; and has historically
been dominated by the agricultural sector, although it has
recently begun to develop as an automobile manufacturing and
high technology center. Region&nbsp;7 includes Puebla, Acapulco,
Veracruz and Oaxaca and contains major operations of the Mexican
petrochemical and automotive industries and significant tourist
resorts and attractions. Region&nbsp;8 includes M&#233;rida,
Villahermosa, Canc&#250;n, Campeche and Tuxtla Guti&#233;rrez
and contains major operations of the Mexican petroleum industry
and significant tourist resorts and attractions. Regions&nbsp;1
and 4, which include Tijuana and Monterrey, are centers for the
maquiladora industry and manufacturing, as well as high
technology.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Subscribers
and System Usage</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">According to customer profiles, professionals
comprise a large portion of our Region 9 postpaid cellular
subscriber base. Iusacell offers a number of value-added
services designed specifically to fulfill the demands of this
important group of postpaid subscribers. For example, we offer
secretarial services and provide English-speaking operators to
serve the large English-speaking market in Region&nbsp;9.
Iusacell also provides financial news reporting, emergency
services, entertainment information, reservations services and
sports reports. Moreover, CDMA digital postpaid customers in
Region 9 have available caller identification, short messaging
service and data transmission services. We believe that these
value-added services help increase postpaid subscriber usage and
also enhance our market image as a full service cellular
provider.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Postpaid
Customers</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our postpaid subscriber base in
the remaining regions consists of subscribers engaged in a
variety of occupations. Due to the lower wireline penetration
outside of Region&nbsp;9, the subscriber base in Regions&nbsp;1,
4, 5, 6, 7 and 8 includes a number of users who purchase
cellular services as a principal means of telecommunications.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that a strong distribution network is
necessary in order to develop and sustain a significant presence
in these markets.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Prepay
Customers</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In contrast to postpaid subscribers, prepay
customers typically generate low levels of cellular usage, have
access to a limited number of value-added services, generally
already own a handset and often are unwilling to make a fixed
financial commitment or do not have the credit profile to
purchase postpaid plan cellular services. Other prepay customers
include vacationers and traveling business people who require
cellular service for short periods of time. In addition to
helping customers control costs, our prepay programs have no
monthly bill and allow customers to prepay for cellular services
in cash.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prepay program markets prepay cards which
credit a specific peso amount worth of air-time usage to an
account to be utilized for outgoing and incoming calls over a
specified period of time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A prepay customer ceases to be considered a
customer of Iusacell when a specified period of time has elapsed
since the customer purchased and activated, or last added credit
to, his or her last prepay card. The customer&#146;s telephone
number is then deactivated, and the customer is considered to
have turned over.
</FONT>

<P align="center"><FONT size="2">27
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s current prepay customers who want
to continue to have wireless service after this time must choose
to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">continue to be prepay customers of Iusacell by
    purchasing another card or otherwise recharge the airtime in
    their accounts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">become postpaid customers of Iusacell; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">become either postpaid or prepay customers of
    another wireless service provider.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">VIVA prepay customers normally have 60&nbsp;days
to use up an activated prepay card and activate a new card or
otherwise recharge the airtime in their account. If the customer
has not activated a new card or recharged the airtime in its
account at the end of 60&nbsp;days, the balance of the VIVA
customer&#146;s account becomes zero, and the customer loses the
ability to make outgoing calls for an additional period of
305&nbsp;days. During this 305-day period, a VIVA customer will
be able to receive local incoming calls, but not to make
outgoing calls, thereby becoming an &#147;incoming calls
only&#148; customer. If the customer activates a new card or
recharges the airtime in its account within the 305-day period,
the customer&#146;s account automatically returns to normal
status, and a new 60-day period begins. Otherwise, once the
305-day period elapses, the customer&#146;s telephone number is
deactivated. See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Operating Results&nbsp;&#151;
Increase in Subscriber Base.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We evaluate alternative methods of determining
prepay customer turnover on an ongoing basis, as the current
method is dependent upon, among other things, the number of days
of use Iusacell permits before deactivating a telephone number.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 1999, in order to evaluate whether we
could generate additional revenues from &#147;incoming calls
only&#148; customers for previously purchased cards, we extended
the period of time to use up an activated card and activate a
new card from 185&nbsp;days to April&nbsp;30, 2000 for
&#147;incoming calls only&#148; customers who otherwise would
have lost service before that date. Beginning May&nbsp;1, 2000,
we decided to return to our prior policy of maintaining
&#147;incoming calls only&#148; customers for only 185&nbsp;days
and began to turn over &#147;incoming calls only&#148; prepay
customers who had reached the 185-day limit without activating a
new prepay card. In July 2001 we reduced the initial period for
using up an activated prepay card and activating a new card from
185&nbsp;days to the current 60&nbsp;days. As a result, at the
time, approximately 345,000 incremental subscribers were
transferred to the &#147;incoming calls only&#148; prepaid
customer status.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, Iusacell had
approximately 768,000 &#147;incoming calls only&#148; customers.
The substantial majority of &#147;incoming calls only&#148;
customers generate little or no traffic. Iusacell&#146;s prepay
subscribers who can both make outgoing calls and receive
incoming calls had an average monthly revenue per subscriber
during 2001 of Ps.146 (approximately U.S.$15.9).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 1999, we substantially completed the
installation of the VIVA prepay operating system. The VIVA
platform better tracks customer turnover than its predecessor
system. This operating system, together with initiatives to
increase the number of distribution points for prepay cards,
adjust commissions to encourage distributors to sell prepay
cards of higher denominations, improve customer care and
otherwise improve the convenience of the prepay program, has
enhanced our ability to add and retain prepay customers and has
increased usage. In 2000, we implemented two important tools for
the sale of prepay airtime: sales through automated teller
machines at banks and sales over the phone by dialing *AIRE. In
early 2002, we introduced a tool to sell prepay airtime through
our website.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, we invested approximately
U.S.$8.0&nbsp;million in our VIVA platform in order to expand
its capacity to meet demand. In 2002, we will be evaluating
different payment platforms with intelligent network capability
that will enable us to launch new services and support third
generation wireless technology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Given the higher turnover among our prepay
customers, we pursue plans to migrate our qualified prepay
customers to postpaid plans, where customer loyalty and
retention have been historically higher.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to better focus on active prepay
customers and reduce the potential turnover from prepay sales
through retail distribution channels, in 2001 we implemented a
new policy under which a pre-activated prepay sale will be
reported only when the end-user places the first outgoing call.
Accordingly, commissions related to this type of prepay sale are
now paid only after the end-user places the first outgoing call.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Postpaid
Churn</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Postpaid churn measures both voluntarily and
involuntarily disconnected subscribers. Through
December&nbsp;31, 1997, we calculated postpaid churn for a given
period by dividing, for each month in that period, the total
number of postpaid subscribers disconnected in such month by the
number of postpaid subscribers at the beginning of such month
and dividing the sum of the resulting quotients for all months
in such period by the number of months in such period. Effective
January&nbsp;1, 1998, we changed the methodology by which we
determine average monthly postpaid churn for a given period.
Average monthly postpaid churn for a given period is now
calculated by dividing the sum of all postpaid subscribers
disconnected during such period by the sum of the
beginning-of-month postpaid subscribers for each of the months
in such period, expressed as a percentage.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Voluntarily disconnected subscribers encompass
subscribers who choose to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no longer subscribe to wireless service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">become a prepay customer of Iusacell; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">obtain wireless service on a postpaid or a prepay
    basis from another wireless service provider.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Involuntarily disconnected subscribers encompass
customers whose service is terminated after failing to meet
Iusacell&#146;s payment requirements.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roaming</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our roaming agreements with other
operators, we offer nationwide roaming service to our prepay and
postpaid cellular subscribers, and international service only to
our postpaid subscribers. Through these agreements, subscribers
can place calls from any location in Mexico served by a Cellular
A-Band operator, and can receive a call made to the
subscriber&#146;s number (automatic call delivery) regardless of
the region in Mexico in which the subscriber is located. We also
provide cellular services to all subscribers of other
non-wireline cellular operators in Mexico while such subscribers
are temporarily located in a region served by Iusacell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An operator (a host operator) providing service
to a subscriber of another operator (the home operator)
temporarily located in the host operator&#146;s service region
(an in-roamer) earns usage revenue. We bill the home operator of
an in-roamer for the in-roamer&#146;s usage in our service
region. In the case of roaming by a Iusacell subscriber in the
region of a host operator (an out-roamer), Iusacell is billed by
the host operator for the subscriber&#146;s usage. We remit the
billed amount to the host operator and bill our own customer,
the out-roamer, without any mark-up. As a result, we retain the
collection risk for roaming charges incurred by our own
subscribers. Conversely, roaming charges billed by Iusacell for
in-roaming usage by subscribers of other non-wireline operators
are the responsibility of those operators. Roaming charges
between wireless operators are settled monthly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interconnection charges owed to Telmex and
long-distance charges owed to long distance carriers as a result
of roaming are the responsibility of the host operator. In
addition to higher per minute charges for airtime (as compared
to home region rates), the host operator is entitled to receive
a fee for each day roaming service is initiated. In-roaming fees
and usage revenue represented 1.6%, 1.3% and 1.7% of our total
revenues during 1999, 2000 and 2001, respectively. Out-roaming
charges represented 4.2%, 6.2% and 4.9% of Iusacell&#146;s total
revenues during 1999, 2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have more than 60 agreements with U.S.,
Canadian and other foreign operators to provide our subscribers
with international roaming capabilities. These operators include
Verizon International affiliates such as Verizon Wireless,
Movilnet in Venezuela, CTI in Argentina, Codetel in the
Dominican Republic, Telus in Canada, Puerto Rico Telephone
Company, AT&#38;T Wireless and Cingular Wireless. In addition,
we provide, through the National Automatic Cellular Network,
automatic call delivery throughout most of the United States,
including Puerto Rico, whereby our subscribers may receive
telephone calls from Mexico without the caller having to dial
access codes. Currently, our customers are able to roam in over
2,000 municipalities in the United States and Canada as well as
in 85 other countries in the Americas, Europe, Asia, Africa and
the Pacific.
</FONT>

<P align="center"><FONT size="2">29
</FONT>

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<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personal
Communications Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our strategy to develop a nationwide
wireless footprint, in 1998 we won auction concessions giving us
the right to provide PCS wireless services in Regions&nbsp;1 and
4 in northern Mexico. We paid approximately
Ps.493.2&nbsp;million (in nominal terms)
(U.S.$49.8&nbsp;million, using the applicable exchange rate as
of the date of the purchase) for these concessions in June and
September&nbsp;1998. These two regions include several
industrial cities, including Tijuana in Region&nbsp;1 and
Monterrey in Region&nbsp;4, and cover approximately 11.0% of
Mexico&#146;s total population. In the second quarter of 2000,
we initiated PCS network operations in Tijuana and Monterrey. In
2001, we spent approximately Ps.188.4&nbsp;million
(U.S.$20.6&nbsp;million) in the commercial deployment of PCS
services in Tijuana and Monterrey, which we launched in
December&nbsp;2001. In 2002, subject to obtaining financing, we
expect to spend approximately U.S.$79.0&nbsp;million to continue
the build-out of our PCS networks and deploy non-network
infrastructure in Regions&nbsp;1 and 4 with the goal of
completing the majority of our strategic plan to provide PCS
services in those regions by the end of 2002. See Item&nbsp;5,
&#147;Operating and Financial Review and Prospects&nbsp;&#151;
Liquidity and Capital Resources&nbsp;&#151; Capital
Expenditures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We market PCS using the same fundamental
strategies successfully employed by our existing cellular
operations. The PCS network that we are in the process of
deploying uses digital CDMA technology purchased mostly from
Lucent Technologies.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long Distance
Services</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;1996, we became one of
Telmex&#146;s first competitors in long distance service when we
began to provide long distance services to our cellular
subscribers in Mexico pursuant to the 30-year concession which
was awarded to Iusatel in October&nbsp;1995 and was modified in
December&nbsp;1997. Our competitors in long distance include 14
other companies operating under concessions, including Telmex,
the former long distance monopoly. We believe that competition
in the Mexican long distance market has stimulated growth in
demand for long distance service. During 1998, there were no
significant price changes in our long distance rates, and our
long distance traffic increased approximately 11% compared with
1997. During 1999, our prices increased approximately 14%, and
our long distance traffic increased approximately 25% compared
with 1998. During 2000, our prices decreased approximately 13%,
and our long distance traffic increased approximately 22%
compared with 1999. During 2001, we implemented an average 8%
price increase for our long distance customers, including
cellular long distance, while the rate of inflation in Mexico
that year was 4.4%, and long distance traffic increased
approximately 5% compared with 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently provide long distance service using
our own switches and transmission equipment and a combination of
fiber optic lines, microwave links and lines leased from Telmex
and Alestra. At December&nbsp;31, 2001, we provided long
distance service in 52 cities to 1,872,967 customers, 1,864,045
of which were existing customers for our other services. We
chose not to commit significant marketing resources to the
presubscription balloting process in which telephone customers
were asked to elect their long distance carrier, which was
conducted in cities across Mexico in 1997, 1998 and 1999, and as
a result we fared poorly in the initial balloting results. Under
the Cofetel rules we were exempted from the presubscription
obligation for our cellular customers. This authorization
expired on April&nbsp;7, 2002. We requested an extension and
Cofetel granted us a temporary six-month extension, while it
decides on the final term of the extension, that will expire on
October&nbsp;7, 2002. Revenues related to long distance services
represented 9.3% and 10.4% of our total revenues for 2000 and
2001, respectively, not including dark fiber optic cable sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our long distance concession provides for
coverage and technological investment requirements. If we do not
satisfy such requirements, we may have to pay fines and
penalties and potentially lose our long distance concession.
After evaluating the commercial feasibility of complying with
our initial concession, we requested that the SCT and COFETEL
modify the terms of the concession to reflect a more rational
business plan. In December&nbsp;1997, the government granted the
modification request, authorizing a change in the coverage
requirements and increasing flexibility in the choice of
transmission technology, significantly reducing our investment
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We further reduced the capital investment for our
long distance business by entering into fiber optic cable swap
agreements with two other long distance companies, Marcatel and
Bestel, in March&nbsp;1998 and
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<DIV align="left">
<FONT size="2">December&nbsp;1998, respectively. These
agreements will allow us to acquire fibers in the long distance
fiber optic networks built by Marcatel and Bestel in central and
northern Mexico in exchange for fibers in the long distance
fiber optic network we recently completed in central Mexico. As
a result, we will be able to obtain redundancy in central Mexico
and access to the United States border at minimal cost. We
expect to complete the implementation of these fiber exchanges
in 2003.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;1999, Iusatel agreed to swap
dark fiber optic cable in the amount of U.S.$17.3&nbsp;million
and sell approximately U.S.$7.4&nbsp;million of additional dark
fiber optic cable to Telereunion, S.A. de C.V., an affiliate of
Telscape International, Inc. Upon the signing of this swap
agreement, Telereunion issued promissory notes to Iusatel for
the purchase price but defaulted on the payment of each of these
notes. In April&nbsp;2001, Telereunion&#146;s U.S.&nbsp;parent,
Telscape International, Inc, filed for reorganization under
Chapter&nbsp;11 of the U.S.&nbsp;Bankruptcy Code. As part of a
settlement arrangement, on September&nbsp;17, 2001, Telereunion
and Iusatel executed an agreement by means of which the former
transferred dark fiber optic assets in the amount of
U.S.$7.4&nbsp;million to the latter in exchange for full
settlement of the past notes receivable in the same amount. In
addition, in 2001, we entered into a fiber optic cable swap
agreement worth Ps.142.7&nbsp;million (U.S.$15.6&nbsp;million)
to exchange certain long-distance fiber optic cables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1996, Iusatel executed an agreement with
Teleglobe USA, Inc. for the exchange of international long
distance traffic. On May&nbsp;28, 2002, Teleglobe USA, Inc.
filed for reorganization under Chapter&nbsp;11 of the
U.S.&nbsp;Bankruptcy Code. In 2000, Iusatel entered into a
second agreement for the exchange of international long distance
traffic with AT&#38;T, giving Iusatel two alternative routes to
deliver international long distance traffic, thereby reducing
costs and enhancing its proportional return traffic.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
Services</FONT></I></B>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paging</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;14, 1995, Iusacell Celular and
Infomin formed Infotelecom as a joint venture to market national
and international paging services. Iusacell Celular owns 49% of
Infotelecom, Infomin owns 49%, and the remaining 2% is owned by
Mr.&nbsp;Jos&#233; Ram&#243;n Elizondo, a former director of
Iusacell Celular. Infomin has a concession, which expires on
July&nbsp;20, 2009, to provide nationwide paging services in
Mexico. Under the Infotelecom joint venture agreement, Infomin
is obligated to contribute this concession to Infotelecom.
Infomin obtained the Infotelecom&#146;s Board of Directors
authorization to transfer its shares in Infotelecom to Banco
Mercantil del Norte, S.A. Instituci&#243;n de Banca Multiple, a
Mexican bank, in settlement of certain indebtedness. The
completion of such transaction has not been notified to Iusacell
Celular.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to a marketing agreement between
Iusacell Celular and Infomin, Infotelecom has the right to
market national paging services on behalf of Infomin, and
Infotelecom is required to make monthly payments to Infomin
equal to 5% of all gross revenues for the preceding month. This
payment represents the amount which Infomin, as the concession
holder, must pay the SCT for the right to provide paging
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Infotelecom began marketing paging services in
August&nbsp;1996 and, at December&nbsp;31, 2001, provided
service in 34 cities including Mexico City, Guadalajara,
Monterrey, Puebla, Cuernavaca, Toluca, Quer&#233;taro,
Le&#243;n, and Ciudad Ju&#225;rez.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, Infotelecom had
17,054 paging customers. Our revenues related to paging services
represented 0.8% and 0.5% of total revenues for 2000 and 2001,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under their joint venture agreement, Iusacell
Celular and Infomin valued the Infomin paging concession at
U.S.$10.5&nbsp;million, and we agreed to fund the first
U.S.$10.5&nbsp;million of Infotelecom&#146;s cash requirements
before Infomin would be required to make pro rata cash
contributions. In December&nbsp;1998, Iusacell Celular and
Infomin determined the appropriate manner in which to capitalize
Infotelecom. Up to that time, we had been funding the joint
venture by means of loans. On December&nbsp;31, 1998, Iusacell
Celular capitalized Ps.141.9&nbsp;million
(U.S.$15.5&nbsp;million) in advances to Infotelecom, including
Ps.52.6&nbsp;million (U.S.$5.7&nbsp;million) in interest which
was not credited against the U.S.$10.5&nbsp;million required to
be funded by us. However, U.S.$9.0&nbsp;million of such
capitalization was applied against the U.S.$10.5&nbsp;million to
be funded by us. In 1999, Iusacell capitalized approximately an
additional U.S.$1.0&nbsp;million against the
U.S.$10.5&nbsp;million funding requirement. In 2000 and 2001, no
amounts were capitalized and applied against the funding
requirement.
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Public and Rural
Telephony and Local Fixed Wireless</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate public and rural telephony programs,
utilizing available cellular capacity. These programs provide
telecommunications services through cellular telephones in phone
booths, intercity buses and rural areas. The provision of
services in this way fulfills the terms of our concessions for
the provision of cellular telephone service and utilizes our
cellular network to provide telecommunications coverage in areas
with little or no basic service. As of December&nbsp;31, 2001,
we had 37,972 cellular telephones in service under our public
and rural telephony programs, representing a 91% increase
compared to 19,917 cellular phones in service as of
December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we were providing,
on a trial basis pending approval from SCT, local wireless
service in the 450&nbsp;MHz frequency band to 9,869 customers in
selected markets in Region&nbsp;9. We do not charge our local
wireless customers fees for incoming calls. We believe that
there is substantial unmet demand for telephone service in
Mexico as demonstrated by the relatively low level of
residential wireline, business wireline and cellular penetration.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We experienced substantial delays in obtaining
the SCT&#146;s approval of our technical and economic plans for
local wireless service in the 450&nbsp;MHz frequency band.
However, on June&nbsp;10, 1997, the SCT and Iusacell Celular
agreed on a process by which we could obtain a concession issued
and recognized by the SCT to provide local wireless service in
the 450&nbsp;MHz frequency band. This agreement allows us to
convert and consolidate our existing concessioned radiotelephony
frequencies into 450&nbsp;MHz spectrum in Regions&nbsp;4, 5, 6,
7 and 9 and grants us a right of first refusal to acquire
concessions to provide local wireless service in these regions
over such frequencies at prices derived from the prices of the
winning bids in the auctions for 450&nbsp;MHz and 1.9&nbsp;GHz
(PCS) frequency bands concluded in May&nbsp;1998. These auctions
yielded a right of first refusal exercise price estimated at
U.S.$2.25&nbsp;million for each of the five regions. However,
neither the SCT nor COFETEL has formally notified us of the
exact right of first refusal exercise price, the payment terms
or the coverage and build-out requirements relating to the
concessions, all of which are necessary for us to decide whether
to exercise our right of first refusal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of these delays and the uncertainty
relating to our ability, at a commercially acceptable cost, to
implement full scale local wireless service in the 450&nbsp;MHz
frequency band, we are exploring alternatives for providing
local telephony services, such as limited zone wireless services
in the 800&nbsp;MHz (cellular) or 1.9&nbsp;GHz (PCS) frequency
bands deploying digital technology that permits mobility or
fixed wireless services over such bands. If we were to determine
that it would be preferable to pursue such an alternative rather
than to continue to pursue local wireless service in the
450&nbsp;MHz frequency band, that alternative could require the
acquisition of concessions, other regulatory approvals and the
payment of substantial fees. Our management is currently
evaluating our overall strategy with respect to local telephony
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September&nbsp;1998, we determined that
because of many factors, including the impact of changing
technology since the initiation of the 450&nbsp;MHz fixed local
wireless project in 1994, an impairment of our investment in
450&nbsp;MHz TDMA technology had occurred. As a result, we
recorded a substantial non-cash write-down of our investment in
the 450&nbsp;MHz fixed local wireless project. Given the
obsolescence of our existing 450&nbsp;MHz network
infrastructure, we may record a non-cash write-down of
substantially all of the remaining book value of the
450&nbsp;MHz project fixed assets by the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In expanding our local telephone services, we
plan to capitalize on synergies between our mobile wireless and
local wireless services, utilizing our existing cellular network
and anticipated 1.9&nbsp;GHz (PCS) network for connections with
the local subscribers&#146; premises. Furthermore, we believe
that local wireless service requires a lower investment cost per
line than landline service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January&nbsp;1996, our long distance
subsidiary applied to modify its concession to allow it to
provide local wireline service, including dedicated circuits,
local switching and data service. This request was reasserted in
Iusacell Celular&#146;s October 1997 application to modify our
long distance concession. This request was rejected for
procedural reasons in July&nbsp;1998. In January&nbsp;1997,
Iusatelecomunicaciones, S.A. de C.V., Iusacell Celular&#146;s
450&nbsp;MHz local wireless subsidiary, also filed for a local
wireline concession. The SCT has not yet issued this concession.
While we currently do not anticipate that the provision of local
wireline service will become a
</FONT>

<P align="center"><FONT size="2">32
</FONT>

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<DIV align="left">
<FONT size="2">significant part of our services, we may provide,
on a case-by-case basis, local wireline telephone service as
part of our overall provision of telecommunications services.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Data
Transmission</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We began providing data transmission services in
1993. We provide both public and private data transmission
primarily using excess capacity in our microwave and fiber optic
backbone in our existing cellular network in Region&nbsp;9 and,
until March&nbsp;2001, we provided satellite transmission
through Satelitr&#243;n, S.A. de C.V., which we refer as
&#147;Satelitr&#243;n,&#148; a joint venture among Iusacell,
Hughes Network Systems and another partner which provided a
shared hub for private networks. On March&nbsp;22, 2001 we sold
our 65.9% equity interest in Satelitr&#243;n and our ownership
of the Satelitr&#243;n transmission hub, receiving approximately
U.S.$1.3&nbsp;million in proceeds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since the latter part of 2001 we started
providing data transmission services, our primarily targeted
customers are Mexican based carriers. As of the end of
May&nbsp;2002, we had 8 customers, all Mexican based carriers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June&nbsp;2002, we installed and activated a
Genuity Internet POP in Mexico which allows Iusatel to deliver
Internet Access Services in conjunction to our leased line
service. The addition of this infrastructure will better
position Iusatel to deliver future Internet protocol (IP)
services.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Microwave
Transmission</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;1998, the SCT issued three
20-year concessions to Punto-a-Punto Iusacell, S.A. de C.V., a
joint venture between Iusacell Celular and Mr.&nbsp;Jos&#233;
Ram&#243;n Elizondo, a former director of Iusacell Celular, for
short-haul microwave frequencies in the 15&nbsp;GHz and
23&nbsp;GHz frequency bands won at auction. Punto-a-Punto
Iusacell paid approximately Ps.42.6&nbsp;million
(U.S.$4.7&nbsp;million) for these concessions. These frequencies
are being used to interconnect our cell sites, business
customers and other networks. Additionally, we have an
obligation to provide the right to use excess capacity in these
frequencies to other users to enable them to install their own
microwave links. Accordingly, during 2000, Punto-a-Punto
Iusacell, S.A. de C.V. started to provide services to other
carriers allowing them to use our excess capacity for
installation of links. In 2001, we continued providing these
services, including services to other carriers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Punto-a-Punto Iusacell participated in the
auctions for long-haul microwave frequencies in the 7&nbsp;GHz
frequency band that began in March&nbsp;1999 and concluded in
July&nbsp;1999. However, Punto-a-Punto Iusacell did not win any
concessions in these auctions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September&nbsp;1999, Punto-a-Punto Iusacell
entered into an agreement with an affiliate of the service
provider in the four Cellular A-Band regions in northern Mexico
to swap the right to use long-haul microwave frequency links
held by the affiliate for short-haul microwave frequency links
held by Punto-a-Punto Iusacell plus U.S.$2.45&nbsp;million in
cash. Punto-a-Punto Iusacell closed this transaction in
January&nbsp;2000 and is currently operating and installing
additional links in those frequencies.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and
Marketing</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With the assumption of control of our management
by Verizon in 1997, we redefined our marketing strategy for
achieving profitable growth, particularly in our mobile wireless
business. More recently, we have focused our sales and marketing
strategy on the CDMA digital cellular business, where there is
greater per-subscriber usage and revenues than there is with
analog subscribers. We seek to increase our average monthly
revenue per subscriber, aggressively grow our mobile wireless
subscriber base, decrease the cost of acquiring additional
subscribers and reduce postpaid churn and prepay turnover.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our mobile wireless subscribers consist of
postpaid and prepay customers who can be classified as high,
moderate or low-usage customers. We are implementing
distribution, advertising, customer service support and pricing
plans targeted to each specific customer segment and to increase
airtime usage.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distribution</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently target the various segments of our
subscriber base through five sales and distribution channels:
Iusacell owned and operated customer sales and service centers,
independent distributors, a direct
</FONT>

<P align="center"><FONT size="2">33
</FONT>

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<DIV align="left">
<FONT size="2">sales force, commission sales agents and
telemarketing. We are aggressively increasing the number of our
points of distribution in order to acquire additional
subscribers. At December&nbsp;31, 2001, Iusacell had
46,106&nbsp;points of distribution, as compared to 20,762, 6,522
and 2,280 at December&nbsp;31, 2000, 1999 and 1998,
respectively. As of December&nbsp;31, 2001 these points of sale
comprised 135 customer sales and service centers owned and
operated by Iusacell, 1,619&nbsp;points of sale operated by
independent distributors who offer all of our products and
44,352&nbsp;points of sale for distribution only of VIVA prepay
cards, also operated by independent distributors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our redesigned sales force compensation plan is
structured to motivate the sales force within each distribution
channel through monetary incentives. This plan provides training
and monetary incentives so that the sales force is encouraged to
activate profitable and loyal accounts, cross-sell the full line
of our service offerings and maintain our standards in
advertising, promotions and customer service.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer
Sales and Service Centers</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have reconfigured each of our customer sales
and service centers to offer one-stop-shopping for a variety of
cellular, long distance and paging services, as well as
accessories. Walk-in customers can subscribe to cellular service
postpaid plans, purchase prepay cards, sign up for long distance
service and purchase equipment such as handsets, pagers and
accessories. In an effort to maximize customer loyalty, reduce
postpaid churn and prepay turnover and increase average monthly
revenue per subscriber through cross-selling, we continue to
emphasize the customer sales and service centers that we own and
operate ourselves as a key distribution channel.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 1998, we opened 22 new customer sales and
service centers. In 1999, although we did not open any new
customer sales and service centers, we replaced one existing
customer sales and service center and remodeled 16 other
existing customer sales and service centers. In 2000, we opened
14 new customer sales and service centers and remodeled 6 other
existing customer sales and service centers. In 2001, we opened
29 new customer sales and service centers. As of
December&nbsp;31, 2001, Iusacell owned and operated
135&nbsp;customer sales and service centers throughout our
cellular and PCS regions.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Direct
Sales Force</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To service the needs of our customers, we have
created a dedicated direct sales force, which, at
December&nbsp;31, 2001, included 700 full-time sales
representatives, an increase from 117 full-time sales
representatives at December&nbsp;31, 2000. The increase in the
number of our direct sales representatives was the result of our
recent acquisition of Portatel which provides cellular service
in Region 8 and the integration of new personnel dedicated to
Regions 1 and 4 in northern Mexico, where we have begun to
provide commercial PCS services on a limited basis. This group
of trained representatives seeks to increase sales by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">aggressively pursuing the sales opportunities in
    the different niches of the market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;bundling&#148; combinations of services
    into customized packages designed to meet customers&#146;
    requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">developing and marketing new services to satisfy
    the demands of such customers; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">educating corporate purchasing managers about
    alternative pricing plans and services.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These direct sales representatives are
distributed along our service regions to deliver personalized
service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, face-to-face customer service personnel
were integrated to 31&nbsp;stores which we own and operate in an
effort to further personalize the service. In 2002, we expect to
include a customer service representative in all of the stores
we own.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Independent
Distributors</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to broaden our market, we maintain
relationships with a broad network of over 80 exclusive
distributors that, at December&nbsp;31, 2001, sold all of our
products at 1,619 points of sale in our core regions in central
Mexico. In addition, VIVA prepay cards were distributed at an
additional 44,352 points of sale. In order to ensure that our
standards are maintained at all distribution points, we provide
assistance to our
</FONT>

<P align="center"><FONT size="2">34
</FONT>

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<DIV align="left">
<FONT size="2">distributors in training, promotions and
advertising. We also provide them with information on our
customer base to allow the distributors to service our customers
effectively.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we launched a program called &#147;los
Rojos&#148; which was implemented in Mexico City, Guadalajara,
Toluca, Cuernavaca, Puebla and Veracruz. The program,
implemented through a distributor, recruits existing street
vendors and provides them with an opportunity to increase their
income by directly selling our prepay VIVA cards and
preactivated prepaid handsets to car drivers and pedestrians.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commission
Sales Agents</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We retain commission agents as a flexible sales
force in all of our mobile wireless regions. The agents function
as cellular service brokers for us, working out of their own
premises to better target their customers. These agents provide
additional distribution outlets with minimal support from
Iusacell. We used to retain commission agents as a flexible
sales force throughout our regions. As of December&nbsp;31,
2001, we had no agreements with commission sale agents since we
decided to incorporate these into our direct sales force.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Telemarketing</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time, Iusacell engages telemarketing
service providers as a direct marketing mechanism or to follow
up on targeted mailings.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electronic
Means</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, we implemented two important electronic
tools for the sale of prepay airtime: sales through automated
teller machines at banks and sales over the phone by dialing
*AIRE. Sales at ATM machines are charged against our
customer&#146;s bank account. Sales using *AIRE are charged to
our customer&#146;s credit card. We have implemented ATM sales
at BBVA Bancomer, Bital and Bancrecer. We intend to negotiate
additional ATM distribution agreements in 2002. The charges are
credited to our customer&#146;s account by using a personal
identification number.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell has launched an integrated media plan
emphasizing the benefits of our products and supported by the
Iusacell brand image, the logo for which was redesigned in 1997
and modernized in 2001. Since 1997, all product offerings have
been marketed under the single, well-recognized IUSACELL brand
name which was reinaugurated as <I>IUSACELL Digital </I>in
February 1998, in anticipation of the digitalization of our
network and product offerings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the media plan is to inform and
convince potential users and subscribers about the benefits of
the products and services offered by Iusacell and to target
potential subscribers through a coordinated print, radio,
television and fixed and moving outdoor advertising campaign. A
key element of this integrated media plan is a periodic agency
review, where the sales results of a given campaign are
evaluated. The integrated media plan enables us to negotiate
more favorable advertising rates. Television and print
advertisements prominently feature an ad-response telephone
number to solicit new customer inquiries.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer
Service</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We view superior customer service as essential in
order to distinguish ourselves in the competitive Mexican
wireless telecommunications market. We have trained customer
service representatives who are equipped to answer
customers&#146; questions regarding services and products and
are available from 8:00 a.m. to 10:00&nbsp;p.m. daily. We train
our customer service representatives to ensure that each
customer receives prompt attention, informed answers to any
inquiries and satisfactory resolution of any concerns. We
believe that enhanced customer service, especially after-sales
support, is essential to developing brand loyalty and supports
the efforts of our sales force to cross-sell our services and
products. For prepay customers, the VIVA prepay operating system
better tracks the usage patterns and identities of these
subscribers. The system has improved customer satisfaction
through automated activation, automated self service menus
through the Integrated Voice Response (IVR)&nbsp;system, voice
messaging and other services and has lowered the cost of support
services.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To further enhance customer service, we have
installed dedicated personal computer terminals linked to our
billing system so that each customer service representative,
either at a Iusacell customer sales and service center or at a
Iusacell call center, can handle customer inquiries, billing
questions and account payments with real-time data and a full
customer profile in hand. These dedicated personal computer
terminals have been provided with a new application, Computer
Telephony Integration (CTI)&nbsp;which allows us to give a
proactive solution to our customers&#146; requests, minimizing
the time of response. Customer data gathered from such sources
as the activation process, the billing system and exit
interviews with customers who terminate service allows us to
better tailor our marketing strategy to each customer. Along
with providing information as to how we can improve our customer
service, this data is expected to enable representatives from
each of the distribution channels to better target their sales
approach to each customer when cross-selling Iusacell&#146;s
services and products. We are currently in the process of
upgrading our Automatic Call Distribution (ACD), monitoring and
workforce management systems and we believe we will have these
upgraded systems in place by the second half of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In early 1998, we opened two call centers that
provide more automated and efficient service to customers.
Iusacell&#146;s call center service quality and response speed
in Region 9 further improved in 2000 with the implementation of
state-of-the-art customer service software. We implemented this
software in Regions 5, 6 and 7 in 2001. In 1998, we also began
implementing the Customer Attention Support Team
(CAST)&nbsp;program in our busiest customer service centers in
order to accelerate the problem resolution process. This program
has also been expanded to include the majority of our customer
service centers in all five of our cellular operating regions.
Currently we have extended this program to all our corporate,
medium and small business accounts as well as government
accounts. Each of these customers has an assigned CAST, sales
and collections executive.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2000, the certifying company
<I>Societ&#233; Generale de Surveillance de M&#233;xico
</I>(SGS)&nbsp;granted ISO 9002 Certification under the
<I>Entidad Mexicana de Acreditaci&#243;n (EMA) </I>to
Iusacell&#146;s customer care process in the following areas:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">*611;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">explanations and complaints, including certain
    CAST sale centers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">activations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">retention; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">service assurance.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since we received the ISO 9002 Certification, we
have had four quality audits by the certifying company and we
have maintained the certification.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pricing</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General.</FONT></I><FONT size="2"> Iusacell
offers a variety of flexible pricing options for our mobile
wireless service. The primary components of the postpaid pricing
plans include monthly fees, per-minute usage charges and a
number of free minutes per month. The prepay program markets
cards which credit a specified number of pesos to a
customer&#146;s account. The cards can be utilized for outgoing
and incoming calls over a period of up to 60&nbsp;days and for
incoming local calls only for an additional period of
305&nbsp;days. See Item&nbsp;4, &#147;Information on the
Company&nbsp;&#151; Business Overview&nbsp;&#151; Mobile
Wireless Services&nbsp;&#151; Prepay Customers.&#148; Most of
the postpaid plans include a selection of free cellular
handsets. The prepay plans do not provide free cellular handsets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Postpaid Plans. </FONT></I><FONT size="2">The
digital and analog postpaid pricing plans are designed to target
primarily high and moderate usage postpaid subscribers.
High-usage customers are typically willing to pay higher monthly
fees in exchange for larger blocks of free minutes, value-added
services, a free high-end handset and lower per minute airtime
charges under a single contract. Moderate and lower-usage
subscribers typically prefer pricing options which have a lower
monthly charge, fewer free minutes, a less expensive handset and
higher per minute airtime charges than those options chosen by
high-usage customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 1999, in an effort to differentiate our
digital product, we drastically simplified our digital postpaid
plan offerings. We reduced the number of our postpaid plans from
11 to 6 and substantially increased the number of minutes
included with the monthly fee when compared with previous
comparable digital and
</FONT>

<P align="center"><FONT size="2">36
</FONT>

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<DIV align="left">
<FONT size="2">analog postpaid plans. However, to satisfy the
more limited needs of low-usage postpaid subscribers, we
maintained one additional postpaid plan which provides a
moderately priced, fixed monthly charge coupled with a high
per-minute airtime charge and relatively few free minutes.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Prepay Plans.</FONT></I><FONT size="2"> In
contrast to postpaid subscribers, prepay customers typically
generate low levels of cellular usage, have access to a limited
number of value-added services, generally already own a handset
and often are unwilling to make a fixed financial commitment or
do not have the credit profile to purchase postpaid plan
cellular services. Other prepay customers include vacationers
and traveling business people who require cellular service for
short periods of time. In addition to helping customers control
costs, our prepay programs have no monthly bill and allow
customers to prepay for cellular services in cash.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1997, we introduced our
next-generation VIVA prepay service. VIVA provides for automated
reactivation and value-added services such as voice-messaging.
As of December&nbsp;31, 2001, VIVA prepay cards were available
in denominations of Ps.&nbsp;100, Ps.&nbsp;150, Ps.&nbsp;200 and
Ps.&nbsp;500. Since January&nbsp;1, 2002, after the
implementation of a new tax to certain telecommunication
services in Mexico, our VIVA prepay cards are only available in
denominations of Ps.&nbsp;100 and Ps.&nbsp;150. See Item&nbsp;3,
&#147;Key Information&nbsp;&#151; Risk Factors&nbsp;&#151; Risk
Factors Relating to Doing Business in Mexico.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Hybrid Plans.</FONT></I><FONT size="2"> In
2000, we launched the ID Pack, a hybrid plan with elements of
postpaid and prepay plans targeted at high school and
university-aged youths who want the status of a cellular phone
but want to control their usage. The plan had a low monthly fee
of Ps.&nbsp;99 and provided certain value-added services, with
airtime purchased through the activation of a VIVA prepay card.
In 2001, we launched the Lady Pack, a hybrid plan targeted at
women in their 20s. Both of these plans were discontinued in
January 2002. In February 2002, we launched the IDEAL plan, a
new hybrid plan targeted at individuals who want the status of a
cellular phone but want to control their usage. This plan also
has a low monthly fee of Ps.&nbsp;165 and provides certain
value-added services and 30&nbsp;minutes worth of airtime per
month. Additional airtime is purchased through the activation of
a VIVA prepay card.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Discounts on Incoming
Calls.</FONT></I><FONT size="2"> In response to competitive and
market conditions, we offer discounts on the airtime charges of
up to 50% for incoming calls for our customers who are in their
home region and who have opted out of the CPP system. Beginning
in May 1999, with the advent of the CPP modality, cellular
customers who do not opt out of CPP do not pay airtime charges
for incoming local calls (other than incoming local calls while
roaming outside their home region).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Off-peak Pricing.</FONT></I><FONT size="2">
Evidencing our commitment to innovation and our focus on
differentiation, we launched an off-peak pricing rate plan for
postpaid and prepaid subscribers in November 2001. For the first
time in Mexico, this plan offered wireless customers a
discounted per-minute tariff during nights and weekends. Our
competitors soon followed our initiative.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Strategy.</FONT></I><FONT size="2"> We intend
to continually review market pricing and will attempt to
increase prices, if economic and competitive conditions permit,
to keep pace with inflation. Constant adjustments to meet market
and competitive conditions may require that we increase or
decrease prices over short periods of time. See Item&nbsp;5,
&#147;Operating and Financial Review and Prospects&nbsp;&#151;
Trend Information&nbsp;&#151; Price Increases and
Rollbacks.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Activation,
Billing and Collection Procedures</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We can activate a phone within 15 minutes or less
for any prepay and postpaid customers. For postpaid customers
who intend to pay their monthly charges with a credit card,
there is a credit approval process prior to the delivery and
activation of a cellular telephone. For postpaid customers who
intend to pay their monthly charges in cash, there is a credit
review process and a requirement of a security deposit,
depending on the postpaid plan, in a minimum amount equal to 1.5
times the corresponding monthly rental fee. In 2000, we started
to offer direct online activation to reduce the time of response
to our customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have also implemented a system to monitor MOU
levels and the number of calls to certain geographic areas in
order to identify abnormal usage by postpaid subscribers. When
abnormal usage is detected, we contact the subscriber to
determine whether such usage has been authorized. We believe that
</FONT>

<P align="center"><FONT size="2">37
</FONT>

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<DIV align="left">
<FONT size="2">these procedures are effective in reducing the
number of billing disputes with subscribers and losses due to
cellular fraud.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Billing is currently administered using five
different billing systems, including a cellular customer care
and billing system provided by LHS Communications Systems, Inc.
(LHS)&nbsp;in Regions 5, 6, 7, 8 and 9 which we also use for our
450 MHz fixed local wireless business, one point of sale system
that provides billing, administration and control features, a
proprietary residential long distance system, a proprietary
system for high-volume business long distance customers and a
purchased system for paging customers. We compile billing
information from our switches by electronic transfer on an
hourly basis for processing by our billing systems. We take
protective and disaster recovery measures in connection with all
billing information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From 1998 through 2001, we invested a total of
U.S.$32.6&nbsp;million in the cellular portion of our LHS
cellular customer care and billing system.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We mitigate our credit exposure in five ways:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for all customers by obtaining a credit report
    from the <I>Bur&#243; Nacional de Cr&#233;dito </I>(National
    Credit Bureau), a Mexican affiliate of TransUnion Corporation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by requiring payment to be made by credit card
    or, for those customers who do not pay by credit card, by
    requiring security deposits;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by requiring that postpaid customers purchase a
    bond, which provides for payment in the event of customer
    defaults;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by establishing credit limits, and portfolio
    segmentation, according to customers&#146; credit quality; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by utilizing prepay services, which eliminate all
    credit risk.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For 1999 and 2000, we reserved approximately 2.7%
and 1.6% of our cellular revenues in each year for doubtful
receivables. For 2001, we reserved approximately 1.7% of our
cellular revenues for doubtful receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, we also record a revenue provision
for those postpaid customers who had fallen behind in their
payments and whose service had been suspended. Toward the end of
the third quarter of 1999, we changed our billing practice for
these postpaid customers. Rather than continue our policy of not
charging monthly fees upon suspension, in the hope of receiving
additional revenues from CPP tariffs for incoming local calls
and from suspended customers who ultimately pay overdue amounts
and reinitiate service, we began to permit incoming call service
and continue to charge monthly fees to suspended customers for
an additional two months, but reserved a substantial portion of
the monthly fees as a revenue provision. This period was reduced
to two months in the second quarter of 2000. This change in
policy resulted in additional marginal revenue and in the
increase in 1999 and 2000 reserves discussed above.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Network and
Equipment</I></FONT></B>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mobile Wireless
Services</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, our integrated
mobile wireless network comprised 7 cellular switches,
583&nbsp;cellular and PCS cell sites, 135&nbsp;repeaters and
26&nbsp;microwave repeaters, and covered approximately 66% of
all mobile wireless regional POPs, representing 60&nbsp;million
inhabitants or 59% of Mexico&#146;s total population. In 2000,
we added 63&nbsp;cellular cell sites and 38&nbsp;repeaters
throughout our cellular regions. During 2001, we added
83&nbsp;new cellular cell sites, 42&nbsp;PCS cell sites,
43&nbsp;repeaters and 1&nbsp;switch. As a result of the
integration of Portatel into our business, in 2001 we added 26
cell sites in Region 8 to our cellular network.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1997, we signed an agreement with
subsidiaries of Lucent Technologies for the replacement of
Iusacell&#146;s existing analog network equipment with Lucent
Technologies analog and CDMA digital network equipment. This
replacement began in February 1998. All regions that we owned at
the time were completely swapped out as of August 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are also deploying Lucent Technologies CDMA
technology as we build out our PCS networks in Regions&nbsp;1
and 4 in northern Mexico pursuant to an agreement signed with
subsidiaries of Lucent Technologies on February&nbsp;11, 2002.
As of December&nbsp;31, 2001, our PCS network comprised 46 PCS
cell sites that used
</FONT>

<P align="center"><FONT size="2">38
</FONT>

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<DIV align="left">
<FONT size="2">virtual switching through one of our cellular
switches and 2 PCS microwave transmission sites. In the first
quarter of 2002, one new PCS switch was acquired and deployed to
service our PCS regions, replacing the use of virtual switching
through the cellular switch. We elected to deploy CDMA digital
technology instead of TDMA technology based on our and
Verizon&#146;s evaluation of the two technologies. Verizon is
successfully using CDMA technology in most of its U.S. markets
with favorable customer response. CDMA offers significantly
greater call-carrying capacity, superior voice quality, longer
telephone battery life and greater fraud protection and is
easier to upgrade than TDMA. We will maintain transmitting
equipment to serve both analog and digital formats, and we are
marketing tri-mode cellular and PCS telephones capable of
sending and receiving both analog and digital transmissions in
order to support roaming service between our cellular and PCS
regions.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Digital microwave links between cell sites and
the landline system are supplied by various equipment
manufacturers. Taking advantage of the ability of our various
switching systems to run customized software, in 2000 we
developed a proprietary software package which is able to track
and report, in real-time, all aspects of network performance,
including traffic analysis, call quality and alarms. In 2001 we
began introducing the new Dense Wavelength Division Multiplexing
(DWDM)&nbsp;technology in some high-traffic areas of our fiber
optic network to increase capacity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a network operations and control center
(NOCC)&nbsp;in Mexico City which oversees, administers and
provides technical support to all our cellular regions. In 1999,
we upgraded our NOCC by installing a new network management
system that provides more complete and automated surveillance
capabilities and fault and performance management for all
network equipment. During 2000, we implemented a new network
administration system that provides better surveillance and
administration of network performance. We are installing another
center for network operations in Toluca that will provide an
alternative monitoring capability for the network in case of a
contingency in the center for network operations located in
Mexico City. We expect to start operations at the center to be
located in Toluca during the second half of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2002 we started providing two-way Short
Message Service (SMS)&nbsp;and we are evaluating the feasibility
of installing a Packet Switched Data (PSD) platform to provide
data services over the new 3G-1XRTT technology. Nevertheless,
the network is being currently enhanced to support 3G-1XRTT
handsets only for voice service in order to increase the network
capacity.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
Services</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide paging services primarily using our
own cellular network facilities as well as 69 owned and one
leased paging antennas. For long distance, we use fiber optics
and state-of-the-art digital systems. In particular, we use our
three long distance switches and our own fiber optic network and
transmission equipment, as well as other redundant facilities
leased from Telmex and other competitors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide private data transmission services,
primarily using excess capacity in our microwave backbone in our
existing cellular network in Region&nbsp;9.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that our local wireless network, if
implemented in the 450&nbsp;MHz frequency band, will be based on
the most advanced digital switching, transmission and subscriber
connection equipment that is readily available and commercially
feasible. We would utilize our existing infrastructure,
including one switch and fourteen 450&nbsp;MHz cell sites, to
the extent possible. If we opt to provide local wireless service
through our 800&nbsp;MHz cellular or 1.9&nbsp;GHz (PCS)
frequency bands, the digital technology that would be employed
would offer additional features such as out-of-zone mobility.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;<I>Competition</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The offering of cellular services in Mexico is
currently a regulated duopoly in each region. Iusacell&#146;s
cellular competitor in all regions in which it provides service
is Telcel, the holder of the Cellular B-Band concession for
service throughout Mexico and the country&#146;s largest
cellular provider. Cellular systems compete principally on the
basis of quality of telecommunications services, customer
service, price, breadth of coverage area, roaming capabilities
and value-added services. Operators are largely free to set
their own rates, provided they are set on the basis of cost.
</FONT>

<P align="center"><FONT size="2">39
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are facing increasing competition from
companies providing mobile wireless telecommunications services
utilizing alternative existing technologies. Nextel de
M&#233;xico,&nbsp;S.A. de C.V. began marketing its enhanced
specialized mobile radio services in 1998. In 1999, we began to
face competition from the winners of 1.9&nbsp;GHz
(PCS)&nbsp;spectrum in the auctions concluded in May 1998.
Pegaso commercially launched its mobile wireless PCS services in
Tijuana in February 1999, initiated PCS services in Monterrey,
Guadalajara and Mexico City later in 1999 and at the end of 2001
provided PCS service in 12&nbsp;cities in Mexico. In May 2002,
Telef&#243;nica M&#243;viles announced that it signed an
agreement to buy 65% of the share capital of Pegaso from Leap
Wireless and Sprint PCS and intends to merge this entity into
its existing operating company in Mexico. Unef&#243;n launched
mobile wireless services in Acapulco and Toluca in February
2000, and now provides fixed and mobile wireless services in
those two cities as well as in Mexico City, Guadalajara,
Monterrey and 12 more cities in Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In paging services, we compete with established
companies such as Comunicaciones Mtel, S.A. de C.V. (Skytel),
Operadora Biper, S.A. de C.V., Enlaces Radiof&#243;nicos, S.A.
de C.V. (Digitel), Comunicaci&#243;n Din&#225;mica
Metropolitana, S.A. de C.V. (Coditel), Grupo Radio Beep, S.A. de
C.V. and Buscatel, S.A. de C.V., a Telmex subsidiary. Some of
our paging competitors have already established nationwide
paging networks, giving them a significant operational and
marketing advantage over us. In 1999, COFETEL concluded auctions
for a series of nationwide and regional concessions for
frequencies to be used to provide two-way paging services in
which we did not participate. Moreover, we and other digital
wireless providers, including Telcel and Pegaso, have begun to
provide one-way and two-way short message services, which are
paging services, over wireless frequencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In providing long distance telephone service, we
face or will face competition from 14 other concession holders,
including Telmex and joint venture companies in which AT&#38;T
and MCI WorldCom have beneficial ownership interests.
Presubscription balloting in which telephone customers were
asked to elect their long distance carrier was conducted in 150
cities across Mexico in 1997, 1998 and 1999. We chose not to
commit significant marketing resources to the balloting process
and fared poorly in the initial balloting results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the local telephony market, we expect to face
significant competition from Telmex, the existing monopoly, and
new competitors providing service over the 1.9&nbsp;GHz (PCS)
frequency bands, and 3.4-3.7&nbsp;GHz (Wireless Local Loop)
frequency bands, such as Axtel and Unef&#243;n.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In providing data transmission services, we
compete for customers with Telmex, state-owned
Telecomunicaciones de M&#233;xico, which we refer to as Telecom,
and the operational long distance companies. In addition, we
believe that the current Mexican data transmission industry
includes over 1,000 private networks that provide data
transmission services.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Government
Regulation</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Telecommunications systems in Mexico are
regulated by the SCT and by COFETEL, a decentralized regulatory
body within the SCT, pursuant to the 1995 Telecommunications Law
<I>(Ley Federal de Telecomunicaciones)</I>, which became
effective on June&nbsp;8, 1995. Regulations governing
international long distance, domestic long distance and local
telephony have been promulgated under the 1995
Telecommunications Law. However, some rules from the prior Law
of General Means of Communication <I>(Ley de V&#237;as Generales
de Comunicaci&#243;n)</I> and the rules promulgated under such
law, including, without limitation, the Telecommunications Rules
<I>(Reglamento de Telecomunicaciones) </I>which we collectively
refer to as the Original Communications Laws, generally remain
effective if they are not inconsistent with the 1995
Telecommunications Law and the rules promulgated under that law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These laws and regulations define the regulatory
structure applicable to the nationwide telecommunications
infrastructure and the provision of telecommunications services.
They govern, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">applications to obtain concessions to install,
    maintain and operate telecommunications systems;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the establishment of technical standards for the
    provision of telecommunications services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the grant, revocation and modification of
    concessions and permits; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the auction of spectrum.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">40
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the first half of 2001, the SCT announced
that the 1995 Telecommunications Law would be amended to include
new provisions related to competition, customer protection,
spectrum auctions, permits for commercialization of
telecommunication services and universal service. Reportedly,
the amendments will focus more on networks than on services. The
SCT and the telecommunications industry have been recently
involved in discussions to define the content of the new law. We
believe that the initiative could be presented to Congress for
approval in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In particular, the terms and conditions of
concessions and permits granted under the Original
Communications Laws, which is the case for the cellular
concessions and permits granted to Iusacell and our
subsidiaries, should be governed by the Original Communications
Laws and respected under the new regulatory regime until their
expiration. The 1995 Telecommunications Law may grant rights
enhancing those set forth in the Original Communications Laws.
For instance, rates charged by holders of concessions and
permits granted under the Original Communications Laws no longer
require prior approval from the SCT, but only require
registration with COFETEL.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Concessions
and Permits</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To provide public telecommunications services in
Mexico through a public network, the service provider must first
obtain a concession from the SCT. Pursuant to the 1995
Telecommunications Law, concessions for public networks may not
exceed a term of 30&nbsp;years, and concessions for
radioelectric spectrum may not exceed a term of 20&nbsp;years.
Concessions may be extended for a term equivalent to the term
for which the concession was originally granted, but not to
exceed such 20- or 30-year limit, as the case may be.
Concessions specify, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the type of network, system or service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the allocated spectrum, if applicable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the geographical region in which the holder of
    the concession may provide the service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the required capital expenditure program;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the term during which such service may be
    provided;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the payment, where applicable, required to be
    made to acquire the concession, including, where applicable, the
    participation of the Mexican government in the revenues of the
    holder of the concession; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other rights and obligations affecting the
    concession holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to concessions, the SCT may also
grant permits for (i)&nbsp;establishing, operating or exploiting
telecommunications services not constituting a public network
(i.e.,&nbsp;reselling) and (ii)&nbsp;installing, operating or
exploiting transmission-ground stations. There is no specified
maximum term for permits. Under the 1995 Telecommunications Law,
only registration with the SCT is required to provide
value-added telecommunications services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the 1995 Telecommunications Law and the
Foreign Investment Law <I>(Ley de Inversi&#243;n
Extranjera)</I>, concessions may only be granted to Mexican
individuals and to Mexican corporations in which non-Mexicans
hold no more than 49% of their voting shares or which are not
otherwise controlled by non-Mexicans, except that, in the case
of concessions for cellular communications services, foreign
investment participation may exceed 49% with the prior approval
of the Mexican Foreign Investment Commission of the Mexican
Ministry of Economy (formerly the Ministry of Commerce and
Industrial Development). The Mexican Foreign Investment
Commission has recently ruled, upon application of Unef&#243;n,
that concessions for PCS services should be treated identically
to concessions for cellular services for foreign investment
purposes. There are no foreign investment participation
restrictions in respect of operations conducted under permits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A concession or a permit may be terminated
pursuant to the 1995 Telecommunications Law upon:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">expiration of its term;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">resignation by the concession holder or the
    permit holder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">revocation;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">41
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">expropriation; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">dissolution or bankruptcy of the concession
    holder or the permit holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A concession or a permit may be revoked prior to
the end of its term under certain circumstances, such as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unauthorized or unjustified interruption of
    service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the taking of any action that impairs the rights
    of other concessionaires or permit holders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">failure to comply with the obligations or
    conditions specified in the concession or permit;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">failure to provide interconnection services with
    other holders of telecommunications concessions and permits;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">loss of the concession or permit holder&#146;s
    Mexican nationality in instances in which Mexican nationality is
    legally required;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unauthorized assignment, transfer or encumbrance
    of the concession or permit, of any rights under the concession
    or permit or of assets used for the exploitation of the
    concession or permit;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">failure to pay to the Mexican government its fee
    for the concession or permit or, where applicable, its
    participation in the revenues of the holder of the concession or
    permit; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">participation of any foreign government in the
    capital stock of the holder of the concession or permit.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In addition, the SCT may establish for any
    concession further events which could result in revocation of
    that concession.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican government, through the SCT, may also
temporarily seize all assets related to a concession or permit
in the event of a natural disaster, war, significant public
disturbance or threats to internal peace and for other reasons
related to preserving public order or for economic reasons. In
addition, the government has the statutory right to expropriate
a concession and assets related to its exploitation for public
interest reasons. Under Mexican law, the Mexican government is
obligated to compensate the owner of the assets in the case of a
statutory expropriation or temporary seizure, except in the
event of war. If the Mexican government temporarily seizes such
assets, it must indemnify the concession or permit holder for
all losses and damages, including lost revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the case of an expropriation, the amount of
the compensation is to be determined by appraisers. If the party
affected by the expropriation disagrees with the amount
appraised, it may initiate judicial action against the
government. Should no agreement be reached on the amount of the
indemnity in the case of a seizure or expropriation, the
determination will be made by an independent appraiser. Iusacell
is not aware of any instance in which the SCT has exercised any
of these powers in connection with a cellular company.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">The
Original Concession</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right to provide radiotelephony, local
wireless and data transmission services nationwide, as well as
cellular service in Region 9, is based upon the concession
granted on April&nbsp;1, 1957, as amended, which we refer to as
the Original Concession, to Servicio Organizado Secretarial,
S.A., merged into SOS Telecomunicaciones, S.A. de C.V., which we
refer to as SOS. The term of the Original Concession is
50&nbsp;years, and it expires on April&nbsp;1, 2007. The
Original Concession may, however, be revoked prior to such date
in the event that SOS fails to comply with its terms or
applicable law. The Original Concession is renewable upon timely
application to the SCT, provided that SOS has complied with all
of the requirements of the Original Concession and agrees to any
new terms and conditions established by the SCT at the time of
renewal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In consideration for the Original Concession, SOS
must make payments to the Mexican government equal to 5% of all
gross revenues derived from services provided through its Region
9 cellular network and payments in an amount which is the
greater of (i)&nbsp;4% of all gross revenues and (ii)&nbsp;10%
of net income, in either case, derived from services provided
through its nationwide radiocommunications network.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of the Original Concession, SOS
must continually modernize its services. In updating its
services, SOS must submit technical and economic plans for
approval by the SCT. In determining whether to approve these
plans, the SCT is authorized to consider whether the plans
sufficiently address factors such as
</FONT>

<P align="center"><FONT size="2">42
</FONT>

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<DIV align="left">
<FONT size="2">the public interest (including, without
limitation, teledensity) and efficiency and uniformity in
telecommunications throughout Mexico.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Initially, the Original Concession authorized
only the installation and commercial operation of nationwide
mobile (vehicle-installed) radiotelephone public service in the
132-144&nbsp;MHz frequency range. Since then, however, the
Original Concession has been amended numerous times, allowing us
to expand the types of telecommunications services which we may
offer. In 1978, the Original Concession was amended to grant SOS
an additional allocation in the 440-450&nbsp;MHz and
485-495&nbsp;MHz frequency ranges in return for yielding a
portion of its 132-144&nbsp;MHz frequency range allocation. SOS
retained the frequencies between 138 and 144&nbsp;MHz.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Between 1986 and 1989, the Original Concession
was further amended to enable SOS to provide fixed rural
radiotelephony service, to offer telex and data transmission
with the obligation to link its subscribers to the network owned
by Telecom, and to interconnect its radiocommunications ground
stations through satellite.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1989, SOS was authorized to install, operate
and maintain a mobile public radiocommunications network with
cellular technology in the 825-835&nbsp;MHz and 870-880&nbsp;MHz
frequency bands in Region&nbsp;9. In 1990, SOS was authorized to
carry intra-regional cellular-to-cellular communications
throughout Region&nbsp;9 without being required to interconnect
with the long distance carrier. In 1992, SOS was authorized to
provide public data transmission service nationwide through its
radio communications networks without the obligation to link its
subscribers to the Telecom network.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1993, SOS was granted an additional 5&nbsp;MHz
band in the 800&nbsp;MHz frequency range for the provision of
cellular service, due to the high volume of cellular traffic
experienced in Region&nbsp;9. In the same year, SOS was
authorized to improve its radiocommunications public service in
the 440-450&nbsp;MHz and 485-495&nbsp;MHz frequency ranges by
utilizing digital technology and to interconnect its
telecommunications systems through fiber optic, satellite and
microwave technologies. The SCT also clarified the ability, and
indeed the obligation, of SOS to interconnect customers of its
nationwide radio communications network regardless of whether
such customers use fixed, mobile or portable telephones.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with the 1995 Telecommunications
Law, SOS applied to renew the Original Concession in March 1997.
Moreover, in December 1996, we applied to divide the Original
Concession into two concessions, one relating to the provision
of cellular services over the 800&nbsp;MHz frequency band in
Region&nbsp;9, which would not be subject to restrictions on
foreign investment, and a second relating to the 450&nbsp;MHz
frequencies, which would be subject to restrictions on foreign
investment. We are currently negotiating the terms and
conditions for such extension and division with COFETEL.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Cellular
Concessions</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico is divided into nine cellular regions. The
SCT has allocated cellular telephone system frequencies in each
region in the Cellular&nbsp;A-Band and the Cellular&nbsp;B-Band.
In each region, Telcel holds the Cellular&nbsp;B-Band concession
and its cellular competitor in each region holds the
Cellular&nbsp;A-Band concession.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In Region&nbsp;9, we hold the right to provide
cellular service pursuant to an authorization granted to SOS by
the SCT in 1989 under the Original Concession. In
Regions&nbsp;5, 6, 7 and 8, we hold the right to provide
cellular service through our subsidiaries Comunicaciones
Celulares de Occidente, S.A. de C.V., known as Comcel, Sistemas
Telef&#243;nicos Port&#225;tiles Celulares, S.A. de C.V., known
as Portacel, Telecomunicaciones del Golfo, S.A. de C.V., known
as Telgolfo, and Portatel del Sureste, S.A. de C.V. known as
Portatel, respectively. Comcel, Portacel, Telgolfo and Portatel
each holds a 20-year concession expiring in 2010 which
authorizes these subsidiaries to install, operate, maintain and
exploit mobile public radiotelephone networks with cellular
technology for commercial use in the Cellular A-Band. In
consideration for these authorizations and
</FONT>

<P align="center"><FONT size="2">43
</FONT>

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<DIV align="left">
<FONT size="2">concessions, the subsidiaries made initial
payments to the Mexican government and, in addition, must make
payments as follows:
</FONT>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of Gross Revenues Payable To</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Subsidiary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican Government</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comcel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Portacel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telgolfo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Portatel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">By the terms of their concessions, Comcel,
Portacel, Telgolfo and Portatel must continually modernize their
services after receiving approval of their technical and
economic plans from the SCT. In determining whether to approve
these plans, the SCT is authorized to consider whether the plans
sufficiently address factors such as the public interest
(including, without limitation, teledensity) and efficiency and
uniformity in telecommunications throughout Mexico. These
concessions may be revoked or terminated prior to their
expiration dates in the event the concession holder fails to
comply with the conditions established in the concessions or
applicable law. The concessions may, however, be renewed for a
term equal to the original term upon timely application to the
SCT, provided that the concession holder had complied with all
of the requirements of its concession and agrees to any new
terms and conditions established by the SCT at the time of such
renewal.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">PCS
Concessions</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 1998, the SCT granted to Iusacell PCS,
S.A. de C.V., which we refer to as Iusacell PCS, a joint venture
between Iusacell and Jos&#233; Ram&#243;n Elizondo Anaya, a
former director of Iusacell Celular, in which Iusacell holds a
94.9% equity interest and a 49% voting interest, a concession
for the installation and exploitation of a public network to
provide fixed and local mobile access and a concession of
1.9&nbsp;MHz frequencies in Region&nbsp;1 (which includes the
city of Tijuana) and Region 4 (which includes the city of
Monterrey), for a renewable 20-year term. Under the terms of its
concession title, Iusacell PCS is committed to cover at least
20% of the total population in those regions by the end of the
third year of the concession and 50% of the total population in
those regions by the end of the fifth year of the concession. We
started PCS network operations during the second quarter of 2000
and commercial operations in the fourth quarter of 2001, and we
are currently in compliance with the coverage commitments under
our concession. Upon our application, in November 2000, the SCT
granted Iusacell PCS an exemption for five years from the
obligation to take part in the long distance carrier selection
by a pre-subscription process.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Paging</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;14, 1995, Iusacell Celular and
Infomin formed Infotelecom as a joint venture to market national
and international paging services. Infomin has a concession,
which expires on July&nbsp;20, 2009, to provide nationwide
paging services in Mexico. Although the joint venture agreement
between Iusacell Celular and Infomin contemplates that Infomin
will ultimately transfer its paging concession to Infotelecom,
Infomin&#146;s paging concession prohibits foreign ownership of
more than 49% of the voting shares of the entity holding the
concession. Infomin, therefore, would be unable to contribute
its paging license to the joint venture so long as Verizon
continued to control the management of Iusacell and Iusacell
Celular continued to hold more than 49% of the voting shares of
Infotelecom.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to eliminate this obstacle to the
transfer of the paging concession to Infotelecom, in December
1998 we sold a 2% interest in Infotelecom to Mr.&nbsp;Jos&#233;
Ram&#243;n Elizondo, a former director of Iusacell Celular. As a
result, we currently hold a 49% interest in Infotelecom.
Infotelecom is required to make monthly payments to Infomin
equal to 5% of all gross revenues for the preceding month. This
payment represents the amount which Infomin as concession holder
must pay to the SCT for the right to provide paging service. In
2000, Infomin received governmental approval to transfer its
paging concession to Infotelecom. We nevertheless expect the
transfer of the concession to be implemented in 2002. The
financial statements of Infotelecom are consolidated with the
financial statements of Iusacell. See Note 2 to the Consolidated
Financial Statements.
</FONT>

<P align="center"><FONT size="2">44
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Long
Distance</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right to provide international long distance
services is based upon a long distance concession granted by the
SCT to Iusatel, on October&nbsp;16, 1995. The term of the long
distance concession is 30&nbsp;years and may be renewed upon
timely application to the SCT, for an equal period of time,
provided that Iusatel complies with certain requirements. Upon
our application, the SCT and COFETEL modified this concession on
December&nbsp;17, 1997, authorizing a change in the coverage
requirements and increasing flexibility in the choice of
transmission technology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the modified concession, Iusatel is
required to comply with technical specifications and had to
serve with its own infrastructure a minimum of 11 specified
cities by July&nbsp;31, 1998, 26 additional specified cities by
December&nbsp;31, 1999 and another 13 additional specified
cities by December&nbsp;31, 2000. Iusatel complied with its
coverage commitments in all cities except for Saltillo in
Region&nbsp;4. Therefore, in 2001 the SCT substituted Tlaxcala
for Saltillo in our coverage commitment, and we are currently in
compliance with all our coverage commitments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 1997, the Mexican Foreign Investment
Commission conditioned its approval of Bell Atlantic assuming
management control over Iusacell Celular upon the requirement,
among others, that we transfer at least 51% of the voting shares
of Iusatel to Mexican investors on terms acceptable to the
Mexican Foreign Investment Commission. In November 1998, we
complied with this requirement by having Mr.&nbsp;Elizondo agree
to subscribe to 5.1% of the capital stock of Iusatel, comprising
51% of the voting shares thereof. We retained a 94.9% equity
interest in Iusatel, including a 90% equity interest through the
ownership of neutral limited voting stock (<I>inversi&#243;n
neutra</I>) and a 49% voting interest representing a 4.9% equity
interest. The financial statements of Iusatel are consolidated
with the financial statements of Iusacell. See Note&nbsp;2 to
the Consolidated Financial Statements.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Local
Telephony</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our right to provide local telephony
service is derived from the Original Concession. The Original
Concession, as originally granted, permitted SOS to provide
radiocommunications service to vehicle-mounted terminal
equipment nationwide.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1986, the SCT amended the Original Concession
to authorize SOS to provide fixed public radiotelephony service
in rural areas nationwide in accordance with plans to be
approved by the SCT. In 1990, the Telecommunications Rules were
promulgated by the Mexican government which further modified the
Original Concession.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These regulations classified radiocommunications
services on the basis of the networks used to provide such
services rather than upon the basis of subscriber terminal
equipment. Radiocommunications networks are generally classified
as either &#147;fixed&#148; or &#147;mobile.&#148; Our
radiocommunications network is a mobile network. In 1993, the
SCT clarified the ability, and indeed the obligation, of SOS to
interconnect customers of its nationwide radiocommunications
network regardless of whether such customers use fixed, mobile
or portable telephones.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Original Concession, the
commencement of construction and marketing of local wireless
service in the 450&nbsp;MHz frequency band on a commercial basis
requires the prior approval of the SCT. We have never received
the SCT&#146;s approval of our technical and economic plans for
local wireless service in the 450&nbsp;MHz frequency band.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, Iusacell Celular has reached an
agreement with the SCT on a technical process by which we can
provide local wireless service in the 450&nbsp;MHz frequency
band in some of its existing service regions and has received a
right of first refusal to acquire the concessions to provide
local wireless service in such regions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our management is currently evaluating whether to
exercise our right of first refusal. See Item&nbsp;4,
&#147;Information on the Company&nbsp;&#151; Business
Overview&nbsp;&#151; Other Services&nbsp;&#151; Public and Rural
Telephony and Local Fixed Wireless.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 1998, we determined that, because of
many factors, including the impact of changing technology since
the initiation of the 450&nbsp;MHz fixed local wireless project
in 1994, an impairment of our
</FONT>

<P align="center"><FONT size="2">45
</FONT>
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<DIV align="left">
<FONT size="2">investment in 450&nbsp;MHz&nbsp;TDMA technology
had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450&nbsp;MHz fixed local
wireless project.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1998, Mr.&nbsp;Elizondo agreed to
subscribe 5.1% of the capital stock of Iusatelecomunicaciones,
S.A.&nbsp;de&nbsp;C.V., the Iusacell Celular subsidiary which
provides local wireless service in the 450&nbsp;MHz frequency
band on a trial basis, comprising 51% of our total voting
shares. We retained a 94.9% equity interest in
Iusatelecomunicaciones, including a 90% equity interest through
the ownership of neutral limited voting stock (<I>inversi&#243;n
neutra</I>) and a 49% voting interest representing a 4.9% equity
interest. The financial statements of Iusatelecomunicaciones are
consolidated with the financial statements of Iusacell. See
Note&nbsp;2 to the Consolidated Financial Statements.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Data
Transmission</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right to offer telex and provide public data
transmission service throughout Mexico is derived from the
Original Concession. We use our allocations in the
138-144&nbsp;MHz, 440-450&nbsp;MHz and 485-495&nbsp;MHz
frequency bands and excess capacity in our cellular microwave
backbone in Region&nbsp;9 to provide data transmission services.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Satellite
Transmission Permit</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;15, 1991, Satelitr&#243;n, a
joint venture among Hughes Network Systems, Iusacell Celular and
one other investor, was granted a 15-year permit to provide
dedicated circuit services and private networks through Mexican
satellites or any other satellites designated by the Mexican
government. The Satelitr&#243;n permit is renewable for 15
additional years upon timely application to the SCT, provided
Satelitr&#243;n has complied with all of the requirements of the
permit and agrees to any new terms and conditions established by
the SCT at the time of such renewal. Under this permit,
Satelitr&#243;n is required to make monthly payments to the SCT
equal to 2.5% of all gross revenues derived from its provision
of access to its satellite bandwidth, and 2.5% of all such gross
revenues to Telecom for supervision and supporting services. On
March&nbsp;22, 2001, we sold our 65.9% equity interest in
Satelitr&#243;n and our ownership in the transmission hub to
Telepuertos Satelitales, S.A.&nbsp;de&nbsp;C.V. for
U.S.$1.3&nbsp;million.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Dedicated
Microwave Circuit Services Permit</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;8, 1993, the SCT authorized SOS
to use its microwave network&#146;s excess capacity to provide
dedicated circuit services. In accordance with the terms of this
permit, these dedicated microwave circuits cannot be
interconnected to public exchange networks, and the service must
only be provided through the links of the microwave network
authorized by the SCT. On February&nbsp;1, 1994, the SCT
authorized SOS to carry voice, data and video conferencing
through these dedicated circuit services.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Value-Added
Services Permit</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;17, 1993, SOS was granted a permit
to provide through its public network the following value-added
telecommunications services to its cellular subscribers:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">secretarial service;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">voice mail; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">data transmission.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The term of this permit is the same as that of
the authorization for using the Region&nbsp;9 cellular network
through which the value-added services are to be provided. Under
this permit SOS is required to make annual payments to the
Mexican government equal to 5% of all gross revenues derived
directly from the provision of these services. In October 1994,
Comcel, Telgolfo and Portacel were each granted a permit to
provide secretarial services under the same terms granted to
SOS, including the making of the annual payments to the Mexican
government.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Foreign
Ownership Restrictions</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the 1995 Telecommunications Law and
the 1993 Foreign Investment Law, holders of concessions to
provide telecommunications services in Mexico, excluding
providers of cellular service, cannot
</FONT>

<P align="center"><FONT size="2">46
</FONT>

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<DIV align="left">
<FONT size="2">have a majority of their voting shares owned by,
and cannot be otherwise controlled by, foreign persons. In
February 1997, the Mexican Foreign Investment Commission
conditioned its approval of Verizon assuming management control
over Iusacell upon the requirement that, within a renewable
period of 180&nbsp;days, Iusacell would transfer at least 51% of
the voting shares of Iusatelecomunicaciones and Iusatel to
Mexican investors on terms acceptable to the Mexican Foreign
Investment Commission. The Mexican Foreign Investment Bureau
twice extended the transfer deadline.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1998, we complied with this
requirement by transferring 51% of the voting shares of these
two subsidiaries to Mr.&nbsp;Elizondo by means of a subscription
to capital. We retained 49% of the voting shares of these
subsidiaries, representing 4.9% of their capital. We also hold
an additional 90% of the capital of these subsidiaries through
the ownership of neutral limited voting stock (<I>inversi&#243;n
neutra</I>) that does not constitute voting shares for purposes
of the Mexican foreign investment laws. Consequently, we hold a
94.9% equity interest in these two subsidiaries, whose financial
results we consolidate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To participate in the auctions for concessions
for microwave frequencies concluded in September 1997, we formed
Punto-a-Punto Iusacell, S.A.&nbsp;de&nbsp;C.V., a joint venture
with Mr.&nbsp;Elizondo. The Mexican Foreign Investment Bureau
approved a capital structure substantially similar to that
authorized for Iusatel and Iusatelecomunicaciones for the
microwave joint venture. The financial statements of
Punto-a-Punto Iusacell are consolidated with the financial
statements of Iusacell. See Note&nbsp;2 to the Consolidated
Financial Statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to participate in the auctions for
concessions for 1.9&nbsp;GHz&nbsp;PCS frequencies concluded in
May 1998, we formed Iusacell&nbsp;PCS, another joint venture
with Mr.&nbsp;Elizondo. The Mexican Foreign Investment Bureau
approved a capital structure substantially similar to that
authorized for Iusatel, Iusatelecomunicaciones and Punto-a-Punto
Iusacell, and we retained a right to acquire
Mr.&nbsp;Elizondo&#146;s interest in the event we are allowed to
do so by the Mexican Foreign Investment Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Mexican Foreign Investment
Commission ruled, upon application of Unef&#243;n, that
concessions for PCS frequencies, like concessions for cellular
frequencies, may be held by entities in which foreign persons
have a majority of the voting shares. Iusacell has applied for
similar treatment for Iusacell PCS and subsidiaries. If
Iusacell&#146;s application is granted, we expect to exercise
our right to acquire Mr.&nbsp;Elizondo&#146;s interest in
Iusacell PCS.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Moreover, in December 1998 Mr.&nbsp;Elizondo
acquired a 2% interest in Infotelecom, from Iusacell Celular. As
a result, we currently hold only 49% of this entity, complying
with the condition precedent necessary to allow our other
partner, Infomin, a Mexican controlled company, to transfer its
paging concession to Infotelecom, as previously agreed with us.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Rates
for Telecommunications Services</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Original Communications Laws, SCT
approval was required for rates charged for all basic and
certain value-added cellular services and for data transmission
services. Historically, the SCT permitted rate increases based
on the cost of service, the level of competition, the financial
situation of the carrier and macroeconomic factors. Carriers
were not allowed to discount the rates authorized by the SCT,
although operators occasionally waived activation fees on a
promotional basis. Interconnection rates were also authorized by
the SCT. All terms of interconnection (such as point of
interconnection) other than interconnection rates were
negotiated between the regional non-wireline cellular carriers
and Telmex under the SCT&#146;s supervision. Rates for dedicated
circuit services through microwave networks, and dedicated
circuits and private networks through satellites, were not
regulated under the Original Communications Laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the 1995 Telecommunications Law, rates for
telecommunications services, including cellular and long
distance services, are now freely determined by the providers of
such services. Providers are prohibited from adopting
discriminatory practices in the application of rates. In
addition, the SCT is authorized to impose specific rate
requirements on those companies determined by the Federal
Competition Commission to have substantial market power. All
tariffs for telecommunications services, other than value-added
services, must be registered with COFETEL prior to becoming
effective.
</FONT>

<P align="center"><FONT size="2">47
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 2001, we negotiated a rate reduction
with Telmex that decreases both long distance and local cellular
interconnection charges from U.S.$0.0330 to U.S.$0.0125 per
minute. Additionally, we negotiated with Telmex the terms
regarding payment for the projects Telmex undertook to prepare
its long distance network for competition. We paid Telmex a
fixed payment of approximately U.S.$13.0&nbsp;million and agreed
to pay a U.S.$0.0053 per minute, usage based, surcharge to the
local wireline interconnection rate for the next four years for
long distance calls terminated in Telmex&#146;s local networks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">United
States Regulation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1982, Bell Atlantic, like all other regional
Bell operating companies, was subject to a consent decree which
we refer to as (the &#147;Decree&#148;); resulting from
anti-trust litigation between the United States Department of
Justice against AT&#38;T. The Decree required AT&#38;T to divest
itself of its local telephone companies. Under the Decree, Bell
Atlantic was prohibited, with certain limited exceptions, from
providing interLATA (long distance) telecommunications, engaging
in the manufacture of customer premises equipment(CPE), or
engaging in the manufacture or sale of telecommunications
equipment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Telecommunications Act of 1996 (the
&#147;1996 Act&#148;, which became effective on February&nbsp;8,
1996, includes provisions that open local telephony markets to
competition and would permit regional Bell operating companies,
such as the local operating telephone companies of the former
Bell Atlantic, to provide interLATA services (long distance),
video programming and to engage in manufacturing. Under the 1996
Act, the former Bell Atlantic was allowed to provide certain
interLATA (long distance) services immediately upon enactment,
including interLATA (long distance) services permitted under the
Decree, interLATA (long distance) services originating outside
the states where its subsidiaries provide local exchange
telephone services and interLATA (long distance) services that
are &#147;incidental&#148; to other permitted business such as
wireless services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, the ability of Verizon and its
affiliates to engage in businesses previously prohibited by the
Decree, including providing interLATA (long distance) services
originating in the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, and
manufacturing CPE or telecommunications equipment, is largely
dependent on satisfying certain conditions contained in the 1996
Act and related regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since Iusacell is a Verizon affiliate, its
operations must comply with the terms of the Decree. In 1986 and
1993, Bell Atlantic obtained waivers under the Decree that
allowed it to conduct business outside the United States,
subject to certain exceptions and restrictions. Under such
exceptions and restrictions, a foreign telecommunications entity
(FTE)&nbsp;affiliated with Verizon, , such as Iusacell, could
not provide interexchange (long distance) telecommunications
services between points in the United States or own any
international telecommunications facilities in the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As to telecommunications traffic between the
United States and a foreign country, an FTE could provide only
the foreign &#147;half&#148; of such traffic. An FTE was
prohibited from discriminating in handling traffic to and from
the United States and was limited as to interests it could own
in international cables and satellite facilities to and from the
United States. Finally, an FTE was prohibited from exporting to
the United States any telecommunications equipment or CPE
manufactured outside the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1996 Act eliminated certain restrictions
under the Decree including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restrictions that precluded an FTE from providing
    the U.S.&nbsp;&#147;half&#148; of traffic originating in a
    foreign country;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restrictions on exporting to the United States
    telecommunications equipment or CPE manufactured outside the
    United States; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restrictions on providing interLATA (long
    distance) telecommunications services between points in the
    United States or international long distance service originating
    in the United States, and from
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">48
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">owning international telecommunications
    facilities in the United States subject to the same conditions
    that Verizon must satisfy under the 1996 Act and any regulations
    promulgated thereunder with respect to interLATA (long distance)
    telecommunications services originating in the states in which
    the pre-Verizon Bell Atlantic local exchange subsidiaries
    provide service.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the 1996 Act, we may now provide both the
foreign &#147;half&#148; and the United States &#147;half&#148;
of telecommunications traffic originating in Mexico (or any
other foreign country) and may now carry international
telecommunications traffic which, although routed through the
United States, neither originates nor terminates in the United
States. In addition, we may carry United States originated
traffic bound for Mexico (or other foreign countries) so long as
the traffic originates outside the states where the former Bell
Atlantic subsidiaries provide local exchange telephone service
except from those states where Verizon has obtained
Section&nbsp;271 approval and subject to having appropriate
authority under Section&nbsp;214 of the United States
Communications Act of 1934.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1996, Iusatel applied for and received
authorization under Section&nbsp;214 of the Communications Act
to become a facilities-based provider of international long
distance services from the United States. This Section&nbsp;214
authorization was transferred to a Peralta Group entity in
January 1997 in order not to delay the proposed change of
control from the Peralta Group to Bell Atlantic. In 2002,
Iusatel USA, Inc., a subsidiary of Iusatel, applied for and
received authorization under Section&nbsp;214 of the
Communications Act to become a facilities-based provider of
international long distance services from the United States. We
have not yet determined whether we will engage in activities
permitted by the 1996 Act or any Section&nbsp;214 authorization
we may receive. If we choose to engage in such activities, we
cannot predict the specific impact of such activities on our
business, financial condition or results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other laws of the United States may restrict
activities of Iusacell by virtue of Verizon&#146;s ownership
interest, including laws and regulations that restrict trade
with, and investments in, specific countries, as well as the
United States Foreign Corrupt Practices Act. The Foreign Corrupt
Practices Act is also applicable to Iusacell because its
securities are listed on the New York Stock Exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Iusacell Shareholders&#146; Agreement
contains provisions designed to require us to refrain from
taking any actions that would cause Verizon to be in violation
of applicable law.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Organizational
Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Grupo Iusacell, S.A.&nbsp;de&nbsp;C.V. is a
holding company for the shares of Grupo Iusacell Celular,
S.A.&nbsp;de&nbsp;C.V. and several other subsidiaries. The
following table shows our principal direct (unless otherwise
noted) subsidiaries, all of which are organized under the laws
of Mexico, their principal line of business and the percentage
of our ownership interest and voting power as of
December&nbsp;31, 2001.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Voting</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Line of Business</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Power</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Grupo Iusacell Celular, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Operating cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Infraestructura, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Microwave financing</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Infraestructura de M&#233;xico, S.A. de
    C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Microwave financing</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell PCS, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Operating PCS</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Arrendadora, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leasing</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell PCS de M&#233;xico, S.A. de C.V.(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Regions&nbsp;1 and 4&nbsp; PCS</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Held indirectly through Iusacell PCS,
    S.A.&nbsp;de&nbsp;C.V.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">49
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows our principal indirect
subsidiaries, all of which are held through Grupo Iusacell
Celular, S.A.&nbsp;de&nbsp;C.V. (unless otherwise noted), their
principal line of business and the percentage of our ownership
interest and voting power.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Voting</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Line of Business</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Power</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SOS Telecomunicaciones, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Region&nbsp;9 cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comunicaciones Celulares de Occidente, S.A. de
    C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Region&nbsp;5 cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sistemas Telef&#243;nicos Port&#225;tiles
    Celulares, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Region&nbsp;6 cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telecomunicaciones del Golfo, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Region&nbsp;7 cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Grupo Portatel, S.A. de C.V. and subsidiaries
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Region&nbsp;8 cellular</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Sales and marketing</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sistecel, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="bottom"><FONT size="2">Administrative services</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatel, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Long distance</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatelecomunicaciones, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Local wireless</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Punto-a-Punto Iusacell, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Microwave transmission</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Infotelecom, S.A. de C.V.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Paging</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatel USA, Inc.(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="bottom"><FONT size="2">Not currently operating</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Held through Iusatel, S.A. de C.V.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the above companies, including those in
which we own directly or indirectly a minority voting interest,
are consolidated with the financial statements of Iusacell. See
Note&nbsp;2 to the Consolidated Financial Statements.
</FONT>

<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property,
Plant and Equipment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we operated in our
service regions a total of 135 customer sales and service
centers, 537 cellular cell sites, 135 repeaters, 24 cellular
microwave transmission repeaters, 46 PCS cell sites, 2 PCS
microwave transmission repeaters, 14 fixed local wireless 450
MHz cell sites, 69 paging antennas, 7 switches for cellular and
PCS service, 1 switch for local wireless service and 3 switches
for long distance service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We generally lease the land and cellular tower
space where our customer sales and service centers, cell sites,
antennas, microwave transmission equipment and switching centers
are located. We own and lease administrative offices in Mexico
City as well as in Guadalajara, Le&#243;n, Guanajuato, Puebla,
Monterrey, M&#233;rida, Tijuana and Ciudad Ju&#225;rez. We
generally own our cellular network equipment, subject to liens.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the book value of
our property and equipment, before accumulated depreciation of
Ps.&nbsp;5,625.6&nbsp;million (U.S.$614.4&nbsp;million) for
2001, consisted of the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(in thousands of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">constant pesos</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">as of December&nbsp;31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">and millions of U.S.</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">dollars)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Property and Equipment</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,623.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;U.S.$&nbsp;177.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Communications equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,193.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,113.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">195.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transportation equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,446.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">158.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular rental telephones
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,481.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Capital Expenditures&#148; for a
discussion of planned capital expenditures and existing
encumbrances on our property and equipment. See also
notes&nbsp;4 and 8 to the Consolidated Financial Statements.
</FONT>

<P align="center"><FONT size="2">50
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OPERATING
AND FINANCIAL REVIEW AND PROSPECTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should read the following discussion and
analysis in conjunction with the Consolidated Financial
Statements included elsewhere in this Annual Report. Unless
otherwise indicated, all financial information in this Annual
Report is presented in constant pesos with purchasing power as
of December&nbsp;31, 2001. The U.S. dollar translations provided
in this Annual Report are, unless otherwise indicated,
calculated at the Noon Buying Rate at December&nbsp;31, 2001,
which was Ps.&nbsp;9.156 per U.S.$1.00. Sums may not add due to
rounding.</FONT></I>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
Results</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion and analysis is intended
to help you understand and assess the significant changes and
trends in the historical results of operations and financial
condition of Iusacell and subsidiaries and factors affecting our
financial resources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Consolidated Financial Statements have been
prepared in accordance with Mexican GAAP, which differs in
certain significant respects from U.S.&nbsp;GAAP. Note&nbsp;23
to the Consolidated Financial Statements provides a description
of the principal differences between Mexican GAAP and
U.S.&nbsp;GAAP as they relate to Iusacell. Note&nbsp;23 to the
Consolidated Financial Statements also provides a reconciliation
to U.S.&nbsp;GAAP of Iusacell&#146;s net income (loss) for the
years ended December&nbsp;31, 1999, 2000 and 2001 and of
stockholders&#146; equity as of December&nbsp;31, 2000 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a Mexican company, we maintain our financial
records in pesos. Pursuant to Bulletin&nbsp;B-10,
&#147;Recognition of the Effects of Inflation on Financial
Information,&#148; and Bulletin&nbsp;B-12, &#147;Statement of
Changes in Financial Position,&#148; issued by MIPA,
Iusacell&#146;s financial statements are reported in period-end
pesos to adjust for the inter-period effects of inflation. The
presentation of financial information in period-end, or
constant, currency units is intended to eliminate the distorting
effect of inflation on the financial statements and to permit
comparisons across comparable periods in comparable monetary
units. Bulletin&nbsp;B-10 requires us to restate non-monetary
assets, non-monetary liabilities and the components of
stockholders&#146; equity using the <I>Indice Nacional de
Precios al Consumidor </I>(&#147;INPC&#148;). We have not
eliminated the effects of these inflation accounting principles
in the reconciliation to U.S.&nbsp;GAAP. See Note&nbsp;23 to the
Consolidated Financial Statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except where otherwise indicated, financial data
for all periods in the Consolidated Financial Statements and
throughout this Annual Report have been restated in constant
pesos as of December&nbsp;31, 2001, in accordance with the fifth
amendment to Bulletin&nbsp;B-10. References in this Annual
Report to &#147;real&#148; amounts are to inflation-adjusted
pesos and references to &#147;nominal&#148; amounts are to
unadjusted historical pesos. In calendar years 1999, 2000 and
2001, the rates of inflation in Mexico, as measured by changes
in the INPC, were 12.3%, 9.0% and 4.4%, respectively. The
inflation indices used are 1.1376 for 1999 figures and 1.0440
for December 2000 figures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In reporting under Mexican GAAP and in accordance
with Bulletin&nbsp;B-10, we are required to quantify all
financial effects of operating and financing the business under
inflationary conditions. For presentation purposes,
&#147;integral financing cost (gain)&#148; refers to the
combined financial effects of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">net interest expense or interest income;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">net foreign exchange gains or losses; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">net gains or losses on monetary position.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net foreign exchange gains or losses reflect the
impact of changes in foreign exchange rates on monetary assets
and liabilities denominated in currencies other than pesos. A
foreign exchange loss arises if a liability is denominated in a
foreign currency which appreciates relative to the peso between
the time the liability is incurred and the date it is repaid, as
the appreciation of the foreign currency results in an increase
in the amount of pesos which must be exchanged to repay the
specified amount of the foreign currency liability. We incurred
a foreign exchange loss in 2000 on our U.S. dollar denominated
debt as the peso depreciated against the U.S. dollar. A foreign
exchange gain arises if a liability is denominated in a foreign
currency which depreciates relative to the peso between the time
the liability is incurred and the date it is repaid, as the
</FONT>

<P align="center"><FONT size="2">51
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">depreciation of the foreign currency results in a
decrease in the amount of pesos which must be exchanged to repay
the specified amount of the foreign currency liability. In 1999
and 2001, we incurred a foreign exchange gain on our U.S. dollar
denominated debt as the peso appreciated against the U.S. dollar.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The gain or loss on monetary position refers to
the gains and losses realized from holding net monetary
liabilities or assets and reflects the impact of inflation on
monetary liabilities and assets. For example, a gain on monetary
position results from holding net monetary liabilities during
periods of inflation, such as in 1998, 1999, 2000 and 2001, as
the purchasing power of the peso declines over time.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Devaluation
and Inflation</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico experienced a severe economic crisis
following the devaluation of the peso in December 1994, when the
Mexican government first allowed the peso to fluctuate freely
against the U.S. dollar. The value of the peso generally
continued to decline during subsequent years, depreciating by
54.8% relative to the U.S. dollar in 1995 and by 22.7% in 1998.
The peso has generally recovered and strengthened in recent
years, depreciating by only 1.5% against the U.S. dollar in 2000
and appreciating by 4.8% in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation of the value of the peso has
contributed to sharp increases in inflation. Inflation, which
had been 7.1% in 1994 as measured by changes in the INPC,
increased to 52.0% and 27.7% in 1995 and 1996, respectively.
After a reduction to 15.7% in 1997, inflation was 18.6% for the
year 1998. Since then inflation has declined to 12.3% in 1999,
9.0% in 2000 and reached its lowest level in more than
30&nbsp;years in 2001 to 4.4%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the past, devaluation and depreciation of the
peso as well as inflation have negatively affected our results
of operations and financial condition and may do so in the
future.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impact of
Devaluation and Inflation on our Results of
Operations</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The general economic conditions in Mexico
resulting from the devaluation of the peso and the resulting
inflation have had, and may have, an overall negative impact on
our results of operations primarily as a result of the following
factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Peso devaluations result in a decrease in the
    purchasing power of Mexican consumers, resulting in a decrease
    in the demand for all goods and services, including cellular
    telephony;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Due to competitive market conditions and the
    overall state of the Mexican economy, we have not been able to
    increase our prices in line with the inflation rate;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Significant inflation leads to an upward
    restatement of our assets, resulting in a substantial increase
    in depreciation and amortization expense.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Given our net U.S. dollar liability position,
    devaluation of the peso as compared to the U.S. dollar results
    in the recording of net foreign exchange losses, and
    appreciation of the peso as compared to the U.S. dollar results
    in the recording of net foreign exchange gains.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Impact
of Devaluation and Inflation on our Financial
Condition</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The general economic conditions in Mexico
resulting from the devaluation of the peso and the resulting
inflation have had, and may have, an overall negative impact on
our financial condition as result of the following factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Substantially all of our indebtedness is
    denominated in U.S. dollars. As a result, in a period of peso
    devaluation, the peso-carrying amount of such debt increases to
    reflect the additional pesos required to meet such foreign
    currency liabilities; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Whenever the inflation rate exceeds the
    devaluation rate, as was the case in 1996, 1999, 2000 and 2001,
    the peso-carrying value of our assets purchased in foreign
    currencies is reduced. This is because, assuming that the
    foreign currency value of a given asset remains unchanged
    between periods, the value of such asset for the prior period is
    restated upwards using the inflation rate, while the valuation
    of such asset for the current period is restated using a foreign
    exchange rate which increased at a lower rate.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">52
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Hedging&#148; for a description of
contracts we use to hedge.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Increase in
Subscriber Base</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use our automated VIVA prepay program in all
of our cellular markets. In October 1999, we introduced a
&#147;one-single rate&#148; plan for prepay customers.
One-single rate prepay customers pay a single per minute rate
for local, national long distance and international long
distance service to the United States and Canada.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The VIVA program has been popular with prepay
customers increasing from an insignificant percentage of our
subscriber base at its introduction to 73.4% at
December&nbsp;31, 1999 (970,509 subscribers), 73.7% at
December&nbsp;31, 2000 (1,238,625 subscribers) and 78.2% at
December&nbsp;31, 2001 (1,451,091). Prepay customers comprised
86.7%, 74.8% and more than 100% of our net subscriber additions
in 1999, 2000 and 2001, respectively. We expect that prepay
customers will continue to comprise the substantial majority of
new subscriber additions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The percentage of total service revenues derived
from prepay customers was 11.9% in 1999, 13.0% in 2000 and 23.4%
in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999 and 2000, we experienced a 27.2% and
25.6% increase in the aggregate number of postpaid customers,
respectively, compared to the beginning period number, with
limited migration by postpaid customers to prepay programs. In
2001 we experienced an 8.7% reduction in the number of postpaid
customers. Many of these postpaid customers migrated to our
prepay program or disconnected as a result of a higher postpaid
churn rate derived from the stricter activation policies and
retention programs implemented to increase the quality of
additions. Moreover, as part of a review of postpaid customers
implemented in the second quarter of 2001, including a targeted
retention program, the Company decided to delete 11,600 postpaid
customers from their subscriber base in that period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prepay customers, on average, have substantially
lower minutes of use than postpaid customers and do not pay
monthly fees and, as a result, generate substantially lower
average monthly revenues per subscriber, even though prepay
plans involve higher outgoing call per minute airtime charges
than the average postpaid plan. Consequently, as the proportion
of prepay customers to our total subscribers continues to
increase, we expect that average minutes of use per customer and
average monthly revenues per customer will continue to decrease.
The implementation of the CPP modality and the digitalization of
the postpaid subscriber base have moderated this decline.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1998, we extended the life of our
VIVA prepay cards from a maximum of 135&nbsp;days to a maximum
of 180&nbsp;days to allow greater flexibility in their use. In
April 1999, in anticipation of the advent of the CPP modality
and for competitive reasons, we extended the life of our VIVA
prepay cards to a maximum of 365&nbsp;days. After the balance of
a prepay card becomes zero (which occurs automatically after
180&nbsp;days), the VIVA customer had 185&nbsp;days to activate
a new card before losing his phone number. During this 185-day
period, the VIVA customer was considered an &#147;incoming calls
only&#148; customer, able to receive incoming local calls, but
not able to make outgoing calls.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 1999, in order to evaluate whether we
could generate additional revenues from &#147;incoming calls
only&#148; customers, we extended the period of time to activate
a new card from 185&nbsp;days until April&nbsp;30, 2000 for
those &#147;incoming calls only&#148; customers who otherwise
would have lost service before that date. Beginning May&nbsp;1,
2000, we determined to return to our prior policy of maintaining
&#147;incoming calls only&#148; customers for only 185&nbsp;days
and began to turn over &#147;incoming calls only&#148; prepay
customers who had reached the 185-day limit without activating a
new prepay card.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Extending the life of VIVA prepay cards defers
the deactivation of prepay customers who may in fact not be
using the service. The November 1998 extension, by deferring
prepay turnover for 45 additional days, contributed to the
strong growth in subscriber net additions, particularly prepay
net additions, during the fourth quarter of 1998. Likewise, the
April 1999 and October 1999 extensions, by deferring prepay
turnover, increased overall subscriber net additions in the
second, third and fourth quarters of 1999 and the first quarter
of 2000. The May 2000 decision to no longer defer the
deactivation of prepay customers led to a decrease in
</FONT>

<P align="center"><FONT size="2">53
</FONT>

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<DIV align="left">
<FONT size="2">overall subscriber net additions in the second,
third and fourth quarters of 2000. Overall subscriber net
additions in the second quarter of 2000 were also negatively
affected by our decision to turn over approximately 25,000
prepay customers who had purchased but never activated a prepay
card. Overall subscribers declined by approximately 14,000 in
the third quarter of 2000 as a result of our decision to examine
our entire prepay subscriber base and eliminate approximately
59,000 additional prepaid customers who had not made or received
any calls for an extended period of time. In the second quarter
of 2001 net prepay additions were affected by our decision to
change the policy for reporting preactivated prepay sales in
order to better focus on active customers and reduce the
potential future churn. Under the new policy a preactivated
prepay sale is now reported when the end-user places the first
outgoing call. Accordingly, commissions related to this type of
prepay sale are now paid only after the end-user places the
first outgoing call. This policy change resulted in 88,300
disconnects of previously pre-activated but never used prepay
phones from our customer base. As part of a restructuring of
distribution processes, we conducted a comprehensive review of
the prepay base in the second quarter of 2001. This review
identified an additional 88,100 inactive prepay customers who
were churned in that period.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, we reduced the initial period for
using up an activated prepay card and activating a new card from
185&nbsp;days to 60&nbsp;days effective July&nbsp;1, 2001. This
measure is intended as an incentive for customers to recharge
their airtime on a more regular basis. As a result,
approximately 345,000 incremental customers were transferred to
the &#147;incoming calls only&#148; status in that quarter. The
reduction in the initial period is in line with Mexican market
practices. Any decision to further reduce or extend the VIVA
card life for &#147;incoming calls only&#148; customers will
also reduce or increase overall subscriber net additions for the
period of the reduction or extension.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, we had approximately
768,000 &#147;incoming calls only&#148; customers. The
substantial majority of &#147;incoming calls only&#148;
customers generate very low traffic.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In late March 1999, we implemented marketing
initiatives focused on increasing usage by and revenues derived
from prepay customers. These initiatives included an approximate
6% price increase, the implementation of a Ps.&nbsp;59 or
Ps.&nbsp;79 activation fee for a customer activating a telephone
number with a Ps.&nbsp;250 or Ps.&nbsp;150 prepay card, an
increase in the minimum denomination of the prepay card with
which a customer can activate prepay service from Ps.&nbsp;100
to Ps.&nbsp;150, an adjustment of commissions to encourage
distributors to activate customers with prepay cards of higher
denominations and the sending of electronic reminders to
customers to replenish their cards. During the second half of
2000, we began to migrate high-usage prepay customers to digital
service and to sell digital handsets to new prepay customers. At
the end of 2000 and 2001, 11% and 35% of the prepay subscriber
base, respectively, were able to access digital service. These
initiatives, together with the continuing efforts to increase
the number of distribution points for prepay cards in order to
facilitate and encourage their replenishment, appear to have had
their intended results. Our new and existing prepay customers
are generating higher revenues.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Digitalization</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Digital and dual-mode (i.e., digital-analog)
handsets are substantially more expensive than analog handsets,
although the prices for all types of handsets have declined over
time. As a result, the subsidies we provide for handsets are
higher than they would have been had we remained an exclusively
analog service provider. The sale of digital handsets to new
subscribers and the migration of analog postpaid subscribers to
digital service began in 1998, with our introduction of digital
service. During the second half of 2000, we began to migrate
high-usage prepay customers to digital service and to sell
dual-mode handsets to new prepay customers. In May 2001, we
decided to no longer purchase any analog-only handsets. Upon the
exhaustion of our existing inventory of analog-only handsets, we
will only sell digital, dual mode and tri-mode handsets to our
customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that digitalization will increase
subscriber usage. Our experience has been that the average new
digital customer uses his or her cellular telephone more than
the average analog customer and that analog customers that
migrate to digital service tend to increase their usage upon
migration.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Digital postpaid subscribers increased from
27,410 at December&nbsp;31, 1998 to 337,428 at December&nbsp;31,
2001. At December&nbsp;31, 2001, only 66,647 postpaid
subscribers were analog customers, the vast majority of
</FONT>

<P align="center"><FONT size="2">54
</FONT>

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<DIV align="left">
<FONT size="2">which were rural postpaid terminals. At
December&nbsp;31, 2001, we had 511,618 digital prepay
subscribers, representing approximately 35% of the total prepay
customer base. We expect that the percentage of our prepay
customers who use digital service will increase with our
existing handset purchase and sale policy and our continued
migration of prepay customers to digital service.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Derived from our December 2001 commercial launch
of PCS services in Monterrey and Tijuana, we began to provide
tri-mode handsets (which combine digital PCS, digital cellular
and analog cellular modes) and single-mode digital PCS handsets
to all our new customers in Regions&nbsp;1 and 4. Tri-mode
handsets are substantially more expensive than dual-mode
handsets, although the prices for all types of handsets have
declined over time. As a result, we expect that the subsidies we
provide for handsets will be higher than they otherwise would be
if we were only to provide dual-mode handsets in our cellular
regions and single-mode digital PCS handsets in our PCS regions.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tower
Monetization</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, we entered into a series of
agreements with a Mexican affiliate of American Tower
Corporation, which we refer to as MATC Celular. These
agreements, among other things, give MATC Celular the right to
acquire approximately 330 of our existing non-strategic towers.
In 2001, we closed the sale of approximately 244 of these
non-strategic towers to MATC Celular, receiving in excess of
U.S.$34&nbsp;million in net gains. On May 2002, we closed the
sale of 25 additional non-strategic towers receiving
approximately U.S.$4.2&nbsp;million in net gains. We expect to
sell up to an additional 61 non-strategic towers to MATC Celular
during the remaining 2002. Iusacell is leasing back these towers
from MATC Celular and subleasing them to its operating
subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The difference between the sale price and book
value of the towers sold is being recorded as a reduction in
operating expense. In 2001, we recorded an expense reduction
under Mexican GAAP of Ps.215.9&nbsp;million in connection with
our sale of 244 towers to MATC Celular. However, the leasing of
the towers from MATC Celular results in an increase in our
operating expenses, which we experienced in 2001. However, this
effect was partially offset by the reduction in interconnection
rate expenses registered in January 2001. Under U.S.&nbsp;GAAP,
the majority of the gain was deferred. See Note&nbsp;23 to the
Consolidated Financial Statements for a further discussion.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Results of
Operations</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents results of
operations data for the years ended December&nbsp;31, 1999, 2000
and 2001.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Year Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions of constant</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December 31, 2001 pesos except percentages)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,528.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,820.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,910.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,643.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,923.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,076.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,621.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,409.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(423.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,133.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(86.51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Integral financing gain (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(602.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">191.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(42.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(395.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(500.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55.46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Year Ended December&nbsp;31, 2001 Compared to
Year Ended December&nbsp;31, 2000</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total revenues consist of service revenues and
telephone equipment and other revenues. Our cellular service
revenues are principally derived from the provision of mobile
wireless telephone service (cellular and PCS) in Mexico and also
include revenues attributable to in-roaming and long distance
service revenue generated by our mobile wireless subscribers as
well as revenues from the provision of telecommunication
</FONT>

<P align="center"><FONT size="2">55
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">services in Mexico other than wireless, including
long distance service revenue from non-mobile subscribers and
revenues from the provision of data transmission, fixed local
wireless and paging services. Our service revenues also include
all Bulletin B-10 inflation adjustments on all service revenue
line items, whether mobile wireless service revenues or other
service revenues. Telephone equipment and other revenues consist
primarily of revenues from sales of mobile telephone equipment
and accessories, as well as revenues attributable to out-roaming
and revenues from the sale of dark fiber optic cable. Revenues
attributable to out-roaming are passed through to the applicable
host operator.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents the source of our
revenues for the years ended December&nbsp;31, 2000 and 2001:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Year Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions of constant pesos as of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December 31, 2001, except percentages)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,201.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,634.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephone equipment and other revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">528.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">607.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents service revenues by
source for the years ended December&nbsp;31, 2001 and 2000:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions of constant pesos as of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December 31, 2001, except percentages)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Airtime(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,533.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,840.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monthly fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,710.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,743.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long distance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">532.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">649.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Value-added services and in-roaming(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">424.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">401.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total service revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,201.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,634.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Figures include intercompany eliminations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Airtime includes amounts billed to other carriers
    for incoming minutes under CPP, additional outgoing postpaid
    minutes to those included in the package contracted and prepaid
    outgoing minutes net of unsuitable minutes. Incoming and
    outgoing airtime is charged on a per-minute basis for both peak
    (Monday to Friday, 8:00&nbsp;a.m. to 10:00&nbsp;p.m.) and
    non-peak airtime.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes fees for value-added services, such as
    call waiting, call transfer, emergency service, secretarial
    service and three-way calling, and revenues from premiums for
    surety bonds, insurance-related charges payable by subscribers,
    rural and public telephony and Iusacell&#146;s cellular
    magazines as well as in-roaming service revenue. Does not
    include charges for related airtime. Customers using value-added
    services such as news, weather, sports and entertainment reports
    are charged only for airtime. These revenues are therefore
    included in airtime.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We had 1,855,166 and 1,681,219 mobile wireless
subscribers at December&nbsp;31, 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prepay subscribers increased 17.2% from 1,238,625
subscribers or 73.7% of total subscribers, at December&nbsp;31,
2000 to 1,451,091 or 78.2% of total subscribers, at
December&nbsp;31, 2001. This figure includes 98,470 prepay
subscribers in Region&nbsp;8 in southern Mexico as a result of
our acquisition of Portatel which represent 6.8% of the total
prepay subscriber base at December 2001. &#147;Incoming calls
only&#148; prepay customers, the substantially majority of whom
generate little traffic, grew by 179.3% from 275,001 at
December&nbsp;31, 2000 to 768,076 at December&nbsp;31, 2001.
Revenues from these customers do not have certain costs
associated with them which we incur in connection with postpaid
customers, such as commissions on sales, advertising or bad debt
expenses. Digital prepay customers grew by 270.9% from 137,943
at December&nbsp;31, 2000 to 511,618 at
</FONT>

<P align="center"><FONT size="2">56
</FONT>

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<DIV align="left">
<FONT size="2">December&nbsp;31, 2001. Long distance included
(LDI) prepay customers grew by 88.9% from 416,442 at
December&nbsp;31, 2000 to 786,477 at December&nbsp;31, 2001. A
prepay customer is included as a customer if the customer&#146;s
telephone number remains activated at the end of the reporting
period. In the third quarter 2001, we reduced the initial period
for using up an activated prepay card from 185&nbsp;days to
60&nbsp;days effective July&nbsp;1, 2001 and began to turn over
&#147;incoming calls only&#148; prepay customers who had reached
the 305-day limit without activating a new card or otherwise
recharging the airtime in their accounts.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Postpaid subscribers decreased 8.7% from 442,594
subscribers or 26.3% of total subscribers at December&nbsp;31,
2000 to 404,075 or 21.8% of total subscribers at
December&nbsp;31, 2001. This figure includes 15,112 postpaid
subscribers in Region 8 in southern Mexico. Without including
the Region&nbsp;8 postpaid subscribers as of December 2001, the
decline would have been 12.1% from period to period. Digital
postpaid subscribers decreased by 11.6% from 381,696 at
December&nbsp;31, 2000 to 337,428 at December&nbsp;31, 2001. LDI
postpaid customers decreased by 19.1% from 89,363 at
December&nbsp;31, 2000 to 72,323 at December&nbsp;31, 2001. The
December&nbsp;31, 2001 postpaid subscriber data includes
approximately 37,972 public telephony numbers who are considered
as postpaid customers since January&nbsp;1, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total service revenues increased by 8.3% to
Ps.5,634.3&nbsp;million (U.S.$615.4 million) in 2001 from
Ps.5,201.0&nbsp;million (U.S.$568.0&nbsp;million) in 2000 and
represented 90.3% and 90.8% of total revenues in 2001 and 2000
respectively. Revenues increased primarily as a result of total
subscriber growth, greater usage as a result of the
digitalization of the postpaid subscriber base and traffic
growth.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Monthly fees from postpaid subscribers grew by
1.9% from Ps.1,710.7&nbsp;million (U.S.$186.8&nbsp;million) in
2000 to Ps.1,743.0&nbsp;million (U.S.$190.4&nbsp;million) in
2001. Monthly fees increased notwithstanding an increase in the
number of lower-end subscribers in 2001. Airtime revenues
increased 12.1% from Ps.2,533.4 million
(U.S.$276.7&nbsp;million) in 2000 to Ps.2,840.8&nbsp;million
(U.S.$310.3&nbsp;million) in 2001, primarily as a result of
traffic growth related to calling party pays and greater usage
by postpaid subscribers. Long distance cellular revenue
increased by 22.0% to Ps.649.4&nbsp;million
(U.S.$70.9&nbsp;million) in 2001 from Ps.532.2&nbsp;million
(U.S.$58.1&nbsp;million) in 2000. This growth is the result of
higher usage by the subscriber base.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Average monthly MOU&#146;s for all subscribers
for 2001 (excluding &#147;incoming calls only&#148; prepay
customers) were 117, an increase of 24.5% as compared to the
average monthly MOU&#146;s of 94 in 2000. MOU&#146;s among
postpaid customers increased by 1.6% from 246 in 2000 to 250 in
2001. MOU&#146;s among prepay customers also increased by 40.6%
from 32 in 2000 to 45 in 2001. This increase in MOU&#146;s was
driven by traffic growth and greater usage by the total prepay
subscriber base and the reduction of the period to utilize the
prepay card from 180&nbsp;days to 60&nbsp;days.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nominal average monthly cellular revenue per
subscriber for all subscribers (excluding &#147;incoming calls
only&#148; prepay customers) increased 14.9% to Ps.370
(U.S.$40.4) in 2001 from Ps.322 (U.S.$35.2) in 2000. The
increase was driven mainly by higher usage by the subscriber
base, traffic growth and the reduction of the period to utilize
the prepay card from 180&nbsp;days to 60&nbsp;days.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Postpaid subscriber churn increased to an average
monthly level of 3.8% in 2001 from 3.5% in 2000. We have taken
strict collection procedures to reduce the bad debt expense and
have implemented new activation policies and retention programs.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Telephone
Equipment and Other.</FONT></I><FONT size="2"> Telephone
equipment and other revenues increased 14.8% to
Ps.607.1&nbsp;million (U.S.$66.3&nbsp;million) in 2001 from
Ps.528.7&nbsp;million (U.S.$57.7&nbsp;million) in 2000. The
14.8% increase in revenues comes mainly from out roaming fees.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Cost
of sales</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our cost of sales includes cost of services, cost
of telephone equipment and other costs. Total cost of sales
increased 5.0% to Ps.1,910.4&nbsp;million
(U.S.$208.7&nbsp;million) in 2001 from Ps.1,820.1&nbsp;million
(U.S.$198.8&nbsp;million) in 2000. As a percentage of total
revenues, cost of sales decreased to 30.6% in 2001 from 31.8% in
2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of Services.
</FONT></I><FONT size="2">Cost of services includes taxes and
fees on revenues payable to the Mexican government,
interconnection costs, technical costs such as maintenance,
repair costs, lease expenses, salaries of technical personnel
and utilities on a pro-rata basis. As a percentage of total
revenues, cost of services
</FONT>

<P align="center"><FONT size="2">57
</FONT>

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<DIV align="left">
<FONT size="2">decreased to 24.6% in 2001 from 25.6% in 2000.
Cost of services increased 4.7% to Ps.1,532.4&nbsp;million
(U.S.$167.4&nbsp;million) in 2001 from Ps.1,464.1&nbsp;million
(U.S.$159.9&nbsp;million) in 2000. The increase was primarily
driven by the higher access costs paid to other carriers due to
increased mobile-to-mobile CPP traffic as well as lease costs
following the sale of certain transmission towers in 2001. See
Item&nbsp;5 &#147;Operating and Financial Review and
Prospects&nbsp;&#151; Operating Results&nbsp;&#151; Tower
Sales&#148;. Partially offsetting those items were the reduction
of interconnection rates in January 2001, the more efficient use
of our fiber network and the one-time adjustment in provisions
of gross cellular airtime revenues payable to the Mexican
government.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of Telephone Equipment and Other.
</FONT></I><FONT size="2">Cost of telephone equipment and other
includes that portion of handset and accessory costs that are
not capitalized, handset and accessory inventory obsolescence
charges and the cost of dark fiber optic cable sold. Cost and
telephone equipment and other increased 6.2% to
Ps.378.1&nbsp;million (U.S.$41.3&nbsp;million) in 2001 from
Ps.356.0&nbsp;million (U.S.$38.9&nbsp;million) in 2000 primarily
due to the three-month consolidation of Portatel, partial
subsidization of telephones sold to prepay customers and an
increase in accessory obsolescence charges. As a percentage of
the telephone equipment and other revenues, the cost of
telephone equipment and other decreased to 62.3% in 2001 from
67.3% in 2000. The cost of a cellular handset given to a
postpaid customer is amortized over 12&nbsp;months, the average
length of our cellular contract, instead of being immediately
expensed in the period in which the customer received the
telephone.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Operating
expenses</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating expenses increased 7.9% to
Ps.2,076.7&nbsp;million (U.S.$226.8&nbsp;million) in 2001 from
Ps.1,923.9&nbsp;million (U.S.$210.1&nbsp;million) in 2000. As a
percentage of total revenues, operating expenses slightly
decreased from 33.6% in 2000 to 33.3% in 2001. As a percentage
of total revenues, sales and advertising expenses decreased to
24.0% in 2001 from 24.6% in 2000. In peso terms, sales and
advertising expenses increased 6.2%, to Ps.1,497.2&nbsp;million
(U.S.$163.5&nbsp;million) from Ps.1,410.0&nbsp;million
(U.S.$154.0&nbsp;million) in 2000, primarily because of higher
television advertising rates as well as expenses incurred in
association with the consolidation of Region&nbsp;8 cellular
service into our business. General and administrative expenses
increased 12.8% to Ps.579.5&nbsp;million
(U.S.$63.3&nbsp;million) in 2001, from Ps.514.0&nbsp;million
(U.S.$56.1&nbsp;million) in 2000, due to lower capitalization of
engineering expenses, higher consulting and vendor fees as well
as charges associated with the consolidation of Portatel, the
provider of cellular service in Region&nbsp;8 which we acquired.
As a percentage of total revenues, general and administrative
expenses increased slightly to 9.3% in 2001 from 9.0% in 2000.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
income</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We had other income of Ps.307.9&nbsp;million
(U.S.$33.6&nbsp;million) in 2001 mainly as a result of the sale
of 244 towers to MATC Celular. The same towers were immediately
leased back from MATC Celular by our subsidiary Iusacell
Arrendadora,&nbsp;S.A de C.V. See Item&nbsp;5, &#147;Operating
and Financial Review and Prospects&nbsp;&#151; Operating
Results&nbsp;&#151; Tower Monetization&#148;.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Depreciation
and amortization</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, management completed a review of its
depreciation and amortization policies related to certain analog
and digital network equipment and postpaid handsets. The aim of
the study was to align the estimated remaining useful lives of
those assets with current international benchmarks. As a result
of the review, a change in the weighted estimated useful life of
the network assets was made. The weighted average useful life
for the network equipment was extended to 10&nbsp;years,
compared to the 8.7&nbsp;years previously used. With regard to
the amortization of postpaid handset costs, we shortened the
average amortization period from 18&nbsp;months to
12&nbsp;months. Depreciation and amortization expenses increased
8.7% to Ps.2,619.2&nbsp;million (U.S.$286.1&nbsp;million) in
2001, from Ps.2,409.0&nbsp;million (U.S.$263.1&nbsp;million) in
2000 due primarily to the higher postpaid handset amortization
expense in 2001.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Operating
loss</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We reported an operating loss of
Ps.57.1&nbsp;million (U.S.$6.2&nbsp;million) in our Consolidated
Financial Statements in 2001, compared to an operating loss of
Ps.423.3&nbsp;million (U.S.$46.2&nbsp;million) in 2000. The lower
</FONT>

<P align="center"><FONT size="2">58
</FONT>

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<DIV align="left">
<FONT size="2">operating loss was attributable to the benefit
resulting from the sale of our towers. Without considering this
benefit, our operating loss for 2001 would be
Ps.364.9&nbsp;million (U.S.$39.8&nbsp;million).
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Integral
financing results</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recorded an integral financing cost of
Ps.317.3&nbsp;million (U.S.$34.7&nbsp;million) in 2001 compared
to an integral financing cost of Ps.548.5&nbsp;million
(U.S.$59.9&nbsp;million) in 2000. The lower cost was
attributable to several factors. Net interest expense decreased
by 17.7% from Ps.982.5&nbsp;million (U.S.$107.3&nbsp;million) in
2000 to Ps.808.7&nbsp;million (U.S.$88.3&nbsp;million) in 2001
as a result of lower interest rates and a stronger peso which
appreciated by 4.8% against the U.S. dollar from December 2000
to December 2001. Also due to this appreciation of the peso, we
recorded a foreign exchange gain of Ps.224.8 million
(U.S.$24.6&nbsp;million) in 2001 compared to a foreign exchange
loss of Ps.16.8&nbsp;million (U.S.$1.8&nbsp;million) in 2000. We
also posted a lower gain in monetary position of
Ps.266.6&nbsp;million (U.S.$29.1&nbsp;million) in 2001 compared
to a gain of Ps.450.7&nbsp;million (U.S.$49.2&nbsp;million) in
2000 due to the effect of our net peso liability position of the
lower period-over-period inflation rate of 4.4% in 2001 compared
to 8.9% in 2000.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Net
loss</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the factors described above, our
net loss was Ps.500.0&nbsp;million (U.S.$54.6&nbsp;million) in
2001 compared to a net loss of Ps.1,122.5&nbsp;million
(U.S.$122.6&nbsp;million) in 2000.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Year Ended
December&nbsp;31, 2000 Compared to Year Ended December&nbsp;31,
1999</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Revenues</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents the source of our
revenues for the years ended December&nbsp;31, 1999 and 2000.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Year Ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions of constant pesos as of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December 31, 2001, except percentages)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,285.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,201.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephone equipment and other revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">528.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,783.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below presents service revenues by
source for the years ended December&nbsp;31, 1999 and 2000.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">1999<SUP>(1)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000<SUP>(1)</SUP></FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ps.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions of constant pesos as of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">December 31, 2001, except percentages)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Airtime<SUP>(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,720.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,533.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monthly fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,606.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,710.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long distance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">554.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">532.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Value-added services and in-roaming<SUP>(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">403.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">424.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total service revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,285.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,201.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Figures reflect intercompany eliminations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Airtime includes amounts billed to other carriers
    for incoming minutes under CPP starting May&nbsp;1, 1999.
    Incoming and outgoing airtime is charged on a per-minute basis
    for both peak (Monday to Friday, 8:00&nbsp;a.m. to
    10:00&nbsp;p.m.) and non-peak airtime.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes fees for value-added services, such as
    call waiting, call transfer, emergency service, secretarial
    service and three-way calling, and revenues from premiums for
    surety bonds, insurance-related charges payable by subscribers,
    rural and public telephony and Iusacell&#146;s cellular
    magazine. Does not include charges for related airtime.
    Customers using value-added services such as news, weather,
    sports and entertainment reports are charged only for airtime.
    These revenues are therefore included in airtime.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">59
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Postpaid subscribers increased by 25.6% from
352,289 subscribers, or 26.6% of total subscribers, at
December&nbsp;31, 1999, to 442,594 subscribers, or 26.3% of
total subscribers, at December&nbsp;31, 2000. Digital postpaid
customers grew by 73.6% from 219,829 at December&nbsp;31, 1999
to 381,696 at December&nbsp;31, 2000. LDI postpaid customers
grew by 402.7% from 17,776 at December&nbsp;31, 1999 to 89,364
at December&nbsp;31, 2000. The December&nbsp;31, 2000 postpaid
subscriber data includes approximately 12,000 public telephony
customers who in the second quarter of 2001 were reclassified,
retroactively to January&nbsp;1, 2000, as postpaid customers
rather than prepay customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Service revenues increased by 21.4% to
Ps.5,201.0&nbsp;million (U.S.$568.0 million) in 2000 from
Ps.4,285.9&nbsp;million (U.S.$468.1&nbsp;million) in 1999 and
represented 90.8% and 89.6% of total revenues in 2000 and 1999,
respectively. Revenues increased primarily as a result of
subscriber growth, greater usage as a result of the
digitalization of the postpaid subscriber base and traffic
growth related to calling party pays (which resulted in a
significant increase in incoming calls and contributed to the
growth in prepay subscribers). This increase was offset in part
by the decline in nominal average monthly cellular revenue per
subscriber and long distance cellular revenues described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Monthly fees from postpaid customers increased
6.5% during 2000, Ps.1,710.7&nbsp;million
(U.S.$186.8&nbsp;million) as compared to Ps.1,606.8&nbsp;million
(U.S.$175.5&nbsp;million) in 1999. This was primarily a result
of a migration of postpaid customers from higher to lower
monthly fixed charge products, offset by the increase in the
postpaid subscriber base. Airtime revenues increased 47.2% from
Ps.1,720.9&nbsp;million (U.S.$188.0&nbsp;million) in 1999 to
Ps.2,533.4 million (U.S.$276.7&nbsp;million) in 2000, primarily
as a result of subscriber growth, traffic growth related to
calling party pays and greater usage generated by the
digitalization of the postpaid subscriber base. Long distance
service revenues decreased 4.0% from Ps.554.3&nbsp;million
(U.S.$60.5&nbsp;million) in 1999 to Ps.532.2&nbsp;million
(U.S.$58.1&nbsp;million) in 2000. We believe this decline was
due to the increase in the postpaid and prepay LDI customer
base, which replaces per-minute long distance charges that are
allocated to long distance service revenues with higher
per-minute airtime charges that are not allocated to long
distance service revenues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the second quarter of 2000, in order to
conform to standards applied by other Verizon International
affiliates, we changed our methodology in calculating average
monthly MOUs and nominal ARPU to (i)&nbsp;include minutes of use
from incoming calls to postpaid customers, and (ii)&nbsp;exclude
revenues generated from the sale of handsets and accessories to
postpaid customers. The MOU and ARPU data presented below for
2000 and 1999 have been calculated using this new methodology.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Average monthly MOUs for all subscribers for 2000
(excluding &#147;incoming calls only&#148; prepay customers)
were 94, an increase of 3.2% as compared to the average monthly
MOUs of 91 in 1999. MOUs among postpaid customers increased
17.7% from 209 MOUs in 1999 to 246 MOUs in 2000. MOUs among
prepay customers increased 18.5% to 32 in 2000 from 27 in 1999.
This increase in MOUs was driven by the traffic growth related
to CPP and by the continuing digitalization of the customer base.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nominal average monthly revenue per subscriber
for all subscribers (excluding &#147;incoming calls only&#148;
prepay customers) decreased 3.9% from Ps.335 (U.S.$36.6) in 1999
to Ps.322 (U.S.$35.2) in 2000. This blended decline, primarily
due to the increase in the percentage of prepay customers
(excluding &#147;incoming calls only&#148; customers), masks a
5.0% increase in postpaid customer nominal ARPU and a 7.5%
increase in prepay customer nominal ARPU.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Postpaid subscriber churn increased to an average
monthly level of 3.51% in 2000 from 2.96% in 1999. We believe
that this increase in churn was related to inadequate credit and
collection procedures at the time of activation. We have taken
steps to correct this situation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Telephone Equipment and
Other.</FONT></I><FONT size="2"> Telephone equipment and other
revenues increased by 6.4% from Ps.497.1 million
(U.S$54.3&nbsp;million) in 1999 to Ps.528.7&nbsp;million
(U.S.$57.7&nbsp;million) in 2000. The 71.1% increase in revenues
attributable to out-roaming fees, from Ps.199.7&nbsp;million
(U.S.$21.8&nbsp;million) in 1999 to Ps.341.7&nbsp;million
(U.S.$37.3 million) in 2000, more than offset (i)&nbsp;the 12.6%
decline in handset revenues, from Ps.125.6&nbsp;million
(U.S.$13.7&nbsp;million) in 1999 to Ps.109.8&nbsp;million
(U.S.$12.0&nbsp;million) in 2000 and (ii)&nbsp;the absence of
revenues from the sale of dark fiber optic cable in 2000, which
in 1999 represented Ps.68.7&nbsp;million (U.S.$7.5&nbsp;million)
in revenues.
</FONT>

<P align="center"><FONT size="2">60
</FONT>

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<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
of Sales</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total cost of sales increased 19.1% to
Ps.1,820.1&nbsp;million (U.S.$198.8 million) in 2000 from
Ps.1,528.5&nbsp;million (U.S.$166.9&nbsp;million) in 1999. As a
percentage of total revenues, cost of sales decreased to 31.8%
in 2000 from 32.0% in 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of services.
</FONT></I><FONT size="2">Cost of services increased 19.8% to
Ps.1,464.1&nbsp;million (U.S.$159.9&nbsp;million) in 2000 from
Ps.1,221.9&nbsp;million (U.S.$133.5&nbsp;million) in 1999. This
increase was mainly due to the 21.4% increase in service
revenues, which resulted in higher overall (i)&nbsp;taxes and
fees payable to the Mexican government and (ii)&nbsp;Telmex
interconnection fees. As a percentage of service revenues, cost
of services decreased slightly from 28.5% in 1999 to 28.2% in
2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cost of telephone equipment.
</FONT></I><FONT size="2">Cost of telephone equipment and other
increased by 16.1% to Ps.356.0&nbsp;million
(U.S.$38.9&nbsp;million) in 2000 from Ps.306.6&nbsp;million
(U.S.$33.5&nbsp;million) in 1999 primarily due to the expensed
partial subsidization of telephones sold to prepay customers and
an increase in handset inventory obsolescence charges. As a
percentage of telephone equipment and other revenues, the cost
of telephone equipment and other increased to 67.3% in 2000 from
61.7% in 1999. The cost of a cellular handset given to a
postpaid customer was amortized over 18&nbsp;months, the average
maturity of our cellular contract in these periods.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
Expenses</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating expenses increased 17.1% to
Ps.1,923.9&nbsp;million (U.S.$210.1 million) in 2000 from
Ps.1,643.5&nbsp;million (U.S.$179.5&nbsp;million) in 1999. As a
percentage of total revenues, operating expenses decreased to
33.6% in 2000 from 34.4% in 1999. Sales and advertising expenses
increased 34.4% from Ps.1,048.7&nbsp;million
(U.S.$114.5&nbsp;million) in 1999 to Ps.1,409.9&nbsp;million
(U.S.$154.0&nbsp;million) in 2000, primarily because of
increased commissions to distributors resulting from higher
sales and revenue-related increases in advertising. General and
administrative expenses decreased by 13.5% from
Ps.594.9&nbsp;million (U.S.$65.0&nbsp;million) in 1999 to
Ps.514.0&nbsp;million (U.S.$56.1 million) in 2000 mainly due to
cost containment programs and higher productivity.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
and Amortization</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Depreciation and amortization expenses increased
by 48.6% to Ps.2,409.0 million (U.S.$263.1&nbsp;million) in 2000
from Ps.1,621.0&nbsp;million (U.S.$177.0 million) in 1999. This
increase was primarily due to the completion in late 1999 of the
deployment of the new Lucent Technologies analog and digital
network and the additional investments made in 1999 and 2000 to
satisfy the capacity and coverage requirements for continued
growth and quality standards. In addition, in the fourth quarter
of 1999, we completed the implementation of our new LHS cellular
billing system and we capitalized all associated costs. The
continued digitalization of the postpaid subscriber base
resulted in greater amortization expenses driven mainly by
increased purchases of more expensive digital handsets.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
Loss</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recorded an operating loss of
Ps.423.3&nbsp;million (U.S.$46.2&nbsp;million) in 2000 as
compared to an operating loss of Ps.10.1&nbsp;million
(U.S.$1.1&nbsp;million) in 1999.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Integral
Financing Results</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We recorded an integral financing cost of
Ps.548.5&nbsp;million (U.S.$59.9 million) in 2000 compared to an
integral financing gain of Ps.602.4&nbsp;million
(U.S.$65.8&nbsp;million) in 1999. This change was primarily the
result of higher net interest expense due to the issuance by
Iusacell in December 1999 of U.S.$350.0&nbsp;million in
14&nbsp;1/4% senior notes due in 2006. Net interest expense
increased to Ps.982.5&nbsp;million (U.S.$107.3&nbsp;million) in
2000 from Ps.331.5 million (U.S.$36.2&nbsp;million) in 1999. In
addition, as a result of the slight peso devaluation in 2000 as
compared to the peso appreciation against the U.S. dollar in
1999, we recorded a foreign exchange loss of
Ps.16.8&nbsp;million (U.S.$1.7&nbsp;million) in 2000 as compared
to a foreign exchange gain of Ps.180.9 million
(U.S.$19.8&nbsp;million) in 1999. We also experienced a decrease
in gain in monetary position from Ps.752.9&nbsp;million
(U.S.$82.2&nbsp;million) in 1999 to Ps.450.7&nbsp;million
(U.S.$49.2&nbsp;million) in 2000 due to the effect
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">on our net peso liability position of a lower
period-over-period inflation as measured by changes in the INPC,
12.3% in 1999 as compared to 8.9% in 2000.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
Income</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the factors described above, our
net loss was Ps.1,122.5 million (U.S.$122.6&nbsp;million) in
2000 compared to a net income of Ps.379.7 million
(U.S.$41.5&nbsp;million) in 1999.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Tax,
Asset Tax and Employees&#146; Profit Sharing</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Beginning January&nbsp;1, 1999, as a result of
Mexican income tax law amendments, we must limit our tax
consolidation to 60% of all our subsidiaries, except for five
entities (Iusatel, S.A. de C.V., Iusatelecomunicaciones, S.A. de
C.V., Infotelecom, S.A. de C.V., Iusacell PCS, S.A. de C.V. and
Punto-a-Punto Iusacell, S.A. de C.V.) which are not included in
our consolidated tax return (although they are consolidated for
financial reporting purposes), because we do not hold at least
51% of the voting shares of such subsidiaries. We filed an
injunctive action (amparo)&nbsp;against the new income tax law
amendments on the basis that the law is unconstitutional. This
injunctive action was rejected on technical grounds and we are
not allowed to file another motion on the same grounds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2000, the Mexican Treasury Department
(<I>Secretar&#237;a de Hacienda y Cr&#233;dito P&#250;blico</I>)
ruled that we could prepare consolidated tax returns for
ourselves and the subsidiaries in which we hold a majority of
voting shares and thereby apply our net operating loss
carryforwards against our and such subsidiaries&#146; profits.
In April 2001, the Mexican Treasury Department ruled that
Iusacell Celular&#146;s net operating loss carryforwards would
be transferred to Iusacell, so that Iusacell could apply such
net operating loss carryforwards against its and its
majority-owned subsidiaries&#146; tax result.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell and its subsidiaries pay an alternative
net asset tax, which is levied on the average value of
substantially all assets less certain liabilities. This tax,
which is 1.8% of the taxable base, is required to be paid if the
amount of the asset tax exceeds the computed income tax
liability. We provided for Ps.150.9&nbsp;million
(U.S.$16.5&nbsp;million), Ps.156.3&nbsp;million
(U.S.$17.1&nbsp;million) and Ps.146.4&nbsp;million
(U.S.$16.0&nbsp;million) as asset tax for 1999, 2000 and 2001.
These taxes may be applied in subsequent years against income
tax payments, to the extent income tax liabilities for such
years exceed the net asset tax calculation. Due to net losses,
we paid no income taxes in 2001 and paid the asset taxes
specified above. In 2000, as a result of the new tax
consolidation rules, we paid Ps.82.4&nbsp;million
(U.S.$9.0&nbsp;million) in income taxes as well as the asset tax
specified above, even though Iusacell recorded a net loss on a
fully consolidated basis. See Note&nbsp;12 to the Consolidated
Financial Statements for a discussion of our carryforward tax
losses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While we have no employees at the holding company
level, our subsidiaries are required under Mexican law to pay
their employees, in addition to their required compensation and
benefits, profit sharing in an aggregate amount equal to 10% of
the taxable income of the relevant subsidiary (calculated
without reference to inflation adjustments or amortization of
tax loss carryforwards). There was no statutory profit sharing
in any periods presented.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Mexican
Accounting Pronouncements</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, the MIPA issued the revised
Bulletin C-9, &#147;Liabilities, Provisions, Contingent Assets
and Liabilities and Commitments&#148; (Bulletin&nbsp;C-9), which
establishes a methodology for valuation, presentation and
disclosure of liabilities and provisions, as well as for
valuation and disclosure of contingent assets and liabilities,
and for disclosure for commitments. The revised
Bulletin&nbsp;C-9 states that (i)&nbsp;all contingent assets
that have a practical true realization must be accounted and
disclosed in the financial statements; (ii)&nbsp;contingent
assets that have a probable realization cannot be accounted for
in the financial statements, but must be disclosed; and
(iii)&nbsp;contingent assets that do not have a probable
realization and cannot be accounted for in the financial
statements are not required to be disclosed. Bulletin&nbsp;C-9
requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of
Bulletin&nbsp;C-9 are required to be applied beginning on
January&nbsp;1, 2003, although early adoption is recommended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, in December 2001, the MIPA issued
revised Bulletin&nbsp;C-8, &#147;Intangible Assets&#148;
(Bulletin&nbsp;C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a
</FONT>

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<DIV align="left">
<FONT size="2">future economic benefit. Revised
Bulletin&nbsp;C-8 states that pre-operating costs should be
expensed as a period cost, unless they could be classified as
development costs. Bulletin&nbsp;C-8 requires that intangible
assets with finite useful lives should be amortized over its
useful life. The provisions of Bulletin&nbsp;C-8 are required to
be applied beginning on January&nbsp;1, 2003, although early
adoption is recommended.
</FONT>
</DIV>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. GAAP
Reconciliation</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal differences between Mexican GAAP
and U.S. GAAP as they relate to Iusacell are the adjustment for
the effects of inflation, minority interest, purchase
accounting, deferred income taxes, capitalization of
pre-operating costs, derivative financial instruments,
provisions for consolidation of facilities and accounting for
non-monetary exchanges, and sale-leaseback transactions. See
Note&nbsp;23 to the Consolidated Financial Statements for a
reconciliation to U.S. GAAP of stockholders&#146; equity and net
profit (loss)&nbsp;for the respective periods presented.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New U.S.
Accounting Pronouncements</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2001, the FASB issued FAS No.&nbsp;141,
&#147;Business Combinations,&#148; which supercedes APB
No.&nbsp;16, &#147;Business Combinations&#148; and amends or
supercedes a number of related interpretations of APB
No.&nbsp;16. The Statement is effective for all business
combinations initiated after June&nbsp;30, 2001 and for all
business combinations accounted for by the purchase method that
are completed after June&nbsp;30, 2001. FAS No.&nbsp;141
addresses financial accounting and reporting for business
combinations, eliminates the pooling-of-interests method of
accounting for business combinations, and prescribes the initial
recognition and measurement of goodwill and other intangible
assets, accounting for negative goodwill and the required
disclosures in respect of business combinations. The Company
applied SFAS&nbsp;141 to the Portatel acquisition and
SFAS&nbsp;142 to the intangible assets acquired therein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2001, the FASB also issued FAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148;,
which supercedes APB No.&nbsp;17, &#147;Intangible Assets.&#148;
The Statement is effective for fiscal years beginning after
December&nbsp;15, 2001 and may not be retroactively applied to
financial statements of prior periods. FAS No.&nbsp;142 requires
that goodwill, including previously existing goodwill and
intangible assets with indefinite useful lives not be amortized
but should be tested for impairment annually, or more frequently
if impairment indicators arise. Goodwill and intangible assets
with indefinite useful lives will no longer be tested for
impairment under FAS No.&nbsp;121, &#147;Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of.&#148; The Company expects that due to the adoption
of SFAS&nbsp;141 and 142, amortization of approximately
Ps.169,833, corresponding to all of the Company&#146;s goodwill
at December&nbsp;31, 2001, will not be recorded during 2002,
which previously would have been.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Financial Accounting Standards Board
(&#147;FASB&#148;) recently issued SFAS&nbsp;143,
&#147;Accounting for Obligations Associated with the Retirement
of Long-Lived Assets&#148;, which is effective for fiscal years
beginning after June&nbsp;15, 2002. The objectives of
SFAS&nbsp;143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation
and its associated asset retirement cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the FASB issued SFAS&nbsp;144,
&#147;Accounting for the Impairment of Long-Lived Assets&#148;,
which supersedes SFAS&nbsp;121, &#147;Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of&#148;, and APB&nbsp;30, &#147;Reporting the Results
of Operations-Reporting the Effects of Disposal of a Segment of
a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions&#148;. SFAS&nbsp;144 provides
new guidance on (1)&nbsp;the recognition of impairment losses on
long-lived assets to be held and used or to be disposed of and
(2)&nbsp;how the results of a discontinued operation are to be
measured and presented. It also broadens the definition of what
constitutes a discontinued operation. It is effective for fiscal
years beginning after December&nbsp;15, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April of 2002, the FASB issued SFAS 145,
&#147;Rescission of FASB Statements No.&nbsp;4, 44, and 64,
Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections.&#148; As a result, companies will no longer be
allowed to classify gains and losses from extinguishments of
debt as extraordinary items unless they meet the criteria of
APB&nbsp;30. Gain and losses from extinguishments of debt that
have been classified as extraordinary in prior years that do not
meet the criteria of APB&nbsp;30 shall be reclassified on a go
forward basis. In addition, SFAS&nbsp;145 requires that capital
leases that are modified so that the resulting lease agreement
is classified as an
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">operating lease be accounted for under the
sale-leaseback provisions of SFAS&nbsp;28 or 98, as applicable,
instead of SFAS&nbsp;13. The provisions of this statement with
regard to SFAS&nbsp;4 will be effective for fiscal years
beginning after May&nbsp;15, 2002, and those for SFAS&nbsp;13
will be effective for transactions occurring after May&nbsp;15,
2002.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently evaluating the adoption of SFAS
143, 144 and 145 will have on our results of operations and
financial position.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Critical
Accounting Policies</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have identified certain key accounting
policies on which our consolidated financial condition and
results of operations are dependent. These key accounting
policies most often involve complex matters or are based on
subjective judgments or decisions. In the opinion of our
management, our most critical accounting policies under both
Mexican GAAP and U.S. GAAP are those related to the accounting
for revenue recognition, allowance for doubtful accounts, the
evaluation of long-lived assets, depreciation and amortization
and deferred taxes. For a full description of all of our
accounting policies, see Notes&nbsp;4 and 23 to the Consolidated
Financial Statements included in this Annual Report.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
recognition</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The recognition of revenue from the sale of
prepay cards to mobile wireless customers requires a certain
degree of management estimates. For periods presented we
recognized revenue at the date of the sale, rather than on a
deferred basis, because the length of the average consumption
period for such prepay cards is approximately one to one and
one-half months, which we believe is not a significant period
and is not material to our results of operations. We estimate
the average consumption period taking into consideration the
date cards are shipped to distributors and vendors to when the
minutes are registered in our systems. In 2002, based on more
precise methods of monitoring card usage, we modified our
revenue recognition methodology.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance
for doubtful accounts</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The allowance for doubtful accounts represents
our estimate of the probable loss inherent in all accounts
receivable. We consider a number of factors in determining the
proper level of the allowance including historical collection
experience, current economic trends, the aging of the accounts
receivable portfolio and changes in the credit-worthiness of our
customers. Systems to detect fraudulent call activity are in
place within our network, but if these systems fail to identify
such activity, we may realize a higher degree of uncollectible
accounts. While we believe that our estimates are reasonable,
changes in our customers trends or any of the above mentioned
factors could materially affect our bad debt expense.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Evaluation
of long-lived assets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have recognized on our balance sheets certain
long-lived assets and capitalized costs including goodwill,
property, plant and equipment, pre-operating expenses and Telmex
special projects. These assets are assigned useful lives which
impact annual depreciation and amortization expense, the
assignment of which involves significant judgments and
estimates. These long-lived assets are evaluated for impairment
on a periodic basis and we recognize an impairment to the extent
we believe that the carrying value is no longer recoverable from
future cash flows. Factors we take into consideration include
the future cash flows to be generated by the assets and the
possible impact that inflation may have in our ability to
generate cash flow since, with inflation accounting, the
carrying value is restated by inflation prior to an impairment
analysis. Key assumptions we evaluate include inflation,
currency fluctuations and future revenue growth. If our
assumptions are not correct, we would have to recognize a
write-off or accelerated amortization of the carrying value of
these assets.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
and amortization</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We depreciate property, plant and equipment and
amortize goodwill and other intangible assets using
straight-line methods over the period of time we estimate we
will benefit from each asset. For US GAAP purposes, we do not
amortize goodwill related to Portatel and beginning January 2002
we no longer amortize goodwill of indefinite-lived intangible
assets, but instead evaluate them for impairment.
</FONT>

<P align="center"><FONT size="2">64
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of mobile wireless telephones given to
customers under exclusive service contracts is amortized on a
straight-line basis. During 2001, we reduced the amortization
period of mobile wireless telephones from an average of
18&nbsp;months to 12&nbsp;months. The term of service contracts
varies on a customer by customer basis. Due to the
cost-ineffectiveness of tracking phones on an individual
contract basis for amortization purposes, we estimate the
average term of our contracts based on current trends.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
taxes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have recorded a net deferred tax asset mainly
reflecting the benefit of tax loss carryforwards, which expire
in varying amounts in the future. Realization is dependent on
generating sufficient taxable income prior to expiration of the
loss carryforwards. Although realization is not assured,
management believes it is more likely than not that a portion of
the net deferred tax asset will be realized based on our
business plan estimate of future taxable income over the next
five years in an amount sufficient to utilize the net deferred
tax losses recorded. Although we feel we will use our loss
carryforwards, given the fact that we&#146;ve experienced
significant losses, a valuation allowance for a majority of the
asset has been recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our estimate of future taxable income is based
primarily on and supported by (i)&nbsp;the significant
improvement in operating performance through 2001, as evidenced
by the success of the implementation of the Verizon wireless
business model which has produced strong subscriber annual
compound growth of 50% through 2001, improved revenues mainly
driven by subscriber growth and lower network and operating
costs, (ii)&nbsp;Vodafone&#146;s strong experience and success
in the prepaid market, (iii)&nbsp;additional increases in
revenues generated by the CPP feature with an important taxable
operating margin, (iv)&nbsp;the change in Mexican income tax law
to increase the useful lives for network equipment from
3.3&nbsp;years to 12.5&nbsp;years, representing an important
decrease in depreciation expense for income tax purposes and
(v)&nbsp;an increase in 2002 of the potential effects of
additional cost cutting. We will continue to evaluate our
deferred tax asset every year.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liquidity and
Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the equity recapitalization and
restructuring of Iusacell completed in August 1999, Iusacell
acquired 99.5% of the capital stock of Iusacell Celular. Prior
to that time, Iusacell had nominal assets and no operations,
indebtedness or liabilities. As a result of a second exchange
offer launched in the United States by Iusacell for the
remaining Iusacell Celular ADSs and completed on
February&nbsp;29, 2000, Iusacell held 99.9% of the capital stock
of Iusacell Celular. On March&nbsp;30, 2001, Iusacell
Celular&#146;s shareholders approved a 30,000 to 1 reverse stock
split, which became effective in May 2001. As a result of such
transactions, Iusacell now holds 100% of the capital stock of
Iusacell Celular.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our liquidity requirements arise from cash used
in operating activities, purchases of network equipment,
interest and principal payments on outstanding indebtedness and
acquisitions of and strategic investments in businesses. We have
financed our growth to date through equity contributions from
our principal shareholders, public offerings and private
placements of debt and equity securities, bank debt and vendor
financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that funds from operating activities,
vendor financing and proceeds from tower monetization
transactions will be sufficient to meet our debt service and
principal amortization requirements, working capital
requirements and capital expenditure needs for our existing
businesses through 2003, although we cannot provide any
assurance in this regard.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to our new businesses, our strategic
plan is to substantially complete the build-out our PCS networks
and deploy non-network infrastructure in Regions&nbsp;1 and 4 in
northern Mexico in order to provide PCS services in those
regions by the end of 2002. In addition, we expect to
significantly increase the quality and coverage of our newly
acquired cellular network in Region 8 in southern Mexico. Our
capital expenditure needs and working capital requirements to
develop these businesses will require a significant amount of
additional funding in the second half of 2002 and beyond. We are
seeking to obtain this financing from equipment vendors and
other sources. There can be no assurance that we will be able to
obtain any such financing.
</FONT>

<P align="center"><FONT size="2">65
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our future operating performance and ability to
service and repay our indebtedness will be subject to future
economic and competitive conditions and to financial, business
and other factors, many of which are beyond our control.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in
Financial Position</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, our cash generated from operating
activities has not been sufficient to meet our debt service,
working capital and capital expenditure requirements. We have
relied on the capital markets for new equity and debt financing,
vendor financing and borrowings and equity contributions for our
principal shareholders to meet such funding needs. For the year
ended December&nbsp;31, 1999, our ratio of earnings to fixed
charges was 2.59:1.00. For the years ended December&nbsp;31,
2000 and 2001, our earnings were insufficient to cover our fixed
charges by Ps.914.0&nbsp;million (U.S.$99.8&nbsp;million) and
Ps.279.6&nbsp;million (U.S.$30.5&nbsp;million), respectively.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash Flows From
Operating Activities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We generated positive cash flows from operating
activities in the years ended December&nbsp;31, 2001 and
December&nbsp;31, 2000. Net cash provided by operating
activities was Ps.2,059.3&nbsp;million (U.S.$224.9&nbsp;million)
for 2001 compared to Ps.1,488.7&nbsp;million
(U.S.$162.6&nbsp;million), for 2000. The increase in 2001
resulted mainly from a Ps.637.9&nbsp;million
(U.S.$69.7&nbsp;million) smaller loss from continuing operations
than in 2000, and an increase in depreciation and amortization
of Ps.210.2&nbsp;million (U.S.$23.0&nbsp;million), partially
offset by resources used in working capital of
Ps.231.8&nbsp;million (U.S.$25.3&nbsp;million). We also
generated positive cash flows from operating activities in the
year ended December&nbsp;31, 1999, of Ps.1,305.3&nbsp;million
(U.S.$142.6&nbsp;million).
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Cash
Flows from Financing Activities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001, net
cash provided by financing activities amounted to
Ps.&nbsp;375.5&nbsp;million (U.S.$41.0&nbsp;million) compared to
Ps.&nbsp;777.9&nbsp;million (U.S.$85.0&nbsp;million) for the
year ended December&nbsp;31, 2000. The decrease was mainly
attributable to an increase in the principal payments on
long-term debt of Ps.&nbsp;1,930.7&nbsp;million
(U.S.$210.9&nbsp;million), a decrease in the amount of proceeds
received from effect of rights and primary offerings of
Ps.&nbsp;1,604.1&nbsp;million (U.S.$175.2&nbsp;million),
partially offset by an increase in the proceeds received from
long-term debt of Ps.&nbsp;2,342.7&nbsp;million (U.S.$255.9
million) and an increase of Ps.&nbsp;932.4&nbsp;million
(U.S.$101.8&nbsp;million) in capital stock. Net cash provided by
financing activities in 1999 was Ps.&nbsp;4,178.7 million
(U.S.$456.4&nbsp;million). The decrease in 2000 from 1999 was
mainly due to a decrease in the proceeds received from long-term
debt of Ps.&nbsp;4,000.1&nbsp;million (U.S.$436.9&nbsp;million)
and capital stock from the capitalization of stockholders debt
of Ps.&nbsp;446.8&nbsp;million (U.S.$48.8&nbsp;million) and an
increase in the principal payments on long-term debt of
Ps.&nbsp;1,190.9&nbsp;million (U.S.$130.1&nbsp;million),
partially offset by an increase in the proceeds received from an
effect of rights and primary offerings of
Ps.&nbsp;1,187.3&nbsp;million (U.S.$129.7&nbsp;million) and an
increase in the issuance of notes payable of
Ps.&nbsp;852.8&nbsp;million (U.S.$93.1 million).
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Cash
Flows Used for Investing Activities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in investing activities was
Ps.&nbsp;2,706.4&nbsp;million (U.S.$295.6&nbsp;million) in 2001.
We purchased Ps.&nbsp;3,205.7&nbsp;million
(U.S.$350.1&nbsp;million) of property, equipment and other
assets including the acquisition of Portatel. These purchases
were partially offset by the release of the escrow account
amounting to Ps.&nbsp;495.3&nbsp;million
(U.S.$54.1&nbsp;million). Net cash used in investing activities
was Ps.&nbsp;2,889.9&nbsp;million (U.S.$315.6&nbsp;million) in
2000 and was primarily attributable to purchases of
Ps.&nbsp;3,397.3&nbsp;million (U.S.$371.0&nbsp;million) of
property, equipment and other assets including additional
capital contributions to associated companies, which were
partially offset by the release of the escrow account of
Ps.&nbsp;507.4&nbsp;million (U.S.$55.4&nbsp;million).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net cash used in investing activities in 1999 was
Ps.&nbsp;4,499.6&nbsp;million (U.S.$491.4&nbsp;million). In
1999, we made investments in an aggregate amount of
Ps.&nbsp;3,051.1&nbsp;million (U.S.$333.2&nbsp;million).
Substantially all of these expenditures were for the purchase of
property, equipment and other assets. In addition, in connection
with the issuance and sale of our senior notes due 2006, we
provided security for those notes in the form of a cash escrow
account in the amount of Ps.&nbsp;1,442.5&nbsp;million
(U.S.$157.5&nbsp;million).
</FONT>

<P align="center"><FONT size="2">66
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Tax
Loss Carryforwards</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have recorded a net deferred tax asset of
Ps.&nbsp;173.1&nbsp;million (U.S.$18.9&nbsp;million) mainly
reflecting the benefit of tax loss carryforwards, which expire
in varying amounts between 2005 and 2010. Realization is
dependent on generating sufficient taxable income prior to
expiration of the loss carryforwards. Although realization is
not assured, management believes it is more likely than not that
a portion of the net deferred tax asset at December&nbsp;31,
2001 will be realized based on our business plan estimate of
future taxable income over the next five years in an amount
sufficient to utilize the net deferred tax losses recorded as of
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our estimate of future taxable income is based
primarily on and supported by (i)&nbsp;the significant
improvement in operating performance through 2001, as evidenced
by the success of the implementation of the Verizon wireless
business model which has produced strong subscriber annual
compound growth of 50% through 2001, improved revenues mainly
driven by subscriber growth and lower network and operating
costs, (ii)&nbsp;Vodafone&#146;s strong experience and success
in the prepaid market, (iii)&nbsp;additional increase in
revenues generated by the CPP feature with an important taxable
operating margin, (iv)&nbsp;the change in the income tax law to
increase the useful lives for network equipment from 3.3 years
to 12.5&nbsp;years, representing an important decrease in
depreciation expense for income tax purposes and (v)&nbsp;an
increase in 2002 of the potential effects of additional cost
cutting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of the deferred tax asset considered
realizable could be reduced in the near term if estimates of
future taxable income during the carry forward periods are
reduced.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we had a valuation
allowance of Ps.&nbsp;309.7&nbsp;million
(U.S.$33.8&nbsp;million), to reduce our deferred tax assets to
estimated realizable value. The valuation allowance primarily
relates to the deferred tax assets arising from tax loss
carryforwards and tax credits. To the extent that the Mexican
tax loss carryforwards cannot be used by our subsidiaries, 60%
of such tax loss carryforwards can be used to offset our future
consolidated income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, we had net operating
losses for income tax purposes that may be carried forward and
applied against future taxable earnings of
Ps.&nbsp;2,597.4&nbsp;million (U.S.$283.7&nbsp;million) expiring
in various amounts from 2005 through 2011. See Note&nbsp;12 to
the Consolidated Financial Statements.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital
Expenditures</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002 and 2003, we expect to make capital
expenditures to extend our network infrastructure, build out our
cellular and long distance networks, continue the build-out of
our PCS networks in Regions&nbsp;1 and 4 in northern Mexico,
enhance our new billing systems, and support existing operations
and new business opportunities. The degree and timing of capital
expenditures will remain strongly dependent on the competitive
environment and economic developments in Mexico, including
inflation and exchange rates, as well as on the timing of
regulatory actions and on the availability of suitable debt
and/or equity financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we acquire additional mobile wireless
concessions in Mexico, we may be required to increase our
capital expenditure budget. We would expect to finance these
capital expenditures through a combination of debt and vendor
financing, equity capital and operating cash flow.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect capital expenditures for 2002 and 2003
to total approximately U.S.$430.0&nbsp;million, not including
amounts in respect of capitalized interest. We expect to invest
up to U.S.$250.0&nbsp;million of this amount during 2002,
including up to U.S.$150.0&nbsp;million in our core cellular
business in central Mexico, approximately U.S.$79.0&nbsp;million
to continue the build-out of our PCS networks in Regions 1 and 4
in northern Mexico and approximately U.S.$21.0&nbsp;million to
increase the quality and coverage of our cellular network in
Region&nbsp;8 in southern Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to make capital expenditures of
approximately U.S.$180.0&nbsp;million in 2003, including
U.S.$7.0&nbsp;million to continue the build-out of our PCS
networks and deployment of non-network infrastructure in
Regions&nbsp;1 and 4 and U.S.$10.0&nbsp;million to develop our
cellular network in Region&nbsp;8 in southern Mexico. The
remaining U.S.$163.0&nbsp;million will be used in our core
cellular business in central Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total capital expenditures in 2001 were
U.S.$213.8&nbsp;million. From this amount, approximately
U.S.$189.8&nbsp;million was used primarily for the development
of the wireless network in central regions and to
</FONT>

<P align="center"><FONT size="2">67
</FONT>

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<DIV align="left">
<FONT size="2">construct new and remodel existing customer sales
and service centers. The balance of U.S.$24.0&nbsp;million was
primarily:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">invested in developing and launching PCS services
    in the cities of Tijuana and Monterrey in Regions&nbsp;1 and 4;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">used to develop and increase the quality of the
    wireless network in the recently acquired Region&nbsp;8 in
    southern Mexico.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that funds from operating activities,
other vendor financing, existing short-term facilities and the
proceeds from tower monetization transactions will be sufficient
to meet our debt service and principal amortization requirements
and the working capital requirements and capital expenditure
needs of our existing businesses through 2003, although we
cannot provide any assurance in this regard.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total capital expenditures in 2000 were
U.S.$217.4&nbsp;million. Approximately U.S.$175.0&nbsp;million
of this amount was used for the development of the Iusacell
Celular wireless network.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total capital expenditures in 1999 were
U.S.$144.5&nbsp;million, not including Lucent Technologies
trade-in credits in the amount of U.S.$19.2&nbsp;million and
capitalized interest in the amount of U.S.$17.1&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Capital expenditure amounts were derived using
historical pesos translated at the exchange rate in effect at
the end of the corresponding year.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Contractual
Obligations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table outlines our obligations for
payments under our indebtedness, including notes payable to
suppliers, and operating leases for the periods indicated using
balances as of December&nbsp;31, 2001. Please see the discussion
following this section for a separate discussion of Iusacell
Celular&#146;s debt obligations, operating leases and other
financing arrangements:
</FONT>

<P align="center">
<B><FONT size="2">Payments due by Period</FONT></B>

<DIV align="center">
<B><FONT size="2">(Figures in thousands of U.S. Dollars as of
December&nbsp;31, 2001)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Iusacell Indebtedness(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="2">BNP Paribas facilities:</FONT></I></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-GIEK-Guaranteed Loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,039</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BNP Paribas (Oslo) Non-GIEK- Guaranteed Loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,782</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">GTE Venholdings B.V. Loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Harris facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,055</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,164</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">354,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Operating leases(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MATC Celular
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">862,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,725,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and others
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,327</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355,847</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating leases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">237,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">228,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">218,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">862,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,081,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts are principal payments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts include minimum lease payments.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The degree to which we are leveraged and the
covenants with which we must comply under our various financing
agreements may adversely affect our ability to finance future
operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better
capitalized competitors and to withstand downturns in our
business or the Mexican economy in general. Our high level of
indebtedness could limit our ability to pursue business
opportunities that may be in our interest and that of holders of
our securities. In addition, in the event that the Iusacell
Celular senior notes have not been refinanced by March&nbsp;31,
2004, the outstanding amount of the senior refinancing secured
loan will become due on that date.
</FONT>

<P align="center"><FONT size="2">68
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terms of our and our subsidiaries&#146; debt
impose significant operating and financial restrictions. These
restrictions will affect, and in many respects significantly
limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">borrow money;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends on stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">make capital expenditures and other investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use assets as security in other transactions; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell certain assets or merge with or into other
    companies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we do not comply with these restrictions, we
could be in default even if we can currently pay our debt. In
addition, under our senior refinancing secured loan, we are
required to remain in compliance with certain financial ratios,
and the failure to do so would result in a default under the
facility. In the event of a default under any of our debt which
remains unsecured after any applicable grace period, holders of
the relevant debt could demand immediate payment of the
aggregate amount of that debt. Furthermore, this could trigger a
default under certain of our other debt as well. We may not be
able to make such payments. This could lead to a <I>concurso
mercantil</I>, a two-stage procedure under Mexican law
commencing with negotiations with our creditors and, if such
negotiations fail to reach an agreement, we would be declared
bankrupt.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell
Long-Term Indebtedness</FONT></I></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Iusacell
senior notes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, Iusacell issued
U.S.$350.0&nbsp;million of 14&nbsp;1/4% senior notes due 2006
under an indenture dated as of December&nbsp;16, 1999 among
Iusacell, Bell Atlantic now Verizon, and The Bank of New York,
as trustee, which we refer to as the Iusacell indenture.
U.S.$133.6&nbsp;million of the proceeds from the issuance of the
Iusacell senior notes were deposited in a security account for
purposes of payment of the first six semiannual installments of
interest thereon. The security account contains funds sufficient
to pay scheduled interest through December 2002. In June 2000,
substantially all of the Iusacell senior notes were exchanged
for identical 14&nbsp;1/4% Senior Notes due 2006, which are also
governed by the Iusacell indenture, pursuant to an exchange
offer registered with the SEC. The Iusacell indenture restricts
the ability of Iusacell and its subsidiaries to incur
indebtedness. Under certain circumstances involving a change of
control of Iusacell or Iusacell Celular, Verizon, jointly and
severally with Iusacell, will be required to make an offer to
repurchase the Iusacell senior notes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">BNP
Paribas Facilities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2000, our subsidiary Iusacell
Infraestructura, S.A. de C.V. entered into financing agreements
for the purpose of purchasing NERA microwave equipment
consisting of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a seven-year senior amortizing term facility in
    the principal amount up to U.S.$30.5&nbsp;million, guaranteed by
    the Export Import Bank of Norway, which we refer to as the
    GIEK-Guaranteed Facility; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a four-year senior loan in the principal amount
    up to U.S.$5.4&nbsp;million, which we refer to as the
    Non-GIEK-Guaranteed Loan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The GIEK-Guaranteed Facility bears interest at
six-month LIBOR plus 0.6%. The Non-GIEK Guaranteed Loan bears
interest at six-month LIBOR plus 2.0%. We guarantee the
obligations of our subsidiary under both of these facilities. As
of December&nbsp;31, 2001, we had drawn down
U.S.$20.2&nbsp;million in principal amount under the
GIEK-Guaranteed Facility and U.S.$3.6&nbsp;million in principal
amount under the Non-GIEK-Guaranteed Loan, all of which was
outstanding on that date. Our subsidiary obtains the funds to
pay the interest and principal on these purchase money debt
through rental payments made to it by Iusacell Celular and its
subsidiaries for such microwave transmission equipment.
</FONT>

<P align="center"><FONT size="2">69
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">GTE
Venholdings B.V. Loan</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;8, 2001, we signed a
U.S.$7.8&nbsp;million promissory note in favor of GTE
Venholdings B.V. that accrues interest at an annual rate equal
to 11.5%, and matures on May&nbsp;8, 2003. The proceeds from the
issuance of this note were used to complete the funding of the
acquisition of Portatel.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Harris
Facility</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2000, our subsidiary Iusacell
Infraestructura de M&#233;xico, S.A.&nbsp;de&nbsp;C.V. entered
into a purchase framework agreement for the purpose of
purchasing Harris microwave equipment. This vendor financing
consisted of a five-year senior amortizing term loan facility in
the principal amount of up to U.S.$6.9&nbsp;million, with
interest accruing at a rate of the average term LIBOR plus
1.25%. We guarantee the obligations of our subsidiary under this
facility. As of December&nbsp;31, 2001, we had drawn down
U.S.$6.4&nbsp;million in principal amount under this facility,
all of which was outstanding on that date. Our subsidiary
obtains the funds to pay the interest and principal on these
purchase money debt through rental payments made to it by
Iusacell Celular and its subsidiaries for such microwave
transmission equipment.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Building
and others</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Building and others consisted of operating leases
for our administrative offices, sales branches and service
facilities. Building leases are Pesos-denominated and contain
escalation clauses for inflation. Amounts represents the future
annual minimum rental payments on leases current at
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table outlines Iusacell
Celular&#146;s obligations for payments under its indebtedness,
including notes payable to suppliers and operating leases for
the periods indicated using balances as of December&nbsp;31,
2001.
</FONT>

<P align="center">
<B><FONT size="2">Payments due by Period</FONT></B>

<DIV align="center">
<B><FONT size="2">(Figures in thousands of U.S. Dollars as of
December&nbsp;31, 2001)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Iusacell Celular Indebtedness<SUP>(1)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior refinancing secured loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">265,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="2">Short-term credit lines:</FONT></I></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Banco Santander Mexicano
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Motorola Credit Corporation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vendor Financing (notes payable)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,468</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,203</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">441,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Operating leases<SUP>(2)</SUP></FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">MATC Celular
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">842,995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,685,990</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and others
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">349,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating leases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">273,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">246,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224,586</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214,849</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">842,995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,035,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts include principal payments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts include the minimum lease payments.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell Celular
Long-Term Indebtedness</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Iusacell
Celular senior notes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 1997, Iusacell Celular issued
U.S.$150.0&nbsp;million of its 10% Senior Notes due 2004, which
we refer to as the Iusacell Celular senior notes, under an
indenture dated as of July&nbsp;25, 1997 among Iusacell Celular,
the subsidiaries of Iusacell Celular guaranteeing such senior
notes and First Union National Bank, as trustee, which we refer
to as the Iusacell Celular indenture. Substantially all of the
Iusacell Celular senior notes were exchanged in January 1998 for
identical 10% senior notes due 2004 which are also governed by
the Iusacell Celular indenture, pursuant to an exchange offer
registered with the SEC.
</FONT>

<P align="center"><FONT size="2">70
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Iusacell Celular indenture limits the ability
of Iusacell Celular to make dividend payments to Iusacell. In
addition, it restricts the ability of Iusacell Celular and its
principal subsidiaries to incur indebtedness.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the Senior Refinancing Secured
Loan described below, Iusacell Celular was required, under the
terms of the Iusacell Celular Indenture, to equally and ratably
secure all amounts due under the Iusacell Celular senior notes
by a second priority lien on its cellular concessions, certain
equipment and suppliers.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Senior
Refinancing Secured Loan</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;29, 2001, Iusacell Celular
completed the refinancing of its senior secured credit facility
by entering into an Amended and Restated Senior Secured Credit
Loan Agreement, which we refer to as the senior refinancing
secured loan, which consists of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a Tranche&nbsp;A Loan in an aggregate principal
    amount of U.S.$189.8&nbsp;million for the purpose of refinancing
    existing indebtedness under the senior secured credit facility
    and under a certain bridge loan used to make a principal
    amortization payment under the senior secured credit facility in
    January 2001; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a Tranche&nbsp;B Loan in an aggregate principal
    amount of U.S.$75.8&nbsp;million for the purpose of paying
    existing indebtedness under certain Eximbank facilities and
    under a certain bridge loan used to make a principal
    amortization payment under the Eximbank facilities in January
    2001.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The senior refinancing secured loan bears
interest at a rate per annum equal to one-, two-, three- or
six-month LIBOR (at Iusacell Celular&#146;s option) plus a
spread ranging from 1.75% to 2.25%, depending on Iusacell
Celular&#146;s leverage ratio. Iusacell Celular&#146;s
obligations under the senior refinancing secured loan are
unconditionally guaranteed, jointly and severally, by the
principal operating subsidiaries of Iusacell Celular and its
subsidiaries holding cellular concessions and are secured by a
pledge of substantially all the capital stock and equity
interests held by Iusacell Celular and substantially all assets
used in connection with or related to such cellular concessions.
Upon the acquisition of Portatel, the cellular concession
covering Region&nbsp;8 was mortgaged under this loan, and all
capital stock and equity interests of Portatel are in the
process of being pledged under this loan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The senior refinancing secured loan begins
amortizing on May&nbsp;31, 2004 in equal quarterly amounts and
matures on February&nbsp;28, 2006. However, in the event that
the Iusacell Celular senior notes have not been refinanced by
March&nbsp;31, 2004, the outstanding amount of the senior
refinancing secured loan will become due on that date.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Loan
Covenant Waivers and Modifications</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;7, 2001 the senior refinancing
secured loan was amended, and a waiver and consent were granted
by the lenders allowing Iusacell Celular to (i)&nbsp;create
liens encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or
other interest hedging agreement up to the principal amount of
indebtedness of Iusacell Celular and its subsidiaries with
floating rates of interest; (ii)&nbsp;make loans or advances to
Iusacell in lieu of paying dividends at such times and in such
amounts as necessary to permit Iusacell to pay scheduled
interest (including any tax gross-up with respect thereto) and
principal payments as and when due in respect of the Iusacell
senior notes and (iii)&nbsp;make loans or advances to Iusacell
in lieu of paying dividends in an amount not to exceed
U.S.$5.0&nbsp;million, so long as an event of default has not
occurred, to discharge other liabilities of Iusacell incurred in
the ordinary course of business.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term
debt</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Banco
Santander Mexicano</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001, Iusacell Celular obtained a
one-year unsecured term credit facility from Banco Santander
Mexicano in the principal amount of U.S.$12&nbsp;million to be
used solely to acquire cellular handsets. Loans outstanding
under this facility bore interest at an annual rate of 6.99%.
Interest was paid quarterly and the principal was paid in
February&nbsp;25, 2002.
</FONT>

<P align="center"><FONT size="2">71
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Motorola
Credit Corporation Loan</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the acquisition of Portatel, Iusacell
Celular assumed a U.S.$9.1&nbsp;million loan that Portatel del
Sureste,&nbsp;S.A. de C.V., a subsidiary of Portatel, had
incurred from Motorola Credit Corporation in March 2000 to
purchase certain cellular infrastructure equipment. Interest
under this loan was calculated at a floating annual rate equal
to six-month LIBOR plus 6%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the acquisition of Portatel
and its subsidiaries, Iusacell Celular, Portatel del
Sureste,&nbsp;S.A. de C.V., and Motorola Credit Corporation
entered into a series of agreements pursuant to which a partial
payment of U.S.$3.0&nbsp;million was paid on this loan on
March&nbsp;29,27, 2002, and the remaining U.S.$6.1&nbsp;million
was paid on April&nbsp;26, 2002.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Vendor
Financing</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From time to time, we incur indebtedness with
vendors in order to finance purchases of equipment, hardware,
software and services. As of December&nbsp;31, 2001, we had
U.S.$4.4&nbsp;million of such vendor financing outstanding.
Vendor financing is classified as notes payable to suppliers.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Risks
Associated With Our Ability to Service or Refinance Our
Debt</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our ability to satisfy our obligations under our
debt in the future will depend upon our future performance,
including our ability to increase revenues significantly and
control expenses. Our future operating performance depends upon
prevailing economic, financial, business and competitive
conditions and other factors, many of which are beyond our
control.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular&#146;s debt agreements severely
restrict the ability of Iusacell Celular and its subsidiaries to
pay cash dividends or otherwise make cash available to Iusacell,
except, under some circumstances, for scheduled interest
(including any tax gross-up with respect thereto) and principal
payments in respect of the Iusacell senior notes, so long as no
event of default has occurred and is continuing, scheduled
interest (including any tax gross-up) as an when due in respect
of the notes issued to refinance the Iusacell senior notes, and
loans or advances or dividend payments to Iusacell in an amount
up to U.S.$5.0&nbsp;million in order to discharge other
liabilities of Iusacell incurred in the ordinary course of
business. While such restrictions exist, we expect to meet
Iusacell&#146;s other liquidity requirements with funds provided
by future equity and debt offerings and capital contributions
from our principal shareholders. Our principal shareholders are
under no obligation to make capital contributions to us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total Iusacell debt, including notes payable to
suppliers, was Ps.&nbsp;7,601.8&nbsp;million
(U.S.$830.3&nbsp;million) at December&nbsp;31, 2001. At
December&nbsp;31, 2001, Iusacell&#146;s average cost of
outstanding bank debt was approximately 10.3%, with a remaining
average maturity of approximately 3.8&nbsp;years. At
December&nbsp;31, 2001, Iusacell&#146;s ratio of debt to total
capitalization was 51.5% compared to 54.8% at December&nbsp;31,
2000 and 60.1% at December&nbsp;31, 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular&#146;s liquidity has been
provided by cash from operations, short and long-term
borrowings, vendor financing and capital contributions. Total
Iusacell Celular debt, including trade notes payable, was
Ps.&nbsp;4,044.6&nbsp;million (U.S.$441.7&nbsp;million)
outstanding at December&nbsp;31, 2001, 6.3% lower than the total
debt of Ps.&nbsp;4,315.2&nbsp;million (U.S.$471.3&nbsp;million)
outstanding at December&nbsp;31, 2000. At December&nbsp;31,
2001, Iusacell Celular&#146;s average cost of outstanding bank
debt was approximately 6.9%, with a remaining average maturity
of approximately 3.0&nbsp;years. At December&nbsp;31, 2001,
Iusacell Celular&#146;s ratio of debt to total capitalization
was 32.2% compared to 36.2% at December&nbsp;31, 2000 and 46.8%
at December&nbsp;31, 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we do not have sufficient funds to satisfy our
obligations, we may take specific actions, including delaying or
reducing capital expenditures, attempting to refinance our debt
at or prior to its maturity or, in the absence of such
refinancing, attempting to sell assets quickly in order to make
up for any shortfall in payments under circumstances that might
not be favorable to getting the best price for the assets, or
seeking additional equity capital. Our ability to refinance our
debt and take other actions will depend on, among other things,
our financial condition at the time, the restrictions in the
instruments governing our debt and other factors, including
market conditions, the macroeconomic environment, and the level
of such variables as the Peso-Dollar exchange rate and benchmark
money-market rates in Pesos and Dollars.
</FONT>

<P align="center"><FONT size="2">72
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of our and substantially all of Iusacell
Celular&#146;s debt outstanding at December&nbsp;31, 2001 was
U.S. dollar-denominated and only partly hedged against foreign
exchange risk. See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Liquidity&nbsp;&#151; Hedging&#148; and
&#147;Item&nbsp;11 Quantitative and Qualitative Disclosures
About Market Risk.&#148;
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Certain
Trading Activities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;30, 1999, Iusacell Celular
entered into a foreign exchange hedge using forward rate
contracts to hedge its exchange rate exposure for
U.S.$77.0&nbsp;million, representing approximately 50% of the
principal and interest payments on its indebtedness coming due
over the period from April 2000 to April 2001. This transaction
resulted in a U.S.$9.8&nbsp;million loss. On November&nbsp;22,
2000, Iusacell Celular entered into a second foreign exchange
hedge for U.S.$15.0&nbsp;million. This transaction resulted in a
U.S.$1.7&nbsp;million loss. On August&nbsp;9, 2001, Iusacell
Celular entered into a third foreign exchange hedge using
forward rate contracts for U.S.$11.0&nbsp;million on its
indebtedness coming due over the period from November 2001 to
November 2002. As of December&nbsp;31, 2001, the fair value of
the hedge resulted in an unrealized loss of U.S.$1.4 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August and October 2001, Iusacell Celular
entered into a foreign exchange hedge using forward rate
contracts to hedge 100% of the principal amount of
U.S.$150&nbsp;million and interest of U.S.$34.5&nbsp;million on
its 10% senior notes due 2004. This hedge was intended to
benefit from the strength of the U.S. dollar relative to the
peso to mitigate foreign exchange exposure. This hedge becomes
due between July 2002 and July 2004. As of December&nbsp;31,
2001, the fair value of the hedge resulted in an unrealized loss
of U.S.$17.0&nbsp;million. In accordance with the terms of the
foreign exchange hedge, we posted cash collateral in the amount
of U.S.$2.0&nbsp;million. We determine the fair value of
derivative financial instruments using an external third-party
expert.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, Iusacell Celular
maintained forward-rate contracts for U.S.$201.0&nbsp;million
partially hedging its principal and interest payments due in the
period from January 2002 to July 2004.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Interest
Rate Collars</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 1998, Iusacell Celular entered into an
interest rate collar agreement for a notional amount of
U.S.$35&nbsp;million until July&nbsp;30, 2002. The collar
agreement limits the maximum effective LIBOR cost to 6.12% if
six-month LIBOR is lower than 7.12%, and 7.12% if LIBOR equals
or exceeds 7.12%. Iusacell Celular can participate in a decline
in LIBOR to 5.30%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;26, 1999, Iusacell Celular
entered into an additional interest rate collar agreement to
limit the maximum interest rate which must be paid on
U.S.$15.0&nbsp;million of its floating rate debt until July
2002. This collar agreement limits the maximum effective LIBOR
cost to 5.82% if six-month LIBOR is lower than 6.82%, and 6.82%
if LIBOR equals or exceeds 6.82%. Iusacell Celular can
participate in a decline in LIBOR to 4.75%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001, due to
the significant decrease in the LIBOR interest rates, Iusacell
Celular recognized additional interest expense of
Ps.&nbsp;5.4&nbsp;million (U.S.$0.6&nbsp;million) for the
interest rate collars, which was offset by the lower interest
expense on its floating rate debt. Accordingly, these
derivatives were highly effective.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.$50.0&nbsp;million aggregate notional
amount of the above interest rate collar agreements does not
quantify risk or represent assets or liabilities of Iusacell,
but is used in the determination of cash settlements under the
agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are exposed to credit loss from counterpart
non-performance, but we do not anticipate any such loss from the
interest rate collar agreements, which are with a major
financial institution.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Recent
equity offerings</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;10, 1999, we completed a
comprehensive equity recapitalization and restructuring. As part
of this transaction, we issued 23,596,783 new series&nbsp;V
shares at a price of U.S.$1.05 per share and 18,405,490 new
series&nbsp;V shares at a price of U.S.$0.70 per share. After
commissions and expenses, we received net proceeds of
approximately U.S.$33.7&nbsp;million, which were used primarily
for the acquisition of cellular network infrastructure
equipment. In April and May 2000, we sold 10,529,700 American
depositary shares represent-
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">ing series&nbsp;V shares at U.S.$15.125 per
American depositary share. After commissions and expenses, we
received net proceeds of approximately U.S.$153.0&nbsp;million
from these offerings, which we used primarily to fund
investments in our cellular network as well as the first phase
of our PCS network deployment in Regions&nbsp;1 and 4 in
northern Mexico. See Item&nbsp;4, &#147;Information on the
Company&nbsp;&#151; History and Development of the Company.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;6, 2001, we completed a rights
offering to holders of our outstanding series&nbsp;A and
series&nbsp;V shares and series&nbsp;V American depositary
shares raising an aggregate of U.S.$100&nbsp;million.
Iusacell&#146;s principal shareholders, Verizon and Vodafone,
subscribed for approximately U.S.$81&nbsp;million of the
offering. Verizon&#146;s subscription included all of the
series&nbsp;V shares offered to, but not subscribed by, public
shareholders. In the United States and Mexico, public
shareholders subscribed approximately U.S.$15&nbsp;million and
U.S.$4&nbsp;million of the offering, respectively.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tower
Monetization</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, Iusacell Celular entered into a
series of agreements with MATC Celular. These agreements, among
other things, gave MATC Celular the right to acquire
approximately 330 existing Iusacell Celular non-strategic
towers. In 2001, we sold 244&nbsp;towers to MATC Celular,
receiving in excess of U.S.$34&nbsp;million in net gains. In May
2002, we sold 25 additional non-strategic towers, receiving
U.S.$3.7&nbsp;million in net gain. We expect to sell up to 61
additional non-strategic towers to MATC Celular during 2002.
Iusacell is leasing back the sold towers from MATC Celular and
subleasing them to its operating subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividend
Policy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have never paid dividends in the past, and we
currently have no plans to initiate dividend payments. In
addition, the Iusacell indenture, the Iusacell Celular indenture
and the senior refinancing secured loan limit both
Iusacell&#146;s and Iusacell Celular&#146;s ability to pay
dividends.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and
Development, Patents and Licenses, Etc.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell does not undertake research and
development activities.
</FONT>

<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trend
Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the events and developments
identified elsewhere in this Item&nbsp;5, &#147;Operating and
Financial Review and Prospects,&#148; our financial condition
and results of operations could also be materially affected by
the following events and developments:
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New
Competition</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a direct result of the spectrum auctions
organized by COFETEL, which concluded in May 1998, we are now
facing additional mobile wireless competition operating in the
1.9&nbsp;GHz&nbsp;(PCS) spectrum in our cellular territories and
additional local telephony competition operating in the
3.4-3.7&nbsp;GHz (Wireless Local Loop) spectrum. The experience
of other countries suggests that, although overall demand for
wireless telephony services will increase, prices will
experience downward pressure, especially at the time of market
entry by the new competitors. New competition has not caused us
to decrease prices, we did not increase prices from March 1999
until mid-April 2001, when we apply a 4.5% increase on a
weighted average basis, in the regular monthly fees of our
postpaid plans.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Price
Increases and Rollbacks</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have attempted, and continue to attempt, to
exercise price leadership in the Mexican cellular market, with a
strategy of having our prices keep pace with inflation if
economic and competitive conditions permit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In late March 1999, we raised airtime prices on
our postpaid plans by approximately 12% on a weighted average
basis and approximately 6% for prepay customers. These price
increases remained in place as the competition followed our lead.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In mid-April 2001, after not having raised our
prices for more than two years, we increased the regular monthly
fees of our postpaid plans by approximately 4.5% on a
weighted-average basis and the monthly fees
</FONT>

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<DIV align="left">
<FONT size="2">for one-single rate service of our postpaid plans
by approximately 15% on a weighted average basis. We also
increased the airtime charges of one of our postpaid plans by
4.8%. These price increases have remained effective despite the
fact that the competition has not followed us. Our revenues will
be adversely affected to the extent that our price increases
cannot keep pace with inflation. We believe that the
implementation of the CPP modality accelerated the prepay
subscriber growth and increased the subscriber usage throughout
the Mexican wireless market.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Regulatory
Developments</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican authorities resolved several critical
regulatory issues over the last several years and will likely
continue to resolve additional important regulatory issues
during 2002 which may have a material effect on Iusacell&#146;s
financial condition and results of operations.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Local
Interconnection</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;27, 1998, COFETEL issued a
resolution which established the per-minute interconnection rate
for telephone calls made from wireless customers to wireline
customers at Ps.&nbsp;0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for
inflation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">COFETEL declined to provide for any amount of
reciprocity in the interconnection fee payable by Telmex to
wireless operators for interconnection services that Iusacell
and other wireless operators provide Telmex for calls made by
wireline customers to mobile wireless customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, we negotiated a rate reduction
with Telmex, retroactive to January&nbsp;1, 2001, that decreases
the interconnection rate per minute for telephone calls made
from wireless customers to wireline customers from Ps.&nbsp;0.31
per full minute, payable on a per-second basis, to the peso
equivalent of U.S.$0.0125 per full minute, payable on a
per-second basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Calling
Party Pays</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;27, 1998, COFETEL ruled that the
calling party pays modality would be implemented by May&nbsp;1,
1999 as an option for the wireless customer. CPP is a cellular
telephony payment scheme similar to the existing wireline
payment scheme, where the wireline or fixed wireless party that
places a local call to a cellular telephone, and not the
cellular subscriber receiving the call, will be billed for
interconnection access, and the recipient will not be billed for
the airtime charges corresponding to that call. COFETEL
established the CPP interconnection tariff at Ps.&nbsp;1.80 per
minute or fraction of a minute, which was to be indexed on a
monthly basis for inflation as of October&nbsp;1, 1998, for
calls from Telmex wireline customers to mobile wireless
customers. CPP would only apply to local calls, and the
&#147;mobile party pays&#148; modality would continue to apply
to incoming long distance and incoming calls to a roamer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 1999, after a legal action by Telmex to
attempt to suspend the scheduled implementation of CPP, Telmex
and the Cellular A-Band carriers completed negotiating a new
mobile wireless-Telmex local wireline interconnection agreement
with the approval of COFETEL. The calling party pays modality
was implemented on May&nbsp;1, 1999. All mobile wireless
customers were automatically converted to CPP, with the right to
revert to the mobile party pays modality. The interconnection
rate was frozen for six months at Ps.&nbsp;1.90 per minute or
fraction of a minute. Had the indexing established by the
November&nbsp;27, 1998 COFETEL resolution been applied, the rate
for May 1999 would have been Ps.&nbsp;2.06 per minute or
fraction of a minute. The price which Telmex may charge its
customers was frozen at Ps.&nbsp;2.50 per minute or fraction of
a minute, plus Telmex&#146;s applicable per-call local charge.
Iusacell cannot predict whether COFETEL intends to extend the
same tariff and surcharge at the same rates and for how long.
Telmex greeted the May&nbsp;1, 1999 implementation of CPP with
an advertising campaign critical of the high costs to wireline
customers, whom Telmex urged to block CPP calls. But after a
moderate decline in traffic during the first two weeks of May
1999, we began to experience a gradual increase in traffic over
the last two weeks of May 1999, slightly
</FONT>

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<DIV align="left">
<FONT size="2">exceeding pre-CPP traffic levels by the end of
the month. Since then, we experienced traffic growth in 1999 and
2000. In particular, since the initiation of CPP we experienced
an increase in the percentage of total calls that were incoming
calls from 39% to 60% in 2000. In early 2000, Telmex reversed
its opposition to CPP, publicly announcing support for it. In
2001, the percentage of total calls that were incoming calls
experienced a reduction to 56%, which makes us believe the CPP
effect has been exhausted.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The overwhelming majority of our cellular
customers have chosen not to opt out of the CPP modality. We
believe that the implementation of the CPP modality has
accelerated prepay subscriber growth and increased subscriber
usage throughout the Mexican wireless market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently discussing with COFETEL and
Telmex the possibility of extending the CPP modality to incoming
national long distance calls. If this proposal is accepted, the
mobile party pays modality would continue to apply only to
incoming international long distance calls.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Long
Distance Interconnection</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In a separate resolution issued on
November&nbsp;27, 1998, COFETEL also established the
interconnection tariff between long distance and local wireline
carriers at Ps.&nbsp;0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for
inflation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, we negotiated a rate reduction
with Telmex, retroactive to January&nbsp;1, 2001, that decreases
the per-minute interconnection rate for terminating long
distance telephone calls made by our long distance customers in
Telmex&#146;s local wireline network to the peso equivalent of
U.S.$0.0125 for a full minute.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Long
Distance Concession</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1997, COFETEL authorized a
modification of our concession to provide long distance
services, modifying coverage requirements and permitting the use
of microwave and other non-fiber technologies for transmission
purposes. Together with fiber-swapping agreements reached by
Iusacell with two of our competitors, the modified concession
permits a more efficient, more technologically flexible long
distance network and eliminated more than U.S.$200&nbsp;million
in Iusacell capital expenditure requirements from 1998 to 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;1, 2001, Telmex, Avantel and
Alestra announced a preliminary agreement with respect to how
much, through what means and over how much time Avantel and
Alestra will pay for the special projects implemented by Telmex
prior to January 1997 in order to permit competition in long
distance telephony, including the numbering and signaling plans
and expenditures to facilitate interconnection. Avantel, Alestra
and Telmex agreed that the total amount reimbursable to Telmex
for such special projects by all long distance carriers was
U.S.$777.0&nbsp;million, including interest payable from
December 1997 until October 1999. In March 2001, Iusatel
negotiated a similar agreement with Telmex, in which Iusatel
agreed to pay for its portion of such special projects in two
parts: (i)&nbsp;a fixed payment of approximately
U.S.$13.6&nbsp;million, payable in twelve equal monthly
installments beginning in April 2001, and (ii)&nbsp;a
U.S.$0.0053 per full minute, usage-based surcharge to the local
wireline interconnection rate from January&nbsp;1, 2001 through
December&nbsp;31, 2004 for long distance calls terminated in
Telmex&#146;s local wireline network. Since these special
projects payments relate to capital investments made by Telmex,
we are recording them as a deferred asset and consequently we
are amortizing them.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Quality
Standards</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 1999, we entered into an agreement
with COFETEL to maintain certain cellular quality standards
measured in terms of connection time, dropped calls and
ineffective attempts. We currently meet these quality standards.
Failure to maintain these quality standards may result in refund
obligations to subscribers and governmental sanctions.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although we met COFETEL&#146;s quality standards
in 2000, we nevertheless determined voluntarily to compensate
our subscribers in Region 9 in light of perceived quality
problems during 1999 due to network digitalization and rapid
traffic growth. Our subscribers as of December&nbsp;31, 1999
received, if a postpaid subscriber, 20% more included minutes in
their postpaid package in April and May 2000, or if a prepay
customer, five free minutes. The financial impact of this
voluntary compensation program was not material.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell met successfully COFETEL&#146;s quality
standards, that in 2001 were set as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Drop calls 6%
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ineffective attempts 5%
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Portatel significantly increased its quality
standards in the fourth quarter of 2001, the rate in ineffective
attempts improved to 0.7% after receiving in initial audits in
the city of M&#233;rida, a 14.9% rate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terms and conditions for the 2002 quality
standards agreed by concessionaires and COFETEL are:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Drop calls 4%
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ineffective attempts 5%
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Connection time 12 seconds
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2002 quality tests began June&nbsp;3, 2002
and will end December&nbsp;13, 2002, and will held revisions in
the 30 largest cities in terms of number of wireless mobile
users, that represents 70% of the total wireless mobile users in
Mexico.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Developments</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Distributor
Defection</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, SAGO Interamericana, S.A. de C.V.,
a distributor that represented at that time slightly less than
10% of our monthly gross postpaid additions and approximately 2%
of our monthly gross prepay additions, notified us that it was
immediately terminating its distribution agreement with us. We
believe that this action violated the termination provisions of
the distribution agreement and we are seeking compensatory
damages. In addition, we are seeking to recover approximately
Ps.44.0&nbsp;million in net receivables owed to us by SAGO.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Telereunion
Default</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, Iusatel agreed to swap dark
fiber optic cable in the amount of U.S.$17.3&nbsp;million and
sell approximately U.S.$7.4&nbsp;million of additional dark
fiber optic cable to Telereunion, S.A. de C.V., an affiliate of
Telscape International, Inc. Upon the execution of this
agreement, Telereunion issued promissory notes to Iusatel for
the purchase price but defaulted on the payment of each of these
notes. In April 2001, Telereunion&#146;s United States parent
Telscape International, Inc. filed for reorganization under the
Chapter&nbsp;11 of the United States Bankruptcy Code. As part of
a settlement arrangement, on September&nbsp;17, 2001,
Telereunion and Iusatel executed an agreement by means of which
the former transferred dark fiber optic assets in the amount of
U.S.$7.4&nbsp;million to the latter in exchange for full
settlement of the past notes receivable in the same amount.
</FONT>

<P align="center"><FONT size="2">77
</FONT>

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<!-- link2 "ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM
6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A 12-member Board of Directors manages Iusacell.
The directors nominated by Verizon have the power under our
by-laws to approve, without the affirmative vote of any other
directors, all resolutions of the Board of Directors, except
with respect to some transactions over which the Iusacell
Shareholders Agreement grants Vodafone supermajority rights.
Pursuant to the Iusacell Shareholders Agreement, Fares F.
Salloum is the Chairman of the Board of Directors and possesses
a tie-breaking vote except on any matter which requires a
supermajority vote. See Item&nbsp;7, &#147;Major Shareholders
and Related Party Transactions&nbsp;&#151; Major
Shareholders&nbsp;&#151; Governance&#148; for a description of
the Iusacell Shareholders Agreement, which governs the
appointment of directors as between our major shareholders.
</FONT>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors and
Senior Management</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;30, 2002, Iusacell elected new
directors who will hold office for a period of one year and
until the election of their successors at duly convened general
ordinary shareholders meetings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents information with
respect to our directors at April&nbsp;30, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position(s)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fares F. Salloum
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Chairman of the Board of Directors and
    Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carlos Espinal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alfred C. Giammarino
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Terry W. Lewis
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Carlos Peralta Quintero
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Javier Mart&#237;nez del Campo
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tomas Isaksson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;A Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alan Bowers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;V Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Pitt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;V Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David Anderson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;V Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ignacio Mas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;V Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ignacio G&#243;mez Morin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Series&nbsp;V Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our by-laws authorize alternate directors to
serve on the Board of Directors in place of directors who are
unable to attend meetings or otherwise participate in the
activities of the Board of Directors. The series A alternate
directors as of April&nbsp;30, 2002 are: any of Peter H.
Burrowes, Russell A. Olson, Christopher M. Bennett, Rub&#233;n
G. Perlmutter and Henry Ruiz for any of Fares F. Salloum, Carlos
Espinal, Alfred C. Giammarino, Terry W. Lewis, Carlos Peralta
Quintero and Javier Mart&#237;nez del Campo, and Richard Harman
for Tomas Isaksson. The series V alternate directors as of
April&nbsp;30, 2002 are: any of Marty Enriquez, Richard Harman,
Jack Lester and Mark Hickey for any of Alan Bowers, Michael
Pitt, David Anderson and Ignacio Mas, and Howard Svigals for
Ignacio G&#243;mez Morin.
</FONT>

<P align="center"><FONT size="2">78
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents information relating
to our executive officers at December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position(s)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peter H. Burrowes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">President and Director General*
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Russell A. Olson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Executive Vice President, Finance and Audit, and
    Chief Financial Officer*
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Koren Borges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Senior Vice President, Marketing**
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Juan Carlos Merodio
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Senior Vice President, Legal and Regulatory
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Henry M. Ruiz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President, Technical Operations*
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Anthony Llompart
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President, Sales*
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jos&#233; Bellido
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President, Human Resources
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Andrew G. Hunkin
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President Data and Long Distance
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jorge Halvas
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Vice President, Administration
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Indicates an employee of Verizon who is serving
    as an executive officer of Iusacell.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">**&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Indicates an employee of Vodafone who is serving
    as an executive officer of Iusacell.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Biographies</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Fares F. Salloum </FONT></I><FONT size="2">has
been Chairman of the Board of Directors of Iusacell since August
2000. Mr.&nbsp;Salloum has 29&nbsp;years of experience in global
telecommunications and since July 2000 has served as
Verizon&#146;s President, International for the Americas.
Mr.&nbsp;Salloum is responsible for Verizon&#146;s non-domestic
wireline and wireless investments in the western hemisphere and
international support services. From June 1997 through June
2000, Mr.&nbsp;Salloum served as Senior Vice-President of
International Operations for GTE and was responsible for
GTE&#146;s wireline and wireless international operations. For
24 years prior to his appointment as Senior Vice-President,
Mr.&nbsp;Salloum served in various operational and engineering
capacities at BC Telecommunications Inc., a Canadian
telecommunications provider and predecessor of Telus
Corporation, and its affiliates. From 1995 until June 1997,
Mr.&nbsp;Salloum served as Executive Vice-President of
Communications Services for BC Telecom and was responsible for
sales and services for local, long distance, data, multimedia
and wireless businesses as well as advanced communications
systems and systems support. From 1993 to 1995, Mr.&nbsp;Salloum
served as President of BC Tel Services. From 1991 to 1995,
Mr.&nbsp;Salloum served as Vice-President of Emerging Businesses
at BC Telecom. Mr.&nbsp;Salloum is a director of Telus
Corporation (Canada), CANTV (Venezuela), CODETEL (Dominican
Republic), CTI Holdings S.A. (Argentina) and TELPRI (Puerto
Rico). Mr.&nbsp;Salloum received a B.S. in electrical
engineering from the University of Alberta and an M.B.A. from
the University of British Columbia.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Carlos Espinal G.</FONT></I><FONT size="2">
has been a member of the Board of Directors of Iusacell since
April 2002. Mr.&nbsp;Espinal has served as Verizon&#146;s Senior
Group Vice-President, International for the Americas since April
2002. Before being appointed Senior Group Vice-President,
Mr.&nbsp;Espinal was Chairman and Chief Executive Officer (since
April 2000) of CTI Movil, a leading wireless carrier in
Argentina, of which Verizon is a significant shareholder. Before
joining CTI Movil, Mr.&nbsp;Espinal was General Manager and then
President and Chief Executive Officer of Codetel, a subsidiary
of Verizon in the Dominican Republic. Before joining GTE/
Verizon, Mr.&nbsp;Espinal served as Chairman and/or Chief
Executive Officer for various large multinational firms in the
industrial sector in Mexico, Venezuela, and Thailand, and was
the Managing Director of Hondutel (the Honduran telephone
company) in Honduras. After graduating with honors in Electronic
Engineering from the Universidad Javeriana in Colombia,
Mr.&nbsp;Espinal enrolled in a graduate program in
Telecommunications Engineering at the NTT in Japan. Later, he
obtained a M.S. degree in Industrial Engineering &#38;
Management from the Asian Institute of Technology in Thailand,
and completed the Program for Management Development at the
Harvard Business School. He has been member of several
professional and industry associations throughout Latin America
and is currently a member of the Board of the AmCham in
Argentina.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Alfred C. Giammarino
</FONT></I><FONT size="2">has been a member of the Board of
Directors of Iusacell since August&nbsp;10, 2000.
Mr.&nbsp;Giammarino was named Senior Vice-President and Chief
Financial Officer of Information Services and International for
Verizon in January 2000. Previously, he had served as Senior
Vice-President of International
</FONT>

<P align="center"><FONT size="2">79
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Finance, Planning and Business Development for
GTE since July 1998, where he was responsible for business
development in countries where GTE did not have existing
operations. At GTE, Mr.&nbsp;Giammarino was also responsible for
financial analysis and administration, budgets, benchmarking and
planning for the International organization, as well as
providing financial support for all business-development
activities. In addition, Mr.&nbsp;Giammarino was responsible for
international strategic planning, coordination of business
transaction, due-diligence activities and project integration.
Prior to that, he had served as Vice-President of International
Finance and Planning since 1997 and before that he served as
Vice-President of Finance. Mr.&nbsp;Giammarino began his GTE
career in 1985. He served as Vice-President of Finance and
Planning for the GTE Telecommunications Products &#38; Services
group and, prior to that, as Assistant Controller of Corporate
Accounting for GTE Corporation. Mr. Giammarino previously held
positions with Freeport-McMoRan Inc. and Arthur Andersen LLP.
Mr.&nbsp;Giammarino is a director of TELPRI (Puerto Rico), CANTV
(Venezuela), CTI Holdings S.A. (Argentina), and FLAG Telecom
(UK). He holds a bachelor&#146;s degree in accounting from St.
John&#146;s University and is a certified public accountant.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Terry W. Lewis </FONT></I><FONT size="2">has
been a member of the Board of Directors of Iusacell since April
2001. Mr.&nbsp;Lewis is a Group Senior Vice-President of
Business Services and Support for Verizon and is responsible for
supporting all international units in the areas of wireline,
wireless, advanced communications and Internet protocol (IP),
information technology, operations and engineering, and
marketing and sales. Prior to the Bell Atlantic/ GTE merger,
Mr.&nbsp;Lewis was President of GTE Telecommunications Services,
Inc., a position he held since July 1997. He led a team
responsible for developing and delivering software-based
solutions to the wireless telecommunications industry throughout
North America, Latin America and Europe. He was also accountable
for overall company operations, customer satisfaction and
financial performance. Prior to joining GTE Telecommunications
Services, Mr.&nbsp;Lewis served as Vice-President of Marketing
and Product Management for GTE Wireless, where he was
responsible for strategy and pricing, carrier relations,
distribution, customer marketing and planning, marketing
communications, product management, marketing for seven
geographic areas and media relations. Mr.&nbsp;Lewis joined GTE
in 1979 as a management trainee with GTE Telephone Operations in
Indiana, where he was named accounting manager. He held
accounting, regulatory and financial management positions of
increasing responsibility with GTE&#146;s North Area until 1989
when he moved to Telephone Operations headquarters as Director
of Sales Administration. After several promotions within sales
and product management, he was named Director of Consumer
Services in 1994. Mr.&nbsp;Lewis joined GTE Wireless in June
1995 as Vice-President of Voice Products. Mr.&nbsp;Lewis is an
alternate director of CTI Holdings S.A. (Argentina) and CANTV
(Venezuela). He holds a bachelor&#146;s degree in accounting
from Indiana University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Carlos Peralta Quintero
</FONT></I><FONT size="2">has been a member of the Board of
Directors of Iusacell since August 1998. Mr.&nbsp;Peralta was a
member of the Board of Directors of Iusacell Celular from
October 1992 until February 2000 and served as Vice Chairman of
Iusacell Celular from October 1992 until February 1997. He also
serves as the Chairman of the Board of Directors and Chief
Executive Officer of Grupo Industrial IUSA, S.A. de C.V.
Mr.&nbsp;Peralta is a member of the boards of directors of
Compa&#241;&#237;a Industrial de Parras, S.A. de C.V., Hilaturas
Parras, S.A. de C.V., Cambridge Lee Industries Ltd. and Alper
Holdings Ltd.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Javier Mart&#237;nez del Campo Lanz
</FONT></I><FONT size="2">has been a member of the Board of
Directors of Iusacell since April&nbsp;4, 2001 and was an
alternate member of the Board of Directors of Iusacell from
August 1999 until April 2001. Mr.&nbsp;Mart&#237;nez del Campo
has also been a member of the Board of Directors of Iusacell
Celular since February 1997. He has been a partner with the
Mexico City based law firm of De Ovando y Mart&#237;nez del
Campo, S.C. since 1984. Mr.&nbsp;Mart&#237;nez del Campo holds a
law degree from the Universidad An&#225;huac and a master&#146;s
degree from the University of San Diego. Mr.&nbsp;Mart&#237;nez
del Campo is a member of the Mexican Bar Association and an
international associate of the American Bar Association.
Mr.&nbsp;Mart&#237;nez del Campo serves as the secretary of the
board of directors of various Mexican corporations, including
Grupo Gigante, S.A. de C.V., one of Mexico&#146;s largest
retailers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Tomas Isaksson </FONT></I><FONT size="2">has
been a member of the Board of Directors of Iusacell since
April&nbsp;30, 2002. Mr.&nbsp;Isaksson is Chief Executive
Officer for the Vodafone Americas Region, a position he has held
since January 2002. He is responsible for Vodafone&#146;s
interests in the Americas and Vodafone Global Platform and
Internet Services (VGP). Prior to assuming the Chief Executive
role, he had been President of VGP since its
</FONT>

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<DIV align="left">
<FONT size="2">inception in March 2000. Mr.&nbsp;Isaksson has
worked in the telecommunications industry for the past
24&nbsp;years, starting with Ericsson in 1978. During the
16&nbsp;years he was with Ericsson, he held a variety of key
positions and was appointed President and Chief Executive
Officer of Ericsson Radio Systems Inc. in the United States in
1991. In 1994, he left Ericsson to become President of Swedish
mobile operator Europolitan and in November 1995 was appointed
President and Chief Executive Officer. In 1999, after its merger
with AirTouch, Vodafone became Europolitan&#146;s majority
owner. Mr.&nbsp;Isaksson holds an M.S. in electrical engineering
from the Royal Institute of Technology in Stockholm, Sweden. He
is a member of the Verizon Wireless Board and the Vodafone Group
Executive and Operational Review Committees. He is also a member
of the Board of Directors of Ledstiernan AB (publ).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Alan Bowers </FONT></I><FONT size="2">has been
a member of the Board of Directors of Iusacell since
April&nbsp;30, 2002. Mr.&nbsp;Bowers is the Managing Director of
International Operations for Vodafone Americas Region, with
responsibility for oversight of the company&#146;s operations in
Mexico. Prior to his appointment as Managing Director on
July&nbsp;1, 2000, Mr.&nbsp;Bowers was the country manager for
Korean operations. Mr.&nbsp;Bowers has held a variety of other
international positions with the company including the position
of Chief Financial Officer of Belgacom Mobile, Vodafone&#146;s
joint-venture with Belgacom in Belgium. Prior to working for
Vodafone, Mr.&nbsp;Bowers was an economist at the World Bank in
Washington, D.C. Mr.&nbsp;Bowers has a M.S. degree in Economics
from Georgetown University, and an M.B.A. from the University of
California at Berkeley.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael J. Pitt </FONT></I><FONT size="2">has
been a member of the Board of Directors of Iusacell since
April&nbsp;4, 2001. Mr.&nbsp;Pitt serves as Financial Director
of Group Operations within the Vodafone Group. He has served as
Financial Director of Vodafone Group International Limited and
Vodafone Europe Limited since 1993, the same year he joined
Vodafone as Financial Controller. He has been closely involved
in a number of cellular license bids and has had a leading role
in many of the Group&#146;s overseas acquisitions and disposals.
Prior to joining Vodafone, he spent six years with Coopers &#38;
Lybrand and worked in the printing and engineering industries.
Mr.&nbsp;Pitt is a chartered accountant and has a degree in
Economics and Accounting. Mr.&nbsp;Pitt serves as a director of
various Vodafone companies, including Mannesmann Mobilfunk GmbH,
Mannesmann AG, Libertel (Netherlands), Telecel (Portugal) and
Omnitel Pronto Italia SpA (Italy).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">David Anderson </FONT></I><FONT size="2">has
served as a director of Iusacell since April&nbsp;4, 2001. He is
currently the Group Corporate Finance Director of Vodafone Group
Plc, which he joined in December 2000. Prior to joining
Vodafone, Mr.&nbsp;Anderson worked at Lazard Freres for
17&nbsp;years and became managing director in 1997.
Mr.&nbsp;Anderson holds a first class degree in mathematics and
philosophy from Oxford University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ignacio Mas </FONT></I><FONT size="2">has been
a member of the Board of Directors of Iusacell since
April&nbsp;4, 2001. Mr.&nbsp;Mas has been the Group Business
Strategy Director at Vodafone since January 2000. He joined
Vodafone from Intel Capital, Intel Corporation&#146;s venture
investing arm, where he was Senior Strategic Investments Manager
with responsibility for telecommunications investments in
Europe, based in Munich, Germany. From 1996 until 1999,
Mr.&nbsp;Mas was a Principal Consultant at Analysys Ltd., a
UK-based telecoms strategy consultancy, where he led consulting
activities in internet, broadband and e-commerce. After leaving
Analysys, Mr.&nbsp;Mas became a non-executive director at the
company, but he resigned that position on December 2000. Prior
to joining Analysys, Mr.&nbsp;Mas spent 7&nbsp;years at the
World Bank in Washington DC, where he had several roles as
financial sector economist and within the bank&#146;s treasury
area. Mr.&nbsp;Mas has undergraduate degrees in Mathematics and
Economics from the Massachusetts Institute of Technology, and a
PhD in Economics from Harvard University. He has also twice been
a Visiting Professor of International Business at the Graduate
School of Business at the University of Chicago.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ignacio G&#243;mez Morin
</FONT></I><FONT size="2">has been a director of Iusacell since
April&nbsp;4, 2001 and served as an alternate director of
Iusacell between August 1999 and April 2001. Mr.&nbsp;G&#243;mez
Morin has been an alternate director of Iusacell Celular since
February 1997. He has been a partner of the law firm De Ovando y
Mart&#237;nez del Campo, S.C. since 1992. Mr.&nbsp;G&#243;mez
Morin holds a law degree from the Universidad Nacional
Aut&#243;noma de M&#233;xico and was admitted to practice law in
1991. Mr.&nbsp;G&#243;mez Morin holds the offices of secretary
or alternate secretary of several companies within the
financial, industrial and commercial sectors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Peter H. Burrowes
</FONT></I><FONT size="2">has been a member of the Board of
Directors of Iusacell since September 2001. Mr.&nbsp;Burrowes
was appointed President and Director General of Iusacell on
April&nbsp;23, 2001. Prior to this appointment Mr.&nbsp;Burrowes
was for 8&nbsp;years President and Chief Executive Officer of
Comunicaci&#243;n Celular,
</FONT>

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<DIV align="left">
<FONT size="2">S.A., a leading Colombian cellular services
provider. Before that, Mr.&nbsp;Burrowes served in different key
positions in multinational corporations, including Director
General of Parker Gillete, S.A. de C.V., Director General of
Givaudan Roure, S.A., a Colombian subsidiary of Hoffman La
Roche, Finance and Administration Director of Compa&#241;&#237;a
Qu&#237;mica Borden and Regional Finance Director of General
Foods International, among others. Mr.&nbsp;Burrowes holds an
Economics degree from the Universidad de los Andes, Colombia, an
administration and marketing degree from the Ealing Technical
College of London, Great Britain and participated in the
Executive Program on Competition and Strategy at the Harvard
School of Business.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Russell A. Olson </FONT></I><FONT size="2">has
served as Executive Vice President of Finance and CFO of
Iusacell since October 2001, after serving as Executive Director
of Business Analysis for Verizon International for the Americas
since June 2000. Mr.&nbsp;Olson has served in a variety of
financial positions within Verizon and its predecessor company,
GTE, for over 16&nbsp;years, including financial reporting,
auditing, treasury, international, strategic planning and
business analysis. Mr.&nbsp;Olson holds a B.A. degree in
Business Administration&nbsp;&#151; Finance from the University
of Arizona and a M.S. degree in Finance from Fairfield
University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Koren Borges </FONT></I><FONT size="2">was
appointed Senior Vice-President of Marketing on April&nbsp;23,
2001. Ms.&nbsp;Borges has been employed by Vodafone and its
predecessors for seven years, and has served in a variety of
positions in the marketing and business development areas. Prior
to joining Iusacell, Ms.&nbsp;Borges served as Marketing
Director of Vodafone Malta for two years and as Marketing
Director of Click GSM, Vodafone&#146;s subsidiary in Egypt for
two years. Ms.&nbsp;Borges holds an M.B.A. from the Wharton
School at the University of Pennsylvania, an M.A. in
International Relations from the School of Advanced
International Studies at John Hopkins University and a B.A. in
Biology and Theology from Brandeis University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Juan Carlos Merodio L&#243;pez
</FONT></I><FONT size="2">was appointed Senior Vice-President,
Legal and Regulatory Affairs on April&nbsp;23, 2001.
Mr.&nbsp;Merodio has been involved in the practice of law for
20&nbsp;years, primarily in the transportation industry. During
the two years prior to joining Iusacell, Mr.&nbsp;Merodio was a
partner and director of the Mexican law firm M&#38;A Bufete
Merodio S.C. Mr.&nbsp;Merodio was also in private practice from
1991 until 1995, as a partner of M&#38;A Bufete Merodio y Alfaro
S.C. Mr.&nbsp;Merodio spent 11&nbsp;years working for Grupo
Servia S.A. de C.V. and its subsidiary Transportaci&#243;n
Mar&#237;tima Mexicana S.A. de C.V. (TMM). Mr. Merodio served as
General Counsel of TMM from 1985 until 1991, as President of
Grupo Servia S.A. in 1995 and as President and Director General
of TMM from 1996 until 1999. Mr.&nbsp;Merodio has served as a
director of Cintra S.A., Mexicana S.A. and Aeromexico S.A. and
was Vicechairman of the Mexican Shipowners Association from 1997
until 1999. He is a graduate of the Universidad Nacional
Aut&#243;noma de Mexico, a member of the Mexican Bar association
and a member of the Association of the Bar of the City of New
York.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Henry M. Ruiz </FONT></I><FONT size="2">has
served as Vice-President of Technical Operations of Iusacell
since July&nbsp;31, 2000 as an alternate director of Iusacell
since August 2000 and as a director of Iusacell Celular since
April 2001. Mr.&nbsp;Ruiz also served as Director of Engineering
and Operations for Iusacell in Region 5 from March 1998 to
September 1998 and as Director of Executive Support for
Iusacell&#146;s Vice-President of Technical Operations from
January 1997 until March 1998. Mr.&nbsp;Ruiz has been an
employee of Verizon and Bell Atlantic for 16&nbsp;years. From
October 1998 until June 2000, he served as Chief Technology
Officer of Excelcomindo Pratama in Indonesia, where he was
responsible for network, engineering operations and information
technology. From August 1990 until December 1996, Mr.&nbsp;Ruiz
supported business development efforts worldwide for Bell
Atlantic International Inc. Prior to that, Mr.&nbsp;Ruiz worked
for New Jersey Bell for six years in various engineering and
operations capacities. Mr.&nbsp;Ruiz received a B.S. in
Mathematics and Computer Science at Stevens Institute of
Technology and a degree from the Professional Program for
Managers of Telecommunications and Information Technology at
Carnegie Mellon University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Anthony Llompart </FONT></I><FONT size="2">was
named Vice president of Sales &#38; Distribution of Iusacell on
April&nbsp;29, 2002. Mr.&nbsp;Llompart served three years as
Director Channel Management for Verizon International and has
held a variety of Sales &#38; Marketing positions for Verizon
and its predecessor company, GTE, for over 8 years. These
include Sales Management, Product Management, Distribution, and
Customer Support. Mr.&nbsp;Llompart has over 12&nbsp;years
experience in the wireless industry, and holds a B.S. degree in
Business Management from the University of Phoenix.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jose Bellido Valerio
</FONT></I><FONT size="2">has served as Vice-President of Human
Resources of Iusacell since February 2000 after serving as
Director of Human Resources of Iusacell from August 1999 until
January 2000. From May
</FONT>

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<DIV align="left">
<FONT size="2">1994 until April 1996, Mr.&nbsp;Bellido served as
Human Resources Manager for Iusacell Celular and since May 1996
he has served as Director of Human Resources of Iusacell
Celular. Prior to joining Iusacell Celular, Mr.&nbsp;Bellido
served as Manager of Industrial Relations for Aeromexico, S.A.
de C.V. for more than four years. Mr.&nbsp;Bellido holds a law
degree in labor law from the Universidad Nacional Aut&#243;noma
de Mexico, a specialized degree in law from Universidad
Panamericana, a diploma in human resources strategic planning
from the University of California at Berkeley, and a masters
degree in business from the Instituto Panamericano de Alta
Direcci&#243;n de Empresas (IPADE).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jorge Halvas Begovich
</FONT></I><FONT size="2">has been Vice-President of
Administration of Iusacell since September 2001 and, prior
thereto served as Vice-President of Regulatory Affairs of
Iusacell since February 2000 and, before that he served as
Director of Regulatory Affairs of Iusacell from August 1999
through January 2000. Mr.&nbsp;Halvas has also been Director of
Regulatory Affairs of Iusacell Celular since June 1997 and from
December 1995 until June 1997 served as Manager of Regulatory
Affairs of Iusacell Celular. For more than eight years prior to
being appointed to such position, Mr.&nbsp;Halvas worked in
various capacities in the banking and brokerage industries. From
January 1995 through November 1995, Mr.&nbsp;Halvas served as a
consultant to the Vice-President of Specialized Supervision of
the <I>Comisi&#243;n Nacional Bancaria y de Valores </I>and from
February 1993 until December 1994, he served as a Credit
Director for Banca Confia, S.A. Abaco Grupo Financiero.
Mr.&nbsp;Halvas holds an undergraduate business degree from
Universidad Panamericana and an M.B.A. from the Instituto
Panamericano de Alta Direcci&#243;n de Empresas (IPADE).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Andrew G. Hunkin </FONT></I><FONT size="2">was
appointed Vice-President of Data and Long Distance of Iusacell
in April 2001. Mr.&nbsp;Hunkin has over sixteen years of
telecommunications experience, including fourteen years with
Verizon. Mr. Hunkin has held several positions during his six
years with Verizon International and eight years with GTE
Telephone Operations. Mr.&nbsp;Hunkin served as Director/
General Manager of Data Communications for Puerto Rico Telephone
Company (a Verizon company) from May 1999 until March 2001.
Before that, Mr.&nbsp;Hunkin served as Director of Business
Development Asia/ Pacific from November 1997 until April 1999
and as Manager of International Marketing Support from March
1996 until October 1997. Mr.&nbsp;Hunkin holds an M.B.A. from
Indiana Wesleyan University and a B.S. from Indiana University
at Bloomington.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The aggregate amount of compensation, including,
without limitation, base salary and benefits, paid by Iusacell
in 2001 to all directors and executive officers as a group was
Ps.84.1&nbsp;million (U.S.$9.2&nbsp;million), compared to
Ps.85.9&nbsp;million (U.S.$9.4&nbsp;million) in 2000. The
aggregate amount excludes any amounts paid by Verizon and
Vodafore to their employees who are directors and executive
officers of Iusacell. See Item&nbsp;7, &#147;Major Shareholders
and Related Party Transactions&nbsp;&#151; Related Party
Transactions.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, in 2001 Iusacell granted purchase
rights with respect to a total of 659,000 series&nbsp;V shares
to its executive officers under the management employee stock
purchase plan described below, which were later exchanged for
series&nbsp;V shares. Individuals who are currently Iusacell
executive officers and those executive officers whose labor
relationship with Iusacell Celular terminated during 2001 and in
the first four months of 2002 did not exercise any purchase
rights with respect to series V shares. In addition, purchase
rights with respect to the 659,000 series V shares were
forfeited by executive officers whose labor relationship with
Iusacell terminated during 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our general compensation policy, we
conduct periodic reviews of our management and employees to
determine bonus compensation. Iusacell also provides executive
officers with use of an automobile. In addition, we provide our
executive officers and other employees with food stamps (up to
Ps.1,226.1 per month), gas stamps (up to 320 liters per month)
and with contributions to a savings plan (up to Ps.1,665.8 per
month).
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Board
Practices</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell has established Executive, Finance and
Strategic Planning, Audit and Human Resources and Compensation
Committees of the Board of Directors. All decisions of these
committees require a majority vote of their members, including
the favorable vote of at least one member appointed by the
series A
</FONT>

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<DIV align="left">
<FONT size="2">shareholders. Mexican law requires the Audit
Committee to be comprised of a majority of independent directors
and chaired by an independent director.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Executive Committee, an administrative and
decision-making body of the Board of Directors, may act for the
Board of Directors except where Mexican law requires action of
the Board of Directors. Since April&nbsp;30, 2002, the members
of the Executive Committee are Messrs.&nbsp;Salloum, Espinal,
Giammarino, Lewis, Isaksson and Bowers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Finance and Strategic Planning Committee
reviews, evaluates and makes recommendations to the Board of
Directors regarding investment policies, financing policies and
strategic planning of the Company. Since April&nbsp;30, 2002,
the members of the Finance and Strategic Planning Committee are
Messrs. Salloum, Espinal, Svigals and Lester.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee recommends Iusacell&#146;s
public accountants, reviews our annual consolidated financial
statements, provides oversight of Iusacell auditing, accounting,
financial reporting and internal control functions, and reviews
with management and Iusacell&#146;s independent public
accountants the plans and results of the auditing function. The
members of the Audit Committee elected on April&nbsp;30, 2002
are Messrs.&nbsp;Martinez del Campo, Salloum, Giammarino and
Lester.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Human Resources and Compensation Committee
reviews, evaluates and makes recommendations to the Board of
Directors regarding Iusacell&#146;s executive compensation
standards and practices, including salaries, bonus
distributions, grants under the executive employee stock
purchase plan (described below) and deferred compensation
arrangements. Since April&nbsp;30, 2002 the members of the Human
Resources and Compensation Committee are Messrs.&nbsp;Salloum,
Giammarino, Lewis and Hickey.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell does not provide benefits upon
termination of employment for its directors.
</FONT>

<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, Iusacell and our
subsidiaries had an aggregate of 1,940 full-time and part-time
employees, 129 temporary employees and 8 full time Verizon
seconded employees or consultants. Approximately 33.6% of the
full time employees were members of a labor union. We have never
experienced a work stoppage and management considers our
relationship with our employees to be good.
</FONT>

<P align="left">
<B><FONT size="2">E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share
Ownership</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our directors and officers as a group own, in
aggregate, less than 1% of our shares. See Item&nbsp;7,
&#147;Major Shareholders and Related Party
Transactions&nbsp;&#151; Major Shareholders.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
Employee Stock Purchase Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s management employee stock
purchase plan became the successor to Iusacell Celular&#146;s
management employee stock purchase plan upon the close of
Iusacell&#146;s reorganization in August 1999. The plan helps to
retain key executives and better align their interests with
those of Iusacell&#146;s shareholders. The stock purchase plan
is administered by a management trust with the assistance of the
trust division of Bancrecer, S.A. Under the stock purchase plan,
the technical committee of the management trust (the
&#147;Technical Committee&#148;), which is composed of certain
executive officers of Iusacell at the direction of the Human
Resources and Compensation Committee, determines the executive
employees to whom series V shares of Iusacell will be offered
for purchase under the stock purchase plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Technical Committee, upon direction from the
Human Resources and Compensation Committee, determines the
number of series V shares to be offered for purchase to such
executive employees, the purchase price per share for such
purchase rights, the vesting schedule for such purchase rights,
the payment terms and all other terms and conditions. The
purchase price per share for the purchase rights is one-tenth
the closing price for the series V shares held in form of
American Depositary Shares (ADSs) on the New York Stock Exchange
on the business day selected by the Technical Committee as the
date of sale, converted into pesos at the prevailing exchange
rate published by the Banco de M&#233;xico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Grantees who leave Iusacell forfeit unvested
purchase rights and, after a period of time, forfeit vested but
unexercised purchase rights, all of which forfeited purchase
rights may be reissued by the Technical
</FONT>

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<DIV align="left">
<FONT size="2">Committee to other employees. The number of
series V shares that may be granted under the stock purchase
plan cannot exceed 4.9% of the aggregate number of issued and
outstanding Iusacell shares.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the close of the Iusacell reorganization in
August 1999, outstanding purchase rights with respect to
Iusacell Celular series L shares were exchanged for rights to
purchase Iusacell series V shares. In addition, 39 Iusacell
management employees exercised the right to purchase 1,220,690
series V shares at U.S.$0.70 per share (Ps.6.52 on the date
immediately prior to the date of the launch of the offer) in the
rights offer in respect of the shares held in the management
trust administering the plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Human Resources and Compensation
Committee and the Technical Committee granted purchase rights
with respect to a total of 681,000 Iusacell series&nbsp;V shares
to 5 executive employees at a purchase price of Ps.15.35 per
series&nbsp;V share. All such purchase rights vest in three
equal annual installments commencing a year after the date of
grant. In 2001, the Human Resources and Compensation Committee
and the Technical Committee granted purchase rights with respect
to a total of 659,000 Iusacell series&nbsp;V shares to 4
executive employees at a weighted average purchase price of
Ps.8.96 per series&nbsp;V share. All such purchase rights vest
in three equal annual installments commencing a year after the
date of grant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, purchase rights
with respect to 4,292,638 series&nbsp;V shares had not been
exercised and were outstanding in the management trust
administering the plan, of which 2,079,135 series V shares were
held by executive employees and 2,213,503 previously forfeited
series&nbsp;V shares were held by the trust and awaiting
reassignment. In addition, in 2001, purchase rights with respect
to 1,210,110 shares held by the trust were exercised.
</FONT>

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</FONT>

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<!-- link2 "ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</FONT></B>

<P align="left">
<B><FONT size="2">A.&nbsp;Major Shareholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have two principal shareholders. The first,
Verizon, is comprised of various subsidiaries of Verizon. Since
February 1997, we have been under management control of
subsidiaries of Bell Atlantic, now Verizon. Our second principal
shareholder is a subsidiary of Vodafone Group Plc. No other
shareholder owns more than 5% of any class of our shares. At
April&nbsp;30, 2002, based on the information made available to
us, our shareholders were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Shareholders</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">A Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">V Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Verizon(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">657,966,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,152,002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">734,118,433</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vodafone(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303,326,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">339,617,555</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">642,943,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Public investors(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484,962,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484,962,753</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">961,292,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">900,732,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,862,024,794</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of Verizon Communications Inc. is:
    1095 Avenue of the Americas, New York, New York.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of the Vodafone Group Plc is: Max
    Eunvelaan 61, 3062 MA. Rotterdam, The Netherlands.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes the series&nbsp;V shares held by the
    trust administering our executive employee stock purchase plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our directors and officers as a group own, in the
aggregate, less than 1% of Iusacell&#146;s shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of Iusacell&#146;s series&nbsp;V shares
outstanding at April&nbsp;30, 2002, 233,644,100 series&nbsp;V
shares were held in the form of American Depositary Shares by 40
holders of record. Assuming that the holders of ADSs are located
in the United States, then 42.8% of the series&nbsp;V shares
(which includes all but 1,400,000 series&nbsp;V shares held by
Verizon which are held in the form of ADSs) are held in the
United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 1999, we completed a reorganization of
Iusacell. The reorganization included U.S.$132.5&nbsp;million in
borrowings from our principal shareholders between August 1998
and March 1999 that were immediately converted into equity, an
offer to exchange the shares of Iusacell Celular for shares of
Iusacell, primary equity offerings that raised
U.S.$33.7&nbsp;million in net proceeds for Iusacell and a
U.S.$106.5&nbsp;million secondary offering by our principal
shareholders. This reorganization more than doubled the number
of Iusacell&#146;s publicly held shares. Before the August 1999
primary and secondary offerings, Verizon (then Bell Atlantic)
had a 47.2% interest in Iusacell Celular and the Peralta Group
had a 43.8% interest. After the August 1999 reorganization,
Verizon and the Peralta Group each had a 40.4% interest in
Iusacell. On January&nbsp;31, 2000, we launched a second
exchange offer to acquire the remaining 0.5% interest in
Iusacell Celular held by public shareholders. This offer was
completed on February&nbsp;29, 2000 and, as a result, we then
held 99.9% of the outstanding Iusacell Celular shares. See
Item&nbsp;4, &#147;Information on the Company&nbsp;&#151;
History and Development of the Company.&#148; Since this second
exchange offer placed additional series&nbsp;V shares with
public shareholders, both Verizon and the Peralta Group were
slightly diluted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;30, 2000, Iusacell Celular&#146;s
shareholders approved a 30,000 for 1 reverse split of its shares
which became effective in May 2001. Iusacell now holds 100% of
the outstanding Iusacell Celular shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the fourth quarter of 1999 and the first
quarter of 2000, relatives of Mr.&nbsp;Carlos Peralta sold
approximately 34,900,000 series&nbsp;V shares on the open
market. In April and May 2000, Iusacell sold 10,529,700 American
Depositary Shares for U.S.$15.125 per ADS in a public offering,
receiving approximately U.S.$153.0&nbsp;million in net proceeds.
As a result, as of May&nbsp;31, 2000, Verizon held a 37.2%
interest in Iusacell and the Peralta Group and associated
individuals held a 34.5% interest in Iusacell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;4, 2001, Vodafone closed the
purchase of the Peralta Group&#146;s 34.5% interest in Iusacell.
In connection with this purchase, the shareholders agreement
among Iusacell, Verizon and the Peralta Group terminated and
Iusacell, Verizon and Vodafone entered into a new shareholders
agreement, which we refer to as the Iusacell Shareholders
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;27, 2001, our shareholders
authorized a rights offering to holders of our outstanding
series&nbsp;V shares and ADSs. The rights offering involved
newly issued series&nbsp;V shares representing ADSs and
</FONT>

<P align="center"><FONT size="2">86
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">series A shares for up to U.S.$100&nbsp;million.
The subscription period started on October&nbsp;5, 2001 and
ended on November&nbsp;1, 2001. Iusacell&#146;s principal
shareholders, Verizon and Vodafone, purchased their pro rata
portion of series A and series&nbsp;V shares. 67% of the
non-Verizon and Vodafone shareholders exercised their rights on
the series&nbsp;V shares. In addition, Verizon&#146;s
subscription included all of the series&nbsp;V shares offered
to, but not subscribed by, public shareholders.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of April&nbsp;30, 2002, Verizon held a 39.4%
interest in Iusacell and Vodafone held a 34.5% interest in
Iusacell.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governance</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with Iusacell&#146;s by-laws and
the Iusacell Shareholders Agreement, our Board of Directors
consists of twelve members. The series&nbsp;A shareholders have
the right to appoint seven directors and their alternates
(including the Chairman of the Board of Directors) and the
series&nbsp;V shareholders have the right to appoint five
directors and their alternates. Mexican law, Iusacell&#146;s
by-laws and the Iusacell Shareholders Agreement give Verizon, as
majority owner of the series A shares, the right to elect six of
the series A directors. Under Iusacell&#146;s bylaws and the
Iusacell Shareholders Agreement, Verizon, as holder of the
majority of the series&nbsp;A shares, has the right to elect the
Chairman of the Board of Directors, whose vote breaks a tie.
Vodafone, as holder of greater than 10% but less than 20% of the
capital stock of Iusacell in the form of series A shares, has
the right to appoint the remaining series&nbsp;A director and,
as the controlling owner of the series&nbsp;V shares, all five
series&nbsp;V directors, subject to (i)&nbsp;the right of any
holder of a 10% or greater equity interest in Iusacell in the
form of series&nbsp;V shares to elect one director, and
(ii)&nbsp;the right, granted to Verizon under the Iusacell
Shareholders Agreement, to nominate one of the series&nbsp;V
directors. If Vodafone is unable to elect Verizon&#146;s
series&nbsp;V director nominee, then Vodafone has agreed, under
the Iusacell Shareholders Agreement, to nominate a Verizon
nominee as the seventh series A director.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our by-laws and the Iusacell Shareholders
Agreement provide that resolutions of the Board of Directors
will be valid when approved by a majority vote of the members
present, including a majority of the series A directors, except
for certain matters which require a supermajority vote. For
actions of the Board of Directors present and voting at such
meeting, a &#147;supermajority vote&#148; means the affirmative
vote of a majority of the members of the Board of Directors,
including a majority of the series A directors and the
series&nbsp;A director or directors elected by holders of a 10%
or greater equity interest in Iusacell in the form of
series&nbsp;A shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our by-laws and the Iusacell Shareholders
Agreement also provide that resolutions of our shareholders will
be valid when approved by a majority of our outstanding shares,
including a majority of the outstanding series&nbsp;A shares,
except for certain matters which require a supermajority vote.
For actions by the shareholders, &#147;supermajority vote&#148;
means the affirmative vote of the beneficial owners of a
majority of the series&nbsp;A shares and series&nbsp;V shares,
including 75% of the outstanding series A shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following transactions are subject to a
supermajority vote by our Board of Directors or our shareholders:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">acquisitions of non-telecommunications businesses
    for a purchase price in excess of U.S.$30.0&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain investments, joint ventures and mergers
    within the telecommunications business involving assets in
    excess of U.S.$100.0 million;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain dispositions of assets for consideration
    in excess of U.S.$30.0&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">incurrence of indebtedness in an amount exceeding
    U.S.$100.0 million in the aggregate within any Iusacell fiscal
    year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain issuances of capital stock in an amount
    exceeding U.S.$50.0&nbsp;million in the aggregate within any
    Iusacell fiscal year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">entering into, amending or terminating contracts
    with or for the benefit of certain affiliates of Iusacell,
    except for any renewals or extensions on terms substantially
    similar to those of certain consulting and seconded employee
    arrangements of Iusacell with Verizon affiliates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">termination or disposition of any
    telecommunication transmission business with annual revenues of
    more than U.S.$10.0 million in each of the two most recent
    fiscal years;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">87
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">termination of concessions relating to
    telecommunications operations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the determination of how Iusacell will vote its
    shares and grant proxies to vote its shares on any supermajority
    transaction within entities in which Iusacell holds 10% or more
    of the capital stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the granting of powers-of-attorney in connection
    with any such supermajority transactions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As provided by the Mexican law, our by-laws
require our Board of Directors itself, without delegation, to
approve certain matters:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">non-ordinary course of business related party
    transactions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sales/purchases of 10% or more of assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">guarantees involving more than 30% or more of
    assets; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other non-ordinary course of business
    transactions including more than 1% of assets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our by-laws and the Iusacell Shareholders
Agreement provide that any shareholder or group of shareholders
holding shares that represent at least 25% of the total capital
stock of the Company, provided that such holding includes at
least 11% of such capital stock in series V shares and at least
10% in series A shares, which we refer to as a Qualified
Minority Shareholder, shall be entitled to elect one of the
chief operations officer, the chief financial officer, the chief
marketing officer or the chief technical officer of Iusacell.
Our Board of Directors or our Executive Committee shall
determine the officer to be designated by each Qualified
Minority Shareholder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Iusacell Shareholders Agreement,
Verizon and Vodafone have agreed to some restrictions on the
transfer of their Iusacell shares. Verizon and Vodafone have
granted to each other a right of first refusal on the transfer
of any series&nbsp;A shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Iusacell Shareholders Agreement,
each of Verizon and Vodafone has the right to cause us to
facilitate two registered secondary public offerings of their
respective shares and on one occasion, a shelf-registration for
sale of their respective shares in a bona-fide public offering
for a period not to exceed 180&nbsp;days. After one party&#146;s
exercise of its registration rights, all other parties having
registration rights may elect to include their shares in the
offering. Any party holding registration rights may not exercise
such rights during the 90-day period commencing on the effective
date of any registration statement filed by Iusacell for a
primary equity offering in which gross proceeds are expected to
exceed U.S.$30.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Iusacell Shareholders Agreement also provides
that if we register any equity securities for a primary or
secondary public offering, we must permit Verizon and Vodafone
(and anyone to whom they have transferred shares otherwise than
in a public offering) to include their shares in such offering.
We have agreed to bear all expenses of any of the
above-described primary or secondary public offerings, other
than the fees of counsel to the holders of the registration
rights and any underwriting commissions or discounts. In
addition, we have agreed not to effect any public sale or
distribution of securities similar to those being registered
during the period commencing 21 days prior to the effective date
of a registration statement covering the registered securities
and continuing until 90&nbsp;days following such effective date.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related Party
Transactions</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General
Policy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We adopted a policy on transactions with related
parties in November 1993 in connection with the acquisition by
Bell Atlantic of its initial holdings in Iusacell. This policy
provides that we will not, and will not permit any of our
subsidiaries to, enter into any contract or transaction with or
for the benefit of any of their affiliates (excluding
transactions with, between or among wholly owned subsidiaries),
which is not at a price and on other terms at least as favorable
to us or the subsidiary as those which could be obtained on an
arm&#146;s-length basis from an unaffiliated third party. This
policy has been formalized in the Iusacell Shareholders
Agreement.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consulting
and Secondment Agreements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular and Verizon have entered into a
series of consulting and secondment agreements pursuant to which
Verizon has agreed, for an indefinite term, to provide Iusacell
with management, technical,
</FONT>

<P align="center"><FONT size="2">88
</FONT>

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<DIV align="left">
<FONT size="2">marketing, legal and other consulting services
and seconded employees. Seconded employees generally agree to
expatriate assignments of two to three years duration, with such
employees&#146; compensation being paid by Verizon and
reimbursed by Iusacell. Verizon charges Iusacell for the
provision of seconded employees at cost, and for the provision
of consulting services at or below market rates. Vodafone has
recently entered into a similar agreement with Iusacell.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to consulting services and seconded
employees provided in 2001, Iusacell Celular has been credited
by Verizon for a total of U.S.$7.2&nbsp;million to adjust
previous overcharges. At December&nbsp;31, 2001, Iusacell
Celular owed Verizon U.S.$6.3&nbsp;million for consulting
services and seconded employees provided in 1999, 2000 and 2001.
Vodafone charged to Iusacell for consulting fees and secondment
agreements a total of U.S.$219,216 in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, Verizon and Iusacell agreed that
Verizon would accept a transfer of all rights in connection with
a U.S.$15.0&nbsp;million advance paid by Iusacell Celular to an
affiliate of Nortel Networks Inc. in exchange, on a
dollar-for-dollar basis, for the cancellation of all existing
charges invoiced by Verizon to Iusacell with respect to
consulting services and seconded employees and a credit against
any and all future such charges until the sum of all canceled
and credited against charges equals U.S.$15.0&nbsp;million. See
Item&nbsp;8 &#147;Financial Information&nbsp;&#151; Consolidated
Statements and Other Financial Information&nbsp;&#151; Legal
Proceedings&nbsp;&#151; Non Judicial Disputes.&#148;
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Roaming
Agreements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">GTE Telecommunications Services, Inc., which we
refer to as TSI, provides clearinghouse services for roaming
arrangements. In 2001, TSI paid Iusacell U.S.$134,821 for such
services. In October 2001, we entered into an inter-carrier
roaming agreement with Verizon Wireless in the United States.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interests of
Directors</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Peralta Group, which was one of our principal
shareholders until April&nbsp;4, 2001, owns Fraccionadora y
Constructora Mexicana, S.A. de C.V., known as Fracomex, a
company engaged in real estate investment and management that
has entered into 13&nbsp;lease agreements with some subsidiaries
of Iusacell. In 2001, Iusacell paid Fracomex rent for
U.S.$392,858. Additionally, in 2001 Iusacell acquired some
equipment from Fracomex for a total of U.S.$9,671. Payments
totaled U.S.$402,529.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Two Peralta Group members lease land to Iusacell
at the Peralta Group industrial complex in Pastej&#233;, Mexico,
upon which Iusacell has built and operates warehouses. These
land leases expire in December 2015, but can be terminated
before then if either party gives the other one year&#146;s
prior written notice. Currently, Iusacell pays these two Peralta
Group entities U.S.$23,064 per month for these land leases. In
2001, payments for these leases totaled U.S.$299,835.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, Manufacturas Electr&#243;nicas
Pastej&#233;, S.A. de C.V., a joint venture between the Peralta
Group and Mr.&nbsp;Marco Antonio de la Torre Barranco, an
alternate director of Iusacell until April 2001, provided
telephone and accessory repair services to Iusacell in the
amount of Ps.14.8&nbsp;million (U.S.$1.6&nbsp;million).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Fernando de Ovando, a director of
Iusacell until April 2000, Mr.&nbsp;Javier Mart&#237;nez del
Campo, a director of Iusacell since April 2001 and a director of
Iusacell Celular since February 1997, and Mr.&nbsp;Ignacio
G&#243;mez Morin, a director of Iusacell since April 2001 and an
alternate director of Iusacell Celular since February 1997, are
members of the law firm of De&nbsp;Ovando&nbsp;y Mart&#237;nez
del Campo, S.C., which, in 2001, provided legal services to
Iusacell in the amount of approximately Ps.2.2&nbsp;million
(U.S.$240,280).
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interests of
Experts and Counsel</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not Applicable.
</FONT>

<P align="center"><FONT size="2">89
</FONT>

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<!-- link2 "ITEM 8. FINANCIAL INFORMATION" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM 8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL
INFORMATION</FONT></B>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
Statements and other financial information</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial
Statements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Item&nbsp;19(a) for a list of financial
statements filed under Item&nbsp;18.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Legal
Proceedings</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although we are a party to legal proceedings in
the ordinary course of our business, management believes that
none of these proceedings, individually or in the aggregate, are
likely to have a material adverse effect on Iusacell.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Suit
by Mitsubishi</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mitsubishi Electronics America, Inc. filed a
complaint with the Circuit Court of Cook County, Illinois,
United States, on July&nbsp;28, 1996 against Iusacell Celular,
Bell Atlantic Corporation and Bell Atlantic Latin American
Holdings, Inc. Mitsubishi&#146;s complaint alleged, among other
things, that we breached a purported contract for the purchase
of 60,000 local wireless telephone terminals at a cost of
U.S.$510 each. Mitsubishi later filed an amended complaint
against Iusacell Celular adding a fraud allegation against
Iusacell Celular. Mitsubishi sought judgment in an amount in
excess of U.S.$50,000 for each of the three counts against
Iusacell Celular, plus punitive damages for one of those counts.
Mitsubishi filed answers to interrogatories claiming damages in
an amount of U.S.$8,825,343.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our motions to dismiss the complaint for lack of
personal jurisdiction and on substantive grounds were rejected,
although the court reserved judgment on Iusacell Celular&#146;s
motion to dismiss for <I>forum non conveniens</I>. Although we
believed the lawsuit had no basis, we nevertheless created a
contingency reserve of U.S.$3.0&nbsp;million with respect to
such litigation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After discovery, we filed a motion for summary
judgment. On December&nbsp;7, 2000, the Circuit Court granted
our motion and all counts of the complaint against Iusacell
Celular were dismissed. As a result, in the fourth quarter of
2000, we reversed Ps.23&nbsp;million (U.S.$2.4&nbsp;million) of
the contingency reserve. In January 2001, in order to avoid
further litigation, we reached a settlement with Mitsubishi.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Suit
against SAGO</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, SAGO Interamericana, S.A. de C.V. a
distributor that at that time represented slightly less than 10%
of our monthly gross post paid additions and approximately 2% of
our monthly gross prepay additions, notified us that it was
immediately terminating its distribution agreement. We believe
that this action violated the termination provisions of the
distribution agreement, and have filed a lawsuit seeking
compensatory damages. We cannot predict whether we will prevail
in this lawsuit.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Telemedic
lawsuit</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2002 Telemedic S.A de C.V. filed a
lawsuit against Iusacell S.A de C.V. seeking compensatory
damages. We are now in the process of submitting evidence to the
judge. Those compensatory damages, if any, shall be determined
by the judge at the end of the process.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Non-Judicial
Disputes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 1998, we discovered that our former
corporate headquarters in Mexico City, of which one of Iusacell
Celular subsidiaries is the owner, is encumbered by liens
incurred by the prior owner for an amount in excess of the
estimated fair market value of the property. In March 2001, we
filed suit against the Director of the Public Registry of
Property of the Federal District of Mexico in the 48th Civil
Superior Tribunal in the Federal District of Mexico, seeking
cancellation of the liens in the public registry on the basis
that the underlying obligation has been discharged. We prevailed
in the lawsuit and consequently, the lien will be cancelled in
the Public Registry of Property of the Federal District of
Mexico.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividend
Policy</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since becoming a public company in 1999, we have
not paid any dividends. We do not contemplate paying dividends
in the foreseeable future.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant
Changes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">90
</FONT>

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<!-- link2 "ITEM 9. THE OFFER AND LISTING" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM 9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE OFFER
AND LISTING</FONT></B>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Offer and
Listing Details</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s series A and series V shares have
been listed on the Mexican Stock Exchange since August&nbsp;4,
1999, with the series&nbsp;V shares trading under the symbol
CEL. ADSs representing 10 Iusacell series&nbsp;V shares have
been listed on the New York Stock Exchange since August&nbsp;4,
1999 and trade under the symbol CEL. The series V ADSs are
evidenced by American depositary receipts issued under a deposit
agreement with The Bank of New York, as depositary. Each of the
Iusacell series&nbsp;A and series&nbsp;V shares are without par
value and are in registered form. With respect to limitations on
the rights of series&nbsp;A and series&nbsp;V shares, see
Item&nbsp;5, &#147;Operating and Financial Review and
Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Liquidity&#148; and Item&nbsp;7,
&#147;Major Shareholders and Related Party
Transactions&nbsp;&#151; Major Shareholders&nbsp;&#151;
Governance.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular&#146;s series&nbsp;D and L
shares were listed on the Mexican Stock Exchange until
February&nbsp;29, 2000. ADSs representing 10 Iusacell Celular
series&nbsp;D shares were listed on the New York Stock Exchange
from June&nbsp;21, 1994 until August&nbsp;10, 1999 and traded
under the symbol CEL.d. ADSs representing 10 Iusacell Celular
series&nbsp;L shares were listed on the New York Stock Exchange
from June&nbsp;21, 1994 until February&nbsp;29, 2000 and traded
under the symbol CEL until August&nbsp;4, 1999 and thereafter,
until February&nbsp;29, 2000 under the symbol CEL.y.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables present, for the periods
indicated, the high, low and period end sales prices of
(i)&nbsp;the Iusacell series&nbsp;V shares on the Mexican Stock
Exchange, as reported by the Mexican Stock Exchange, and
(ii)&nbsp;the Iusacell series V ADSs on the New York Stock
Exchange, as reported by the New York Stock Exchange. The table
also present the average trading volume of the shares and ADSs
for the periods indicated.
</FONT>

<P align="left">
<B><FONT size="2">Mexican Stock Exchange (in Ps.)&nbsp;&#151;
Series&nbsp;V Shares</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Daily</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Trading Volume</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">end</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(shares)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,018,252</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP><FONT size="2">(1)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">412,852</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">358,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,075</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">560,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">849,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,082,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,895,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,691,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,670,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">March 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,462,560</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">April 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,195,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,240,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">91
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">New York Stock Exchange (in U.S.$)&nbsp;&#151;
Series&nbsp;V American Depository Shares</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Daily</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Trading Volume</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">end</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(ADSs)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,550</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235,592</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">244,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.1875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">148,744</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.6875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">222,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">209,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235,186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181,941</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.580</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">277,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">477,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">March 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">344,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">April 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.650</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.080</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">May 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.370</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reflects effect of the August&nbsp;4, 1999
    exchange of shares over the Mexican Stock Exchange in connection
    with the Iusacell restructuring and recapitalization plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Source: </FONT></I><FONT size="2">Bloomberg
L.P., Reuters.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan of
Distribution</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Markets</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Trading on
the New York Stock Exchange</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ADSs representing ten Iusacell series V shares
have been listed on the New&nbsp;York Stock Exchange since
August&nbsp;4, 1999 and trade under the symbol CEL.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ADSs representing ten Iusacell Celular
series&nbsp;D shares were listed on the New&nbsp;York Stock
Exchange from June&nbsp;21, 1994 until August&nbsp;10, 1999 and
traded under the symbol CEL.d. ADSs representing ten Iusacell
Celular series&nbsp;L shares were listed on the New York Stock
Exchange from June&nbsp;21, 1994 until February&nbsp;29, 2000
and traded under the symbol CEL until August&nbsp;4, 1999 and
thereafter until February&nbsp;29, 2000, under the symbol CEL.y.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Trading on
the Mexican Stock Exchange</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">General</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican Stock Exchange, which was founded in
1894 and has operated continuously since 1907, is located in
Mexico City and is Mexico&#146;s only stock exchange. The
Mexican Stock Exchange is organized as a corporation, and its
shares are owned by Mexico&#146;s 33 operating brokerage firms.
These firms are exclusively authorized to trade on the floor of
the Mexican Stock Exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Electronic trading on the Mexican Stock Exchange
takes place between the hours of 8:30&nbsp;a.m. and
3:00&nbsp;p.m., Mexico City time, on each weekday other than
public holidays. Lot sizes are of 1,000 shares. Brokerage firms
are permitted to buy odd lots for their own account. The Mexican
Stock Exchange publishes an official daily price list that
includes price information for each listed security.
</FONT>

<P align="center"><FONT size="2">92
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since January&nbsp;11, 1999, the trading of
equity securities listed on the Mexican Stock Exchange is made
through the Electronic Negotiation System, an automated,
computer-linked system commonly known as <I>BMV-SENTRA
Capitales</I>. The trading of debt securities on the Mexican
Stock Exchange commenced in November 1995 through the system
known as <I>BMV-SENTRA T&#237;tulos de Deuda</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The BMV-SENTRA system allows participation in the
securities markets through work stations set up for this purpose
on the trading floor of the Mexican Stock Exchange and on the
trading desks of each member broker. Member brokers must
maintain the number of work stations authorized by the Mexican
Stock Exchange, which work stations must be located in the
territory of Mexico. To access the BMV-SENTRA system, each
member broker is given a password.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transactions may be carried out through ordinary
matched transactions during a trading day or through an auction
process. Ordinary transactions may take the form of firm bids
and offers that are matched on a given trading date, or matched
transactions <I>(operaciones de cruce)</I> in which the same
broker or brokers act for the seller and for the purchaser of
the relevant securities. Matched transactions may only occur if
existing bids or offers made on better terms are first matched.
Auctions may only be initiated with the approval of the Mexican
Stock Exchange in order to (i)&nbsp;determine the market price
of a security, (ii)&nbsp;commence the trading of a security on a
trading day or (iii)&nbsp;reinitiate trading of a security the
trading of which was suspended. Securities may only be traded at
prevailing market prices (which may be adjusted for corporate
events) or at auction prices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Settlement is effected two trading days after a
share transaction is completed on the Mexican Stock Exchange.
Deferred settlements, even if by mutual agreement, are not
permitted without the approval of the CNBV. All securities
traded on the Mexican Stock Exchange are on deposit with <I>S.D.
Indeval, S.A. de C.V., Instituci&#243;n para el Dep&#243;sito de
Valores</I>, known as Indeval, a privately owned central
securities depositary. Pursuant to the Mexican Securities Market
Law of 1975, the only persons authorized to be shareholders of
Indeval are the Mexican Central Bank, brokerage firms,
securities specialists, stock exchanges, credit institutions and
insurance and bonding companies. Indeval acts as a clearing
house, depositary, custodian, settlement, transfer and
registration institution for Mexican Stock Exchange
transactions, eliminating the need for physical delivery of
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican Stock Exchange publishes a daily
official price list that includes information on each listed
security. The Mexican Stock Exchange may suspend trading of a
particular security for various reasons. Trading may be
suspended in the event of disclosure of material non-public
information, if the Mexican Stock Exchange considers that the
suspension is necessary for the public to be fully informed. The
Mexican Stock Exchange may also suspend trading of a particular
security as a result of significant price fluctuations during a
given trading day (fluctuations exceeding a given price level by
more than 15%) or as a result of unusual movements in the price
of a security, but in this last case, during no more than five
consecutive trading days. The Mexican Stock Exchange may also
suspend trading generally as a result of fortuitous events or
force majeure, or if unusual market fluctuations arise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, approximately 147
Mexican companies were listed on the Mexican Stock Exchange,
excluding mutual funds. During 2001, the ten most actively
traded equity issues represented approximately 60% of the total
volume of the shares traded on the Mexican Stock Exchange, not
including public offerings. Although there is substantial
participation by the public in the trading of securities on the
Mexican Stock Exchange, a major part of such activity reflects
transactions of institutional investors. There is no formal
over-the-counter market for securities in Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican Stock Exchange is Latin
America&#146;s second largest exchange in terms of market
capitalization, but it remains relatively small and illiquid
compared to major world stock markets and is subject to
significant volatility. During 1995, for example, the Mexican
Stock Exchange Index (<I>Indice de Precios
y&nbsp;Cotizaciones</I>), which is based on the share prices of
30&nbsp;major Mexican issuers, declined on several occasions by
more than 5% (in peso terms) in one day. From October&nbsp;21,
1997 to October&nbsp;27, 1997, following sharp declines in Asian
stock markets, the Mexican Stock Exchange Index declined by
20.6%. There was another sharp decline of 38.8% in the Mexican
Stock Exchange Index from July&nbsp;14, 1998 to
September&nbsp;10, 1998 following a decrease in oil prices and
concerns about increasing inflation in Mexico. During 1999,
however, the Mexican Stock Exchange Index experienced steady
incremental growth, even though there was
</FONT>

<P align="center"><FONT size="2">93
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">only one registered day of 5% growth or more.
During the first six months of 1999, the index gained 52%, and
by year-end 1999, the increase reached 82%, driven mainly by a
booming local economy and U.S.&nbsp;economic performance. During
2000, the deceleration in the U.S.&nbsp;economy as well as the
political uncertainty generated by the Mexican presidential
elections during the first six months of the year, led the
Mexican Stock Exchange Index to experience one-day gains or
losses of more than 3% on several occasions and end the year
2000 with a 21% loss. During 2001, the continued deceleration in
the U.S.&nbsp;economy and its implications in the Mexican
economy as well as the political and economic uncertainty
derived by the congress consideration and approval of a new tax
reform, led the Mexican Stock Exchange Index to experience 1-day
gains or losses of more than 3% on several occasions and ended
the year 2001 with a 12.7% gain.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
Regulation and Registration Standards</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;28, 1995, the National Banking and
Securities Commission <I>Law (Ley de la Comisi&#243;n Nacional
Bancaria y de Valores</I>) was enacted, which merged the former
Mexican National Securities Commission with the Mexican National
Banking Commission to create the CNBV, which now has supervisory
jurisdiction over both banking and securities activities. The
CNBV regulates the public offering and trading of securities and
imposes sanctions on illegal use of privileged information. The
CNBV regulates the Mexican securities market, the Mexican Stock
Exchange and brokerage houses through a Board of Governors
composed of 13&nbsp;members, five of which are appointed by the
Mexican Ministry of Finance and Public Credit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to offer securities to the public in
Mexico, an issuer must meet qualitative and quantitative
requirements, and only securities for which a listing
application has been approved by the Mexican National Securities
Commission may be listed on the Mexican Stock Exchange. CNBV
approval does not imply any kind of certification or assurance
relating to the merits or the quality of the securities or the
solvency of Iusacell. In June of 2000, the CNBV adopted new
general rules setting forth the requirements to become
registered in the National Securities Registry, which we refer
to as RNV, and to maintain such registration. These new rules
also repealed CNBV&#146;s 1993 general rules that established
Subsection A and B of the RNV. The new rules provide that to
become registered in the RNV, an issuer is generally required to
have:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">at least three years operating history unless the
    issuer is a holding company, in which case the issuer&#146;s
    principal subsidiaries must have an operating history of at
    least three years;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">stockholders&#146; equity of at least 20,000,000
    <I>unidades de inversi&#243;n,</I> which we refer to as UDIs,
    and which are inflation-indexed currency units (equivalent to
    Ps.61.1&nbsp;million or U.S.$6.67&nbsp;million as of
    December&nbsp;31, 2001);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">profits for the last three years of operation
    taken as a whole; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a public float of at least 15% of the capital
    stock on a fully diluted basis, or of at least 7% of said
    capital, also on a fully diluted basis, if the issuer&#146;s
    offer represents a value of at least 160&nbsp;million UDIs, in
    both cases excluding the shares of certain persons related to
    the issuer.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The new rules also provide that to maintain their
registration in the RNV, issuers are required to have:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">stockholders&#146; equity of at least 15,000,000
    UDIs (equivalent to Ps.45.8&nbsp;million or
    U.S.$5.00&nbsp;million as of December&nbsp;31, 2001);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">at least 36 transactions per semester on their
    publicly traded shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an average share price per semester higher than
    one peso;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no less than 8&nbsp;million shares of the issuer
    and no less than 12% of the issuer&#146;s paid-in capital placed
    with the investment public at large; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">at least 100 stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The CNBV has the authority to waive some of these
requirements under certain circumstances. The Mexican Stock
Exchange carries out an annual review of each issuer to
determine if it continues to meet the eligibility requirements
for registration in the RNV. The Mexican Stock Exchange may
request issuers to submit a correction program when such issuers
have failed to comply with maintenance requirements. If the
program is not submitted or complied with by the issuer, the
registration and listing with the Mexican Stock
</FONT>

<P align="center"><FONT size="2">94
</FONT>
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<DIV align="left">
<FONT size="2">Exchange may be canceled by the CNBV. Mexican
Securities which are offered outside Mexico are required to be
registered in the Special Section of the RNV.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell shares are registered under the
Securities and Special Section of the RNV.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Mexican Securities Market Law,
the CNBV must be notified before shareholders of a company
listed on the Mexican Stock Exchange effect one or more
simultaneous or successive transactions outside the Mexican
Stock Exchange affecting 10% or more of such company&#146;s
capital stock. The holders of the shares being transferred in
the transactions are also obligated to inform the CNBV of the
results of the transactions within three days of completion of
the last transaction, or that the transactions have not been
completed. The CNBV will notify the Mexican Stock Exchange of
these transactions, without specifying the names of the parties
involved.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Issuers of listed securities are required to file
unaudited quarterly financial statements and audited annual
financial statements as well as various periodic reports with
the CNBV and the Mexican Stock Exchange.
</FONT>

<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling
Shareholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dilution</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses of
the Issue</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">95
</FONT>

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<!-- link2 "ITEM 10. ADDITIONAL INFORMATION" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADDITIONAL
INFORMATION</FONT></B>

<P align="left">
<B><FONT size="2">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share
Capital</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Memorandum and
Articles of Association</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell was incorporated on August&nbsp;6, 1998
as a variable capital corporation (<I>sociedad an&#243;nima de
capital variable</I>) established under the laws of Mexico.
Iusacell was registered in the Public Registry of Commerce of
the Federal District of Mexico under Commercial Number 242349 on
November&nbsp;3, 1998. We were formed initially for the purpose
of acquiring and holding the shares of Grupo Iusacell Celular,
S.A. de C.V. On March&nbsp;8, 2001, Iusacell&#146;s shareholders
approved new by-laws, which became effective on April&nbsp;4,
2001, upon the closing of the sale by the Peralta Group to
Vodafone of its series&nbsp;A and series&nbsp;V shares in
Iusacell. On April&nbsp;30, 2002, Iusacell&#146;s shareholders
approved amendments to its by-laws, in order to reflect certain
provisions of the Mexican Securities Market law (<I>Ley del
Mercado de Valores</I>).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s corporate purpose is found under
Article&nbsp;Two of its by-laws. Iusacell&#146;s primary purpose
is to act as a holding company. The duration of our existence
under our by-laws is indefinite.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, any member of the Board of
Directors who has a conflict of interest with Iusacell in any
transaction must disclose such fact to the other members of the
Board of Directors and abstain from voting on such matter at the
relevant meeting of the Board of Directors. Any member of the
Board of Directors who violates such provision may be liable for
damages caused to us. Additionally, members of the Board of
Directors may not represent any shareholders at any
shareholders&#146; meeting.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting Rights
and Shareholders&#146; Meetings</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each series&nbsp;A and series&nbsp;V share
entitles the holder to one vote at any general meeting of the
shareholders of Iusacell. Series&nbsp;A shareholders are
entitled to vote at a special meeting of the series A
shareholders to elect seven of the twelve members of our Board
of Directors and the corresponding alternate directors.
Series&nbsp;V shareholders are entitled to vote at a special
meeting of the series V shareholders to elect five of the twelve
members of our Board of Directors and the corresponding
alternate directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our by-laws, any shareholder or group of
shareholders holding shares of one same series of Iusacell
shares representing at least 10% of the total capital stock of
Iusacell, shall be entitled to designate one director
corresponding to such series of shares and the corresponding
alternate director for each 10% of the total capital stock of
Iusacell represented by the shares of such series held by such
shareholder or group of shareholders. In addition, any Qualified
Minority Shareholder shall be entitled, acting at a special
shareholders meeting, to designate and, as the case may be,
remove or substitute a member of each Committee, which shall be
one of the members designated by series&nbsp;V shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, the holders of shares of any
series (or category of holders such as the Qualified Minority
Shareholder) are also entitled to vote at a special meeting of
the holders of shares of such series or category of holders on
any action that would prejudice the rights of such holders, and
such a holder would be entitled to judicial relief against any
such action taken without the approval of the required majority
of holders of the relevant series or category of holders at such
a meeting. Any determination that an action does not require a
vote at a special meeting would be subject to judicial challenge
by an affected shareholder, and the necessity for a vote at a
special meeting would ultimately be determined by a court.
Mexican law does not provide extensive guidance on the criteria
to be applied in making such a determination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General shareholders&#146; meetings may be
ordinary or extraordinary meetings. Extraordinary general
meetings are meetings called to consider the matters specified
in Article&nbsp;182 of the <I>Ley General de Sociedades
Mercantiles,</I> which we refer to as the Mexican Companies Law,
including, principally, changes in the fixed share capital, any
amendments to the by-laws, liquidation, issuance of preferred
stock, merger, transformation from one type of company to
another, change in nationality and change of corporate purpose.
Under our
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">by-laws, an extraordinary general
shareholders&#146; meeting may also be called to consider
certain items (so long as they have not been approved at a
meeting of the Board of Directors or Executive Committee of the
Board of Directors) for which our by-laws require a
supermajority vote, as generally identified in Item&nbsp;7,
&#147;Major Shareholders and Related Party
Transactions&nbsp;&#151; Major Shareholders&nbsp;&#151;
Governance.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General shareholders&#146; meetings called to
consider all other matters are ordinary meetings. An ordinary
general meeting of the shareholders of Iusacell must be held at
least annually during the four months following the end of each
fiscal year to consider matters specified in Article&nbsp;181 of
the Mexican Companies Law, including, principally, the approval
of the report of the Board of Directors regarding the
performance of Iusacell, the approval of the financial
statements of Iusacell for the preceding fiscal year,
appointment of directors and statutory auditors and
determination of their compensation, and the declaration of
dividends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special meetings are meetings of the holders of a
particular series of shares or category of holders called to
consider matters relevant only to holders of such series of
shares or category of holders or which would prejudice the
rights of such holders. Special meetings of the series&nbsp;A
and the series&nbsp;V shareholders and the Qualified Minority
Shareholders, respectively, are to be held at least once a year
if necessary to elect the members of the Board of Directors (or
any committee of the Board of Directors) representing such
shareholders and to address other matters relating to the
relevant series or category of holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our by-laws, the quorum on a first call for
an ordinary general shareholders&#146; meeting of the
series&nbsp;A and series&nbsp;V shareholders is at least 50%
plus one share of the outstanding series&nbsp;A and
series&nbsp;V shares. If a quorum is not available on the first
call, a second meeting may be called and validly held regardless
of the number of shares represented. In order for a resolution
of the ordinary general shareholders meeting to be validly
adopted as a result of a first or subsequent call, attendance by
and the favorable vote of the holders of a majority of the
series A shares is required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The quorum on a first call for an extraordinary
general meeting is 75% of the outstanding shares. If a quorum is
not available on the first call, a second meeting may be called
and convened, provided that at least 50% plus one share of the
outstanding shares are present. Whether on a first or second
call, in order for a resolution of an extraordinary general
meeting to be validly adopted, the favorable vote of the holders
of a majority of the outstanding shares, including a majority of
the outstanding series A shares, is required; provided, however,
that the affirmative vote of at least 75% of the outstanding
series A shares is required to approve the supermajority items
referred to above as well as to approve amendments to certain
provisions of the by-laws and the early dissolution of Iusacell
and the designation of the corresponding liquidators.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The quorum on a first call for a special meeting
is 75% of the outstanding shares of the corresponding series or
category of holders. If a quorum is not available on the first
call, a second meeting may be called and convened, provided that
at least 51% of the outstanding shares of the corresponding
series or category of holders, as the case may be, are present.
Whether on a first or second call for a special meeting to take
action, the favorable vote of a majority of the outstanding
shares of the corresponding series or category of holders is
required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The by-laws require the approval of holders of at
least 95% of the outstanding shares of Iusacell and the approval
from the CNBV for the amendment of the controlling
shareholders&#146; obligation specified in Article&nbsp;30 of
the by-laws for the repurchase of shares in the event of
delisting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of ADSs are entitled to instruct the
depositary as to the exercise of the voting rights pertaining to
the series&nbsp;V shares represented by the ADSs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, holders of 20% of our
outstanding capital stock may have any shareholder action set
aside by filing a complaint with a Mexican court of competent
jurisdiction within 15&nbsp;days after the close of the general
shareholders&#146; meeting at which such action was taken, by
showing that the challenged action violates Mexican law or our
by-laws. Relief under these provisions is only available to
holders:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">whose shares were not represented when the action
    was taken or, if represented, were voted against it; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">whose complaint makes reference to the clause of
    the by-laws or the legal provision that was infringed.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">97
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shareholders&#146; meetings may be called by the
Board of Directors, any of the statutory auditors or any Mexican
court of competent jurisdiction. In addition, the Board of
Directors or any of the statutory auditors may be required to
call a meeting of shareholders upon the written request of
holders of 10% of the outstanding capital stock. In addition,
the Board of Directors or the statutory auditors must call a
shareholders&#146; meeting at the written request of any
shareholder if no ordinary general shareholders&#146; meeting
has been held for two consecutive years or if the
shareholders&#146; meetings held during such period have not
considered the items mentioned in Article&nbsp;181 of the
Mexican Companies Law discussed above. Notice of a meeting must
be published in the Official Gazette of the Federation
(<I>Diario Oficial de la Federaci&#243;n</I>) and in a newspaper
of general circulation in Mexico City at least 15&nbsp;days
prior to the meeting. In order to attend a shareholders&#146;
meeting, a shareholder must request and obtain an admission card
by furnishing, at least 48&nbsp;hours before the time set for
holding the shareholders&#146; meeting, appropriate evidence of
its ownership of shares or depositing such shares with our
corporate secretary of the Board or with an institution
authorized to accept such deposit. If so entitled to attend the
meeting, a shareholder may be represented by proxy signed before
two witnesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, an action for civil
liabilities against members of the Board of Directors may be
initiated by a shareholders&#146; resolution taken at a general
shareholders&#146; meeting. In the event shareholders decide to
bring such an action, the persons against whom such action is
brought will immediately cease to be members of the Board of
Directors. Additionally, shareholders representing not less than
15% of the outstanding shares of Iusacell may directly take such
action against members of the Board of Directors, provided that
(i)&nbsp;such shareholders have not voted in favor of a
resolution approved at the relevant general shareholders&#146;
meeting pursuant to which it was resolved not to take any action
against the directors who are to be sued, and (ii)&nbsp;the
claim in question covers damages alleged to have been caused to
Iusacell and not only to the individual plaintiffs&#146;
interests.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shareholder
Conflicts of Interest</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, any shareholder that has a
conflict of interest in connection with any transaction must
abstain from voting at the relevant shareholders&#146; meeting.
A shareholder that votes on a business transaction in which his
interest conflicts with that of Iusacell may be liable for
damages if the transaction would not have been approved without
such shareholder&#146;s vote.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividend
Rights</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each series&nbsp;A and series&nbsp;V share has
the same dividend rights. The declaration and payment of such
dividends will depend upon Iusacell&#146;s results of
operations, financial conditions, cash requirements, future
prospects and other factors deemed relevant by the shareholders.
In addition, Mexican law provides that Mexican companies may
only pay dividends from retained earnings included in the
year-end financial statements that have been approved by their
shareholders. Dividends may be paid only after all losses for
previous years have been paid for, a legal reserve equal to 20%
of paid-in capital has been achieved and shareholders have
approved the dividend payment. Some of Iusacell&#146;s
subsidiaries, including Iusacell Celular, have outstanding debt
obligations which limit the amount of dividends that can be paid
in any given year or prohibit dividends entirely. Iusacell and
its subsidiaries may agree to similar restrictions in the future
as they incur additional debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with the Iusacell Shareholders
Agreement, each of Verizon and Vodafone has the right to cause
Iusacell to pay dividends during any fiscal year in an amount of
up to 25% of the consolidated net income for the prior fiscal
year, provided that such payment is not in violation of
applicable law or contractual provisions and would not adversely
affect the foreseeable cash flow or capital requirements of
Iusacell. Consolidated net income for these purposes will be
determined in accordance with Mexican GAAP. However, the
Iusacell Shareholders Agreement provides that, if consolidated
net income so determined exceeds consolidated net income
determined in accordance with U.S.&nbsp;GAAP by more than 10%,
consolidated net income will be determined in accordance with
U.S.&nbsp;GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Iusacell Shareholders Agreements also
provides that any declaration and/or payment of dividends that
would (i)&nbsp;in any fiscal year exceed 25% of Iusacell&#146;s
consolidated net income for the prior fiscal year or
(ii)&nbsp;be subject to Mexican withholding tax (except for
dividends required by Vodafone or Verizon, as
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">discussed above) may be made only upon the
approval of holders of a majority of all outstanding shares,
including holders of a majority of the series&nbsp;A shares.
Under Mexican law, shareholders approve the declaration and
payment of dividends generally, but not necessarily, upon the
recommendation of the Board of Directors.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of ADSs on the applicable record date are
entitled to receive dividends declared on the shares underlying
series&nbsp;V ADSs. The depositary will fix a record date for
the holders of ADSs in respect of each dividend distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the annual ordinary general meeting of
shareholders of Iusacell, the Board of Directors will generally
submit the financial statements of Iusacell for the previous
fiscal year, together with a report by the Board of Directors,
to the series&nbsp;A and series&nbsp;V shareholders for their
approval. The series&nbsp;A and series&nbsp;V shareholders,
having approved the financial statements, will determine the
allocation of Iusacell&#146;s net profits for such fiscal year.
At least 5% of such net profits must be allocated to a legal
reserve until the amount of the legal reserve equals 20% of
Iusacell&#146;s capital stock. Such reserve is not available for
distribution except as a stock dividend. Additional amounts may
be allocated to other reserve funds as the shareholders
determine including a reserve to repurchase shares. The
remaining balance of net profits, if any, is available for
distribution as dividends but only after losses, if any, of
previous years have been paid for.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares of each series outstanding at the time
a dividend or other distribution is declared are entitled to
share pro rata in such dividend or other distribution.
Partially-paid shares participate in any distribution to the
extent that such shares have been paid at the time of the
distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The covenants contained in the Iusacell Indenture
limit Iusacell&#146;s ability to declare and distribute
dividends to its shareholders. The covenants contained in the
Iusacell Celular Indenture and in the terms of the Senior
Refinancing Secured Loan limit Iusacell Celular&#146;s ability
to declare and distribute dividends to Iusacell.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that we are liquidated, one or more
liquidators must be appointed at an extraordinary general
shareholders&#146; meeting to wind up our affairs. All
outstanding shares would be entitled to participate equally in
any distribution upon liquidation. Partially-paid shares
participate in any distribution to the extent that such shares
have been paid at the time of the distribution.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Changes in Share Capital and Rights of
    Shareholders</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An increase of capital stock may be effected
through the issuance of new shares for payment in cash or in
kind, by capitalization of indebtedness or by capitalization of
certain items of shareholders&#146; equity. No increase of
capital stock may be effected until all previously issued shares
of capital stock have been fully paid. A reduction of capital
stock may be effected to absorb losses, to make reimbursements
to shareholders, or to release shareholders from payments not
made. A reduction of capital stock to absorb losses may be
effected by reducing the value of all outstanding shares. A
reduction of capital stock shall also be effected on a pro rata
basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shareholders may also approve the redemption of
fully-paid shares with retained earnings. Such a redemption
would be effected by a repurchase of shares listed on the
Mexican Stock Exchange or by lot.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The by-laws require that, unless a
shareholders&#146; meeting resolves otherwise, any capital
increase effected pursuant to a capital contribution be
represented by new series&nbsp;A and series&nbsp;V shares in
proportion to the number of shares of each such series
outstanding. Our by-laws provide that the series&nbsp;V shares
may not exceed 50% less one share of our capital stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fixed portion of our capital stock may only
be increased or decreased by resolution of an extraordinary
general meeting and an amendment to the by-laws, whereas the
variable portion of our capital stock may be increased or
decreased by resolution of an ordinary general meeting of
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No resolution by the shareholders is required for
decreases in capital stock based on exercise of the right to
withdraw variable shares and of the purchase by Iusacell of our
own shares or for increases based on offers by us of shares we
had previously purchased.
</FONT>

<P align="center"><FONT size="2">99
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Preemptive Rights</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of a capital increase through the
issuance of new shares for payment in cash or in kind, a holder
of existing shares has a preferential right to subscribe for a
sufficient number of new shares to maintain the holder&#146;s
existing proportionate holdings of shares. Preemptive rights
must be exercised within the period and under the conditions
established for such purpose by the shareholders, and under
Mexican law and our by-laws in no case may such period be less
than 15&nbsp;days and no greater than 30&nbsp;days following the
publication of notice of the capital increase in the Official
Gazette of the Federation or following the date of the
shareholders&#146; meeting at which the capital increase was
approved if all shareholders were represented. Otherwise, such
rights will lapse.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, preemptive rights may not be
waived in advance by a shareholder, and cannot be represented by
an instrument that is negotiable separately from the
corresponding share. Holders of ADSs that are U.S. persons or
are located in the United States may be restricted in their
ability to participate in the exercise of preemptive rights.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Other Provisions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fixed and
Variable Capital, Withdrawal Rights</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a <I>sociedad an&#243;nima de capital
variable</I>, we may issue shares constituting fixed capital and
shares constituting variable capital. The issuance of variable
capital shares, unlike the issuance of fixed capital shares,
does not require an amendment of our by-laws, although it does
require approval at an ordinary general meeting of shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the by-laws and CNBV regulations, variable
capital may not be greater than ten times the minimum fixed
portion of our capital stock specified in the by-laws. No shares
of Iusacell representing variable capital are currently
outstanding. Outstanding variable capital shares may be fully or
partially withdrawn. In contrast, the minimum fixed capital
required by law cannot be withdrawn. A holder of variable
capital shares that wishes to effect a total or partial
withdrawal of such shares would be required to notify us in an
authenticated written notice to that effect. If we received that
notice prior to the last quarter of the fiscal year, the
withdrawal would become effective at the end of the fiscal year
in which the notice was given. Otherwise, the withdrawal would
become effective at the end of the following fiscal year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Redemption of variable capital shares of Iusacell
would be made at the lower of (i)&nbsp;95% of the average share
price quoted on the Mexican Stock Exchange during the 30
business days prior to the date on which the withdrawal were to
become effective or (ii)&nbsp;the book value per variable
capital share as calculated from our financial statements for
the fiscal year at the end of which the withdrawal were to
become effective, as approved by our shareholders at an ordinary
general meeting. Any such amount to be paid by Iusacell would
become due on the day following such ordinary general meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The covenants contained in the Iusacell Indenture
limit Iusacell&#146;s ability to issue variable capital shares.
The covenants contained in the Iusacell Celular Indenture and
the Senior Credit Refinancing Secured Loan limit Iusacell
Celular&#146;s ability to issue variable capital shares.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Forfeiture of Shares</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As required by Mexican law, Iusacell&#146;s
by-laws provide that &#147;current or future foreign
shareholders of the Company agree with the Ministry of Foreign
Relations to consider themselves as Mexican nationals with
respect to the shares that they may acquire or of which they may
be owners, and therefore not to invoke the protection of their
governments with respect to such shares under penalty, should
they violate this agreement, of forfeiting for the benefit of
the Nation the shares that they may have acquired.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the opinion of de Ovando y Mart&#237;nez del
Campo, S.C., special Mexican counsel to Iusacell and Iusacell
Celular, under this provision a non-Mexican shareholder is
deemed to have agreed not to invoke the protection of his own
government by requesting such government to interpose a
diplomatic claim against the Mexican government with respect to
its rights as a shareholder, but is not deemed to have waived
any other rights it may have with respect to its investment in
Iusacell, including any rights under U.S. securities laws (the
enforceability of which may be challenged in Mexico).
</FONT>

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</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the shareholder should invoke such
governmental protection in violation of this agreement, its
shares could be forfeited to the Mexican government. Mexican law
requires that such a provision be included in the by-laws of all
Mexican corporations unless such by-laws prohibit ownership of
capital stock by foreign investors.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Purchase of Our Own Shares</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">According to Mexican law, we may repurchase any
series of our shares on the Mexican Stock Exchange at any time
at the then prevailing market price. Any such repurchase must be
done by affecting our shareholders&#146; equity account, while
we hold the repurchased shares, or by reducing our capital
stock, if such shares are to be converted into treasury stock.
No resolution from a shareholders meeting is required for such
reduction, but a shareholders meeting must approve, for each
year, the maximum amount of funds that may be used to repurchase
shares, which amount may not exceed the amount of our net
earnings (including retained earnings). During the period we own
repurchased shares, such shares may not be represented at any
shareholders&#146; meeting. Repurchased shares may be placed
among the investing public, without the need of approval from
our Board of Directors or shareholders, and the corresponding
capital increase shall not require a resolution of a
shareholders&#146; meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The covenants contained in the Iusacell Indenture
limit Iusacell&#146;s ability to repurchase its own shares. The
covenants contained in the Iusacell Celular Indenture and in the
terms of the Senior Refinancing Secured Loan limit Iusacell
Celular&#146;s ability to repurchase its own shares.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Repurchase in the Event of Delisting</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that the registration of our shares
in the Securities Section of the RNV is canceled, whether upon
our request or pursuant to a resolution adopted by the CNBV, our
by-laws and CNBV regulations require that our controlling
shareholders make a public offer to purchase the shares owned by
minority holders. The shares must be purchased by our
controlling shareholders at the higher of (i)&nbsp;the average
quotation price of the shares for the 30&nbsp;trading days prior
to the date of the offer or (ii)&nbsp;the book value of the
shares, as reflected in the last quarterly report filed with the
CNBV and the Mexican Stock Exchange prior to the date of the
offer. If after said offer our controlling shareholders fail to
acquire 100% of our capital stock, the cancellation of the
registration of our shares will not become effective until our
controlling shareholders have created a trust with the funds
required to purchase the remaining shares at the same offering
price, with such trust being effective for at least 2&nbsp;years.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Appraisal Rights</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Whenever the shareholders approve a change of
corporate purpose, change of nationality, spin-off or
transformation from one type of corporate form to another, any
shareholder entitled to vote on such change or transformation
who has voted against it has the right to withdraw from Iusacell
and receive an amount generally equivalent to the book value of
our shares (in accordance with our last balance sheet approved
by a shareholders&#146; meeting), provided such shareholder
exercises its right to withdraw within 15&nbsp;days following
the adjournment of the meeting at which the change or
transformation was approved.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Foreign Investment Regulation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Foreign investment in capital stock of Mexican
corporations in certain economic sectors, including telephone
and cellular services, is regulated by the 1993 Foreign
Investment Law, as amended, and the regulations issued under
that law in 1998, which we refer to as the 1998 Regulations.
Under the 1993 Foreign Investment Law, foreign investment is
defined in general as the participation of foreign investors in
the voting capital stock of Mexican corporations and in
activities which are regulated by the 1993 Foreign Investment
Law. Foreign investors are defined as non-Mexican individuals,
non-Mexican legal entities and foreign entities without legal
personality.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican Foreign Investment Commission, the
Mexican Foreign Investment Bureau and the Mexican National
Registry of Foreign Investment are responsible for the
administration of the 1993 Foreign Investment Law and the 1998
Regulations. In order to comply with foreign investment
restrictions, Mexican companies that are engaged in specified
restricted industries typically limit particular classes of
their stock to
</FONT>

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<DIV align="left">
<FONT size="2">ownership by Mexican individuals and by Mexican
corporations in which foreign investment has a minority
participation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a general rule, the 1993 Foreign Investment
Law allows foreign investment in up to 100% in the capital stock
of Mexican companies, except for those engaged in specified
restricted industries, such as basic telephone service, where
foreign investment is limited to 49% of the voting capital
stock. Foreign investment may, however, participate in a
proportion in excess of 49% of the voting capital stock of a
Mexican corporation engaged in the cellular telephone business
previous approval of the Mexican Foreign Investment Commission.
Iusacell has received such approval and, as a result, neither
our series A nor our series&nbsp;V shares are restricted to
Mexican ownership. See Item&nbsp;4, &#147;Information on the
Company&nbsp;&#151; Business Overview&nbsp;&#151; Government
Regulation&nbsp;&#151; Foreign Ownership Restrictions.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Foreign states and foreign governments are
prohibited under the 1995 Telecommunications Law from holding a
concession or permit to provide telecommunications services,
from receiving any such concession or permit as a guarantee, or
from being the beneficiary of any such guarantee or from
directly or indirectly owning shares of Iusacell.
</FONT>

<P align="left">
<B><FONT size="2">C.&nbsp;&nbsp;Material Contracts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1997, Iusacell Celular entered into
an agreement with subsidiaries of Lucent Technologies, Inc.
pursuant to which Iusacell Celular agreed (i)&nbsp;to replace
its existing analog wireless cellular network with a new Lucent
Technologies digital and analog network for a minimum
consideration of U.S.$188.0&nbsp;million which. network swap-out
was completed in August 1999, and (ii)&nbsp;to continue
acquiring network equipment and services under the agreement in
order to improve its digital and analog network. Through
December&nbsp;31, 2001, Iusacell Celular has purchased
approximately U.S.$409.9&nbsp;million of network equipment and
services under this agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, Iusacell Celular, as a first
step toward minimizing its involvement in real estate management
and tower maintenance business, entered into an agreement with
MATC Celular, a Mexican subsidiary of American Tower Corporation
pursuant to which MATC Celular could acquire the majority of
towers currently owned and/or operated by Iusacell Celular. In
return, Iusacell would lease space on those towers and sublease
them to its operating subsidiaries. In 2001, we sold 244 towers
to MATC Celular, receiving in excess of U.S.$34 million in net
book gains. In May 2002, we sold 25 additional non-strategic
towers receiving in excess of U.S.$4.2&nbsp;million in net
gains. We expect to sell up to an additional 61 towers to MATC
Celular during the remainder of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See also, Item&nbsp;5, &#147;Operating and
Financial Review and Prospects&#151;Liquidity and Capital
Resources&nbsp;&#151; Liquidity,&#148; for a summary of
Iusacell&#146;s material credit agreements and indentures.
</FONT>

<P align="left">
<B><FONT size="2">D.&nbsp;&nbsp;Exchange Controls</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are currently no exchange controls in
Mexico; however, Mexico has imposed foreign exchange controls in
the past. Pursuant to the provisions of the North American Free
Trade Agreement and in the event Mexico experiences serious
balance of payment difficulties or the threat thereof in the
future, Mexico remains free to impose foreign exchange controls
on investments made in Mexico, including those made by U.S. and
Canadian investors.
</FONT>

<P align="left">
<B><FONT size="2">E.&nbsp;&nbsp;Taxation</FONT></B>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general summary of material
U.S. and Mexican federal income tax consequences of the
acquisition, ownership and disposition of Iusacell ADSs, the
Iusacell Celular 10% senior notes due 2004 and the Iusacell
14&nbsp;1/4% senior notes due 2006 (the &#147;Note&#148; or the
&#147;Notes&#148;) by U.S. holders.
</FONT>

<P align="center"><FONT size="2">102
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of this summary, a &#147;U.S.
holder&#148; is any holder of any of such securities that is,
for United States federal income tax purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a citizen or resident of the United States;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a corporation, partnership, or other entity
    created or organized in or under the laws of the United States,
    or any political subdivision thereof;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an estate the income of which is includible in
    gross income for United States federal income tax purposes
    regardless of source; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a trust if a court within the United States is
    able to exercise primary supervision over the administration of
    the trust and one or more United States persons have the
    authority to control all substantial decisions of the trust.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary does not constitute, and should not
be construed as, legal or tax advice to holders of Iusacell ADSs
or Notes. This summary does not purport to consider all the
possible U.S. or Mexican federal income tax consequences of the
purchase, ownership and disposition of the Iusacell ADSs or
Notes and is not intended to reflect the individual tax position
of any beneficial owner thereof. The summary is based upon
Mexican federal tax laws, their regulations and administrative
rules issued by the Mexican Ministry of Finance and Public
Credit, the Tax Treaty mentioned below and the Internal Revenue
Code of 1986, as amended (the &#147;Code&#148;), U.S. Treasury
regulations promulgated thereunder, published rulings by the
U.S. Internal Revenue Service (&#147;IRS&#148;) and court
decisions, all as in effect as of the date hereof, all of which
authorities are subject to change or differing interpretations,
which changes or differing interpretations could apply
retroactively. Readers are cautioned that this is not a complete
analysis or listing of all potential tax effects that may be
relevant to a decision to purchase, hold or dispose of the
Iusacell ADSs or Notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary of U.S. federal income tax
consequences is limited to investors who hold the Iusacell ADSs
or Notes as &#147;capital assets&#148; within the meaning of
section 1221 of the Code (i.e., generally, property held for
investment) and does not purport to deal with investors in
special tax situations, such as financial institutions, tax
exempt organizations, insurance companies, regulated investment
companies, dealers in securities or currencies, persons holding
notes as a hedge against currency risks or as a position in a
&#147;straddle,&#148; &#147;conversion transaction,&#148; or
&#147;constructive sale&#148; transaction for tax purposes,
persons owning (actually or constructively) 10% or more of the
voting shares of the Company, or persons whose functional
currency (as defined in section 985 of the Code) is not the U.S.
dollar. In general, for U.S. federal income tax purposes,
holders of Iusacell ADSs will be treated as the owners of the
series V shares represented by those Iusacell ADSs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders and prospective purchasers of the
Iusacell ADSs or Notes should consult their own tax advisors
concerning the application of Mexican and U.S. federal income
tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the
Iusacell ADSs or Notes arising under the laws of any state,
locality or foreign government or other taxing jurisdiction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexico and the United States have signed and
ratified a Convention for the Avoidance of Double Taxation and
the Prevention of Tax Evasion with Respect to Taxes on Income
and related Protocols (collectively, the &#147;Tax
Treaty&#148;). The Tax Treaty is currently in effect and
provisions of the Tax Treaty that may affect holders of Iusacell
ADSs or Notes are summarized below. Holders should consult with
their tax advisors as to their entitlement to the benefits
afforded by the Tax Treaty. Mexico has also executed treaties to
avoid double taxation with other countries as well as agreements
providing for the exchange of information with respect to tax
matters, some of which presently are in force. The following
summary does not take into account the effect of any such
treaties. Readers should consult their tax advisors as to their
entitlement to the benefits afforded by such other treaties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S. Treasury has expressed concerns that
parties to whom ADSs are released may be taking actions that are
inconsistent with the claiming of foreign tax credits for U.S.
holders of ADSs. Accordingly, the analysis of creditability of
Mexican taxes described below could be affected by future
actions that may be taken by the U.S. Treasury.
</FONT>

<P align="center"><FONT size="2">103
</FONT>

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<P align="left">
<B><FONT size="2">Taxation of Distributions of Iusacell
ADSs</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">U.S.
Federal Income Tax Considerations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributions paid out of Iusacell&#146;s current
or accumulated earnings and profits (as determined for U.S.
federal income tax purposes) with respect to the series V shares
represented by Iusacell ADSs will be includible in the gross
income of a U.S. holder as ordinary income when the
distributions are received by the depositary or by the U.S.
holder of a certificated ADS, and will not be eligible for the
dividends received deduction otherwise allowable to U.S. holders
that are corporations. To the extent that a distribution exceeds
earnings and profits, it will be treated first as a return of
the U.S. holder&#146;s tax basis to the extent of such tax
basis, and then as gain from the sale or disposition of a
capital asset. A U.S. holder must include in gross income as
ordinary income the gross amount of such dividends, including
any Mexican tax withheld therefrom, without regard to whether
any portion of such tax may be refunded to the U.S. holder by
the Mexican tax authorities. The amount of any dividend paid in
pesos will equal the U.S. dollar value of the pesos received,
calculated by reference to the exchange rate in effect on the
date the distribution is includible in income, regardless of
whether the pesos are converted into U.S. dollars. For U.S.
holders, that date would be the date the depositary receives the
dividend, regardless of whether the pesos are converted into
U.S. dollars. In addition, if dividends received in pesos are
not converted into U.S. dollars on the day they are received,
U.S. holders may recognize foreign currency gain or loss
(generally treated as ordinary gain or loss) upon the
disposition of such pesos measured by the differences between
such U.S. dollar value and the amount realized on such
disposition. Distributions generally will constitute foreign
source &#147;passive income&#148; (or, in the case of some
holders, &#147;financial services income&#148;) for U.S. foreign
tax credit purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to certain conditions and limitations,
the Mexican tax withheld from dividend payments on Iusacell ADSs
(as described below under &#147;&#151;&nbsp;Mexican Tax
Considerations&#148;) will be treated as foreign income tax that
may be deducted from taxable income or credited against a U.S.
holder&#146;s U.S. federal income tax liability. However, the
Mexican tax may be deducted only if the U.S. holder does not
claim a credit for any Mexican or other foreign taxes paid or
accrued in that year. The foreign tax credit provisions are
complex, and U.S. holders are urged to consult their own tax
adviser as to the availability, if any, of a tax credit or
deduction to them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributions of additional series V shares, if
any, to U.S. holders of Iusacell ADSs that are made as part of a
pro rata distribution to all shareholders of Iusacell generally
will not be subject to U.S. federal income tax.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Mexican
Tax Considerations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Apart from any liability that may result to
Iusacell from our paying of dividends to our shareholders,
dividends, either in cash or in any other form, paid with
respect to the series V shares represented by Iusacell ADSs,
will not be subject to a Mexican withholding tax.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxation of
Capital Gains of Iusacell ADSs</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">U.S.
Federal Income Tax Considerations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, upon the sale or other disposition of
Iusacell ADSs, a U.S. holder generally will recognize gain or
loss equal to the difference between the amount realized on such
sale or disposition (if the amount realized is denominated in a
foreign currency then its U.S. dollar equivalent, determined at
the spot rate on the date of disposition) and the U.S.
holder&#146;s adjusted tax basis in the shares (in U.S.
dollars). Such gain or loss will be treated as capital gain or
loss if the Iusacell ADSs were held as a capital asset and will
be long-term capital gain or loss if the Iusacell ADSs have been
held for more than one year on the date of such sale or other
disposition. For this purpose, a U.S. holder&#146;s holding
period for the Iusacell ADSs will generally include its holding
period for the Iusacell Celular ADSs. The deductibility of
capital losses is subject to limitations. Gain or loss
recognized by a U.S. holder on a sale or other disposition of
Iusacell ADSs generally will be treated as from sources within
the United States for U.S. federal income tax purposes.
</FONT>

<P align="center"><FONT size="2">104
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Mexican
Tax Considerations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sale or other disposition of Iusacell ADSs by
holders who are non-residents of Mexico (as described below)
will not be subject to Mexican tax. Deposits of shares in
exchange for Iusacell ADSs and withdrawals of shares in exchange
for Iusacell ADSs will not give rise to Mexican tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gains realized by an individual who is not a
resident of Mexico on the sale or other disposition of shares
representing capital stock of a Mexican corporation (like
Iusacell) through a recognized stock exchange, currently the
Mexican Stock Exchange only, are exempt from Mexican income tax
if the stock is on the list of publicly-traded shares published
by the Ministry of Finance and Public Credit through general
rules. The Iusacell series V shares are currently included on
that list. The proceeds from the sale or other disposition by an
entity that is not a resident of Mexico of shares representing
capital stock of a Mexican corporation (like Iusacell) through a
recognized stock exchange, currently the Mexican Stock Exchange
only, will be subject to a 5% withholding if the stock is on the
list of publicly-traded shares published by the Ministry of
Finance and Public Credit through general rules. However, under
general rules issued by the Ministry of Finance and Public
Credit on May&nbsp;30, 2002 and in effect until
February&nbsp;28, 2003, nonresident entities are given the right
not to pay said tax while said general rules are in effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under current law, gains realized by a
non-resident holder on the sale or disposition of shares not
conducted through a recognized stock exchange generally are
subject to a Mexican tax at a rate of 25% of the gross sales
price. However, if the holder is a resident of a country which
is not considered to be a low tax rate country (by reference to
a list of low rate countries published by the Mexican Ministry
of Finance and Public Credit), the holder may elect to designate
a resident of Mexico as its representative, in which case taxes
would be payable at a maximum rate of 35% on the gain on such
disposition which maximum rate will be gradually reduced by one
percent per year until 2005. In 2005 and thereafter, said
maximum rate will be 32%. The United States is not considered to
be a low tax rate country.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, even if the sale is not conducted
through a recognized stock exchange, pursuant to the Tax Treaty
gains realized by qualifying U.S. holders from the sale or other
disposition of shares will not be subject to Mexican income tax
so long as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">less than 50% of the assets of Iusacell consist
    of real property situated in Mexico;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">such U.S. holder did not own 25% or more of the
    shares representing capital stock of Iusacell, directly or
    indirectly, during the 12-month period preceding such
    disposition; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the gain is not attributable to a permanent
    establishment of the U.S. holder in Mexico.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Brokerage commissions paid in connection with
transactions on the Mexican Stock Exchange are subject to a
value added tax of 15%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of Mexican taxation, an individual
is a resident of Mexico if he or she has established his or her
home in Mexico, unless he or she has resided in another country
for more than 183&nbsp;days, whether consecutive or not, during
a calendar year and can demonstrate that he or she has become a
resident of that other country for tax purposes. An individual
of Mexican birth is deemed to be a Mexican resident for tax
purposes, unless proof is submitted to the contrary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A legal entity is a resident of Mexico if it
(i)&nbsp;was established under Mexican law or (ii)&nbsp;has its
main management in Mexico. If a legal entity has a permanent
establishment in Mexico, such permanent establishment shall be
required to pay taxes in Mexico on income attributable to such
permanent establishment in accordance with relevant tax
provisions.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Mexican
Taxes</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no inheritance or succession taxes
applicable to the ownership, transfer or disposition of Iusacell
ADSs or shares. There are no Mexican stamp, registration or
similar taxes or duties payable by holders of Iusacell ADSs or
shares.
</FONT>

<P align="center"><FONT size="2">105
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information
Reporting and Backup Withholding</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each U.S. holder who holds ADSs through a broker
participating in the Depositary Trust Company (&#147;DTC&#148;),
or indirect participant holding Iusacell ADSs through DTC on
behalf of a beneficial owner and each paying agent making
payments in respect of Iusacell ADSs will generally be required
to provide the IRS with information, including the name, address
and taxpayer identification number of the beneficial owner of
the Iusacell ADSs, and the aggregate amount of dividends and
sale proceeds paid to such beneficial owner during the calendar
year. These reporting requirements, however, do not apply with
respect to certain beneficial owners, including corporations,
securities broker-dealers, other financial institutions,
tax-exempt organizations, qualified pension and profit sharing
trusts and individual retirement accounts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a beneficial owner of Iusacell
ADSs fails to establish its exemption from such information
reporting requirements or is subject to the reporting
requirements described above and fails to supply its correct
taxpayer identification number in the manner required by
applicable law, or underreports its tax liability, as the case
may be, a holder may be subject to backup withholding at the
rate of 30% in 2002 and 2003 (and at a lower rate in subsequent
years) with respect to dividends and proceeds from the sale or
disposition of Iusacell ADSs. This backup withholding tax is not
an additional tax and any amounts withheld from a payment to a
holder of Iusacell ADSs will be refunded (or credited against
such holder&#146;s U.S. federal income tax liability, if any)
provided that the required information is furnished to the IRS.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S. Treasury Department has issued final
regulations (the &#147;Regulations&#148;) that unify current
certification procedures and modify reliance standards. The
Regulations are generally effective for payments made on or
after January&nbsp;1, 2001. Potential investors and holders of
Iusacell ADSs should consult their own tax advisors concerning
the adoption of the Regulations and the potential effect on
their acquisition, ownership and disposition of Iusacell ADSs.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>United States
Tax Consequences to Holders of Notes</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Payments
of Interest and Additional Amounts</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, payments of interest and any
additional amounts (<I>i.e</I>., &#147;gross-up payment&#148;)
paid by Iusacell or Iusacell Celular (the &#147;Additional
Amounts&#148;) will be taxable to a U.S. holder as ordinary
income at the time such payments are accrued or are received, in
accordance with the U.S. holder&#146;s regular method of
accounting for Federal income tax purposes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Market
Discount</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a U.S. holder purchases a Note for less than
its principal amount, the difference will be treated as a
&#147;market discount&#148; for U.S. federal income tax purposes
subject to a <I>de minimis </I>exception.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the market discount rules, a U.S. holder
will be required to treat any payment on a Note, or any gain on
its sale, exchange, retirement or other disposition, as ordinary
income to the extent of the accrued market discount which was
not previously included in income. If the Note is disposed of in
a non-taxable transaction (other than a non-recognition
transaction described in section 1276(c) of the Code), accrued
market discount will be includible as ordinary income to the
U.S. holder as if it had sold the Note at its fair market value.
In addition, a U.S. holder may be required to defer, until the
maturity of a Note or its earlier disposition (including a
non-taxable transaction other than a transaction described in
section 1276(c) of the Internal Revenue Code), the deduction of
all or a portion of the interest expense in respect of any
indebtedness incurred or continued to purchase or carry the
Note. Market discount will be considered to accrue on a
straight-line basis during the period from the date of
acquisition to the maturity date of the Note, unless the U.S.
holder elects to accrue on a constant-yield basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A U.S. holder of a Note may elect to include
market discount in income as it accrues on either a ratable or a
constant yield basis. If a U.S. holder makes this election, the
rules regarding the treatment of gain upon the disposition of
the Note and upon the receipt of certain cash payments as
ordinary income and regarding the deferral of interest
deductions will not apply. Currently, if a U.S. holder elects to
include market discount in income as it accrues, the election
will apply to all market discount obligations acquired during or
after the first taxable year to which the election applies.
Currently this election may not be revoked without the consent
of the Internal Revenue Service.
</FONT>

<P align="center"><FONT size="2">106
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Amortizable
Bond Premium</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a U.S. holder purchases a Note for more than
the amount payable at maturity (or on an earlier call date),
that excess will be considered an &#147;amortizable bond
premium.&#148; This holder may elect to amortize the premium to
offset the interest and Additional Amounts from the Note such
holder would otherwise be required to include in income (subject
to special rules for early redemption provisions). In any tax
year, the holder can only use as much of the premium as the
constant yield method would allocate to that year. The U.S.
holder&#146;s basis in the Note will be reduced by the amount of
bond premium offset against interest and Additional Amounts.
Currently, if a U.S. holder elects to amortize the premium to
offset the interest from a Note, the election will apply to all
debt instruments acquired during or after the first taxable year
to which the election applies. Currently, this election may not
be revoked without the consent of the Internal Revenue Service.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Sale,
Exchange or Retirement of a Note</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as discussed above, upon the sale,
exchange or retirement of a Note, a U.S. holder generally will
recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and such
U.S. holder&#146;s adjusted tax basis in the Note. For this
purpose, the amount realized does not include any amount
attributable to accrued interest on the Note (which will be
taxable as such). A U.S.&nbsp;holder&#146;s adjusted tax basis
in a new note will generally be the cost of the Note plus the
market discount, if any, the U.S. holder previously included in
income <I>minus </I>any amortizable bond premium and any
payments other than payments of stated interest made on the
Note. Such gain or loss generally will be long-term capital gain
or loss if the Note has been held for more than one year at the
time of such sale, exchange or retirement. The deductibility of
capital losses is subject to limitations. Gain or loss
recognized by a U.S. holder on a sale or other disposition of a
Note generally will be treated as from sources within the United
States for U.S.&nbsp;federal income tax purposes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Foreign
Tax Credit and Effect of Withholding Taxes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest and Additional Amounts paid on Notes
will constitute income from sources outside the United States
for United States federal income tax purposes, and, with certain
exceptions, will be grouped together with other items of
&#147;passive&#148; income (or, in the case of some holders,
&#147;financial services income&#148;), for purposes of
computing the foreign tax credit allowable to a U.S. holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A U.S. holder will be required to include foreign
withholding taxes, if any, imposed on payments on a Note
(including any Additional Amounts payable by Iusacell or
Iusacell Celular) in gross income as interest income. Such
treatment will be required regardless of whether, as will
generally be true, Iusacell or Iusacell Celular is required to
pay additional amounts so that the amount of Mexican withholding
taxes does not reduce the net amount actually received by the
holder of the Note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to certain limitations, a U.S. holder may
be entitled to a credit against its United States Federal income
tax liability, or a deduction in computing its United States
Federal taxable income, for foreign income taxes withheld by
Iusacell or Iusacell Celular (which, as described above, would
include amounts withheld on Additional Amounts paid by Iusacell
or Iusacell Celular with respect to Mexican taxes). The foreign
tax credit provisions are complex, and U.S. holders are urged to
consult their own tax adviser as to the availability, if any, of
a tax credit or deduction to them.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Information
Reporting and Backup Withholding</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For each calendar year in which the Notes are
outstanding, each DTC participant or indirect participant
holding an interest in a Note on behalf of a beneficial owner of
a Note and each paying agent making payments in respect of a
Note will generally be required to provide the IRS with certain
information, including such beneficial owner&#146;s name,
address and taxpayer identification number (either such
beneficial owner&#146;s Social Security number or its employer
identification number, as the case may be), and the aggregate
amount of interest, principal and Additional Amounts paid to
such beneficial owner during the calendar year. These reporting
requirements, however, do not apply with respect to certain
beneficial owners, including corporations, securities
broker-dealers, other financial institutions, tax-exempt
organizations, qualified pension and profit sharing trusts and
individual retirement accounts.
</FONT>

<P align="center"><FONT size="2">107
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that a beneficial owner of a Note
fails to establish its exemption from such information reporting
requirement or is subject to the reporting requirements
described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law,
or underreports its tax liability, as the case may be, a holder
may be subject to backup withholding at the rate of 30% in 2002
and 2003 (and at a lower rate in subsequent years) of each
payment of interest, principal and Additional Amounts with
respect to Notes. This backup withholding tax is not an
additional tax and will be allowed as a refund or credit against
the beneficial owner&#146;s United States Federal income tax
liability if the required information is furnished to the IRS.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prospective purchasers of Notes are advised to
consult their own tax advisers as to the consequences of
acquiring and disposing of the Notes, including, without
limitation, (i)&nbsp;the applicability and effect of any state,
local or non-U.S. tax laws to which they may be subject, and of
any legislative or administrative changes in law, (ii)&nbsp;the
United States Federal income tax consequences of foreign
withholding taxes by Iusacell or Iusacell Celular (and of the
payment by Iusacell or Iusacell Celular of Additional Amounts
with respect thereto) and (iii)&nbsp;the availability of a
credit or deduction for foreign withholding taxes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mexican Tax
Consequences to Holders of Notes</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of the principal
consequences under current Mexican federal tax law, their
regulations and administrative rules issued by the Mexican
Ministry of Finance and Public Credit and the Tax Treaty, in
force as of the date of this report, of the purchase, ownership
and disposition of Notes by a Foreign Holder. A &#147;Foreign
Holder&#148; is a holder who (i)&nbsp;is not a resident of
Mexico for tax purposes and (ii)&nbsp;will not hold Notes or a
beneficial interest in Notes in connection with the conduct of a
trade or business through a permanent establishment or a fixed
base in Mexico.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Taxation
of Payments of Interest and Principal</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Mexican Income Tax Law, payments of
interest made by Iusacell or Iusacell Celular to a Foreign
Holder in respect of their respective Notes will be subject to
Mexican withholding taxes assessed at a rate of 4.9% if,
(i)&nbsp;the Notes have been placed through banks or brokers in
a country with which Mexico has executed a treaty to avoid
double taxation and such treaty is in force, (ii)&nbsp;the Notes
have been registered in the Special Section of the National
Registry of Securities (the &#147;Special Section&#148;), and
(iii)&nbsp;as has been the case in the past, the issuer provides
the information required under general rules issued by the
Ministry of Finance and Public Credit (the &#147;Reduced Rate
Regulation&#148;), which is described below. Otherwise, payments
of interest made by Iusacell or Iusacell Celular to a Foreign
Holder in respect of their respective Notes will be subject to
Mexican withholding taxes assessed at a rate of 10%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information requirements under the
&#147;Reduced Rate Regulation&#148; are generally described
below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that Iusacell and Iusacell Celular, as is the
    case, have timely filed with the Mexican Ministry of Finance and
    Public Credit information relating to the registration of their
    respective Notes in the Special Section and to the issuance of
    their respective Notes; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that Iusacell and Iusacell Celular timely file
    each quarter of the calendar year with the Mexican Ministry of
    Finance and Public Credit information representing that no
    &#147;party related&#148; to Iusacell or Iusacell Celular, as
    the case may be, directly or indirectly, is the effective
    beneficiary of 5% or more of the aggregate amount of the
    interest payment, and Iusacell and Iusacell Celular maintain
    records evidencing compliance with this requirement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Mexican Income Tax Law and the Reduced
Rate Regulation any of the following would be a &#147;party
related&#148; to Iusacell or Iusacell Celular, as the case may
be: (1)&nbsp;shareholders of Iusacell or Iusacell Celular, as
the case may be, that own, directly or indirectly, individually
or collectively with related persons (within the meaning of the
Mexican Income Tax Law and the Reduced Rate Regulation) more
than 10% of the voting stock of Iusacell or Iusacell Celular, as
the case may be, or (2)&nbsp;corporations if more than 20% of
their stock is owned directly or indirectly, individually or
collectively by related persons of Iusacell or Iusacell Celular,
as the case may be.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Apart from the Reduced Rate Regulation, other
special rates of Mexican withholding income tax may apply. In
particular, under the Tax Treaty, the Mexican withholding tax is
reduced to 4.9% (the &#147;Treaty
</FONT>

<P align="center"><FONT size="2">108
</FONT>

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<DIV align="left">
<FONT size="2">Rate&#148;) for some holders that are residents
of the United States within the meaning of the Tax Treaty
provided they satisfy the circumstances contemplated in the Tax
Treaty and provided that the Notes are considered to be
regularly and substantially traded on a recognized securities
market, which is not expected to be the case. During 2002, the
Tax Treaty is not expected, generally, to have any material
effect on the Mexican tax consequences to holders of Notes
because, as described above, with respect to a Foreign Holder,
Iusacell and Iusacell Celular will be entitled to withhold taxes
in connection with interest payments under their respective
Notes at the Reduced Rate so long as the Reduced Rate Regulation
requirements described above are met. From March 2003 and
beyond, holders of the Notes should consult their tax advisors
as to the possible application of the Treaty Rate.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest paid on Notes held by a non-Mexican
pension or retirement fund will be exempt from Mexican
withholding tax if the fund (i)&nbsp;has been duly incorporated
as a fund pursuant to the laws of its country of origin, (ii) is
the effective beneficiary of the interest paid, (iii)&nbsp;is
registered with the Mexican Ministry of Finance and Public
Credit for that purpose, and (iv)&nbsp;the relevant interest
income is exempt from taxes in that country.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell and Iusacell Celular, have agreed,
subject to the exceptions and limitations contained in the
indentures under which the Notes were issued, to pay additional
amounts in respect of the Mexican withholding taxes mentioned
above to the holders of the Notes. Payment of these additional
amounts with respect to the Notes will be subject to Mexican
withholding tax at the same rate generally applicable to
interest paid in the Notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Mexican Income Tax Law, a Foreign
Holder will not be subject to any Mexican income taxes in
respect of payments of principal made by Iusacell or by Iusacell
Celular in connection with the Notes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Taxation
of the Sale and other Disposition of the Notes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Income Tax Law it is not clear if a tax
will apply to gains resulting from a Foreign Holder&#146;s sale
or other disposition of Notes. Iusacell believes, but has not
verified, that the tax in question applies only to the gains
resulting from a Foreign Holder&#146;s sale or other disposition
of debt securities placed among the investment public at large
in Mexico.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Transfer
and other Taxes</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are no Mexican stamp, registration, or
similar taxes payable by a Foreign Holder in connection with the
purchase ownership or disposition of the Notes. A Foreign Holder
of Notes will not be liable for Mexican estate, gift,
inheritance or similar tax with respect to the Notes, although
gratuitous transfers of the Notes may in some circumstances
cause a Mexican income tax to be imposed on the recipient.
</FONT>

<P align="left">
<B><FONT size="2">F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends and
Paying Agents</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable, but see Item&nbsp;5,
&#147;Operating and Financial Review and Prospects&nbsp;&#151;
Liquidity and Capital Resources&nbsp;&#151; Dividend
Policy&#148; and Item&nbsp;8, &#147;Financial
Information&nbsp;&#151; Consolidated Statements and Other
Financial Information&nbsp;&#151; Dividend Policy.&#148;
</FONT>

<P align="left">
<B><FONT size="2">G.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statement by
Experts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="left">
<B><FONT size="2">H.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Documents on
Display</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We file Annual Reports with and furnish other
information to the SEC as may be applicable from time to time.
You may read and copy any documents filed or furnished by
Iusacell at the SEC&#146;s public reference rooms in Washington,
D.C., New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. In addition, because Iusacell&#146;s American depositary
shares are listed on the New York Stock Exchange, reports and
other information concerning Iusacell can also be inspected at
the office of the New York Stock Exchange, 20&nbsp;Broad Street,
New York, New York 10005.
</FONT>

<P align="left">
<B><FONT size="2">I.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsidiary
Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">109
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM
11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Rate
Risks</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s earnings are affected by changes
in interest rates as a result of long-term borrowings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell has fixed rate debt under the Iusacell
senior notes and $7.8&nbsp;million loan made by GTE Vendholdings
due 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell also guarantees variable debt borrowed
by its infrastructure equipment purchase subsidiaries under the
BNP Paribas Facilities and the Harris Facility. Under the BNP
Paribas Facilities, the GIEK-Guaranteed Facility bears interest
at six-month LIBOR plus 0.6%, while the Non-GIEK Guaranteed Loan
bears interest at six-month LIBOR plus 2.0%. The Harris Facility
bears interest at a rate of six-month LIBOR plus 1.25%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular has fixed rate debt under its
Iusacell Celular senior notes. Iusacell Celular also had, as of
December&nbsp;31, 2000, variable debt which was refinanced in
March 2001 with other variable debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell Celular&#146;s Senior Refinancing
Secured Loan bears interest at a variable rate per annum equal
to one, two, three or six-month LIBOR (at Iusacell
Celular&#146;s option) plus a spread ranging from, depending on
Iusacell Celular&#146;s leverage ratio, of 1.75% to 2.25%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not enter into derivative financial
contracts for trading or speculative purposes. However, we have
managed the exposure to interest rate risk through the use of
interest rate collars and the exposure to foreign exchange risk
through forward rate contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 1998, Iusacell Celular entered into an
interest rate collar agreement on a notional amount of
U.S.$35.0&nbsp;million until July&nbsp;30, 2002. The collar
agreement limits the maximum effective LIBOR cost to 6.12% if
six-month LIBOR is lower than 7.12% and 7.12% if LIBOR equals or
exceeds that level. On February&nbsp;26, 1999, Iusacell Celular
entered into a second interest rate collar agreement to limit
the maximum interest rate Iusacell Celular must pay on
U.S.$15.0&nbsp;million of its floating rate debt until July
2002. Under the terms of this second collar agreement, Iusacell
Celular&#146;s maximum effective LIBOR cost is limited to 5.82%
if six-month LIBOR is lower than 6.82% and, if six-month LIBOR
equals or goes above 6.82%, then Iusacell Celular&#146;s maximum
effective LIBOR cost is limited to 6.82%. These interest rate
collar agreements remain applicable to the debt under the Senior
Refinancing Secured Loan according to the March 2001 refinancing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the debt
obligations and derivative instruments that are sensitive to
changes in interest rates held by Iusacell as of
December&nbsp;31, 2001. For the debt, the tables present
principal payment obligations that exist by maturity date and
the related average interest rate. For the collars, the table
present the notional amounts and average cap and floor rates
that exist by contractual date. Average interest rates for
liabilities are calculated based on weighted averages.. Dollar
denominated amounts have been converted to Mexican Pesos based
on the exchange rate of December&nbsp;31, 2001, which was
1&nbsp;U.S. $1&nbsp;= Ps&nbsp;9.1695
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><B><FONT size="1">As of December&nbsp;31, 2001&nbsp;&#151; Expected Maturity Date</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><FONT size="1">in thousands of Mexican Pesos (U.S. Dollars)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Fixed Rate Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">U. S. Dollar denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,034</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">82,419</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,394,913</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,488</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,217,915</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,824,769</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,106,731</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">Mexican Peso denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Variable Rate Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">U. S. Dollar denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,191</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">53,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">958,566</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,254,848</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">341,492</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,520</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,736,997</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,736,997</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">Mexican Peso denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Interest Rate Derivatives</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">Interest Rate Collars</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average Cap Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.03</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average Floor Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.13</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<P align="left">
<I><FONT size="2">Note: To determine the weighted-average
interest rate for variable rate debt, Libor interest rate was
forecasted by CIEMEX-WEFA assuming 2.40% for 2002, 4.30%. for
2003, 5.30% for 2004 and beyond. Foreign Currency Risk</FONT></I>

<P align="center"><FONT size="2">110
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Iusacell&#146;s primary foreign currency exposure
relates to our foreign currency denominated debt.
Iusacell&#146;s debt obligations are denominated in
U.S.&nbsp;dollars while it generates revenues in Mexican pesos.
Therefore, Iusacell is exposed to currency exchange rate risks
that could significantly affect our ability to meet our
obligations. The exchange rate of pesos to the U.S.&nbsp;dollar
is a freely floating rate and the peso has experienced
significant devaluations in recent years. Any significant
decrease in the value of the peso relative to the
U.S.&nbsp;dollar in the near term may have a material adverse
effect on Iusacell and on our ability to meet our long-term debt
obligations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, Iusacell Celular used
forward-rate contracts to hedge its exchange rate exposure for
U.S.$77.0&nbsp;million, approximately 50% of the principal and
interest payments coming due over the period April 2000 to April
2001. In November 2000, Iusacell Celular entered into another
forward-rate contract to hedge its exchange rate exposure for
U.S.$15.0&nbsp;million of interest payments coming due between
then and January 2002. In August 2001, Iusacell entered into
another forward-rate contract for U.S.$11.0&nbsp;million to
hedge its exchange rate exposure of interest payments coming due
between then and November 2002. In August and October 2001
Iusacell Celular hedged using forward rate contracts 100% of the
principal U.S.$150&nbsp;million and U.S.$34.5&nbsp;million of
associated interest of its 10% senior notes due 2004.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes Iusacell&#146;s
debt and derivative instruments that are sensitive to changes in
foreign currency exchange rates as of December&nbsp;31, 2001.
For the debt, the tables present principal payment obligations
that exist by maturity date and the related average interest
rate. For the forward exchange contracts, the table presents the
amount of foreign currency that Iusacell has contracted to
purchase and the average exchange rates by contractual dates.
Average interest rates for liabilities are calculated based on
weighted average. Dollar denominated amounts have been converted
to Mexican Pesos based on the exchange rate of December&nbsp;31,
2001, which was 1&nbsp;U.S. $1&nbsp;= Ps&nbsp;9.1695.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><B><FONT size="1">As of December&nbsp;31, 2001&nbsp;&#151; Expected Maturity Date</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><FONT size="1">in thousands of Mexican Pesos (U.S. Dollars)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Fixed Rate Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">U.S. Dollar denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,034</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">82,419</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,394,913</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,488</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,217,915</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,824,769</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,106,731</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Variable Rate Debt</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">U.S. Dollar denominated</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,191</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">53,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">958,566</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,254,848</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">341,492</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,520</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,736,997</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,736,997</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Weighted-average interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Forward Exchange Derivatives</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">Receive Mexican Pesos/ Pay
    U.S.&nbsp;Dollars</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average exchange Rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="1">Receive U.S. Dollars/ Pay Mexican
    Pesos</FONT></I></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">209,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">140,752</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,984,279</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average exchange rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.955</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.384</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12.026</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<P align="left">
<I><FONT size="2">Note: To determine the weighted-average
interest rate for variable rate debt, Libor interest rate was
forecasted by CIEMEX-WEFA assuming 2.40% for 2002, 4.30%. for
2003, 5.30% for 2004 and beyond.</FONT></I>

<P align="center"><FONT size="2">111
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">112
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART II" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<!-- link2 "ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See Item&nbsp;5, &#147;Operating and Financial
Review and Prospects&nbsp;&#151; Liquidity and Capital
Resources&nbsp;&#151; Loan Covenant Waivers and
Modifications&#148; for a description of any default and the
correspondent waiver.
</FONT>

<!-- link2 "ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<!-- link2 "ITEM 15. RESERVED" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RESERVED</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<!-- link2 "ITEM 16. RESERVED" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RESERVED</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Not applicable.
</FONT>

<P align="center"><FONT size="2">113
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART III" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="center">
<B><FONT size="2">PART III</FONT></B>

<!-- link2 "ITEM 17. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have responded to Item&nbsp;18 in lieu of
responding to this Item.
</FONT>

<!-- link2 "ITEM 18. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Grupo Iusacell, S.A. de C.V.
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="91%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Report of Independent Accountants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Balance Sheets&nbsp;&#151;
    December&nbsp;31, 2001 and 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Income Statements&nbsp;&#151; Fiscal
    Years Ended December&nbsp;31, 2001, 2000 and 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Changes in
    Stockholders&#146; Equity&nbsp;&#151; Fiscal Years Ended
    December&nbsp;31, 2001, 2000 and 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Statements of Changes in Financial
    Position&nbsp;&#151; Fiscal Years Ended December&nbsp;31, 2001,
    2000 and 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to the Consolidated Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">114
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT ACCOUNTANTS</FONT></B>

<P align="left">
<FONT size="2">Mexico City, March&nbsp;1, 2002, except for
Note&nbsp;24 for which the date is May&nbsp;29, 2002.
</FONT>

<P align="left">
<FONT size="2">The Board of Directors and Stockholders of
</FONT>

<DIV align="left">
<FONT size="2">Grupo Iusacell, S. A. de C. V.:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheets of Grupo Iusacell, S. A. de C. V. and
subsidiaries (the Company) as of December&nbsp;31, 2001 and
2000, and the related consolidated statements of income, of
changes in stockholders&#146; equity and of changes in financial
position for each of the three years in the period ended
December&nbsp;31, 2001 and the financial statement schedule
included in this Form&nbsp;20-F. These financial statements and
financial statement schedule are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
generally accepted auditing standards in Mexico and the United
States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement and are prepared in
accordance with generally accepted accounting principles. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the consolidated financial
statements and financial statement schedule referred to above
present fairly, in all material respects, the consolidated
financial position of Grupo Iusacell, S. A. de C. V. and
subsidiaries as of December&nbsp;31, 2001 and 2000, and the
consolidated results of its operations, changes in
stockholders&#146; equity and changes in its consolidated
financial position for each of the three years in the period
ended December&nbsp;31, 2001, in conformity with accounting
principles generally accepted in Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounting principles generally accepted in
Mexico vary in certain significant respects from accounting
principles generally accepted in the United States. The
application of the latter would have affected the determination
of consolidated net income for each of the three years in the
period ended December&nbsp;31, 2001 expressed in Mexican Pesos
and the determination of consolidated stockholders&#146; equity
at December&nbsp;31, 2001 and 2000 also expressed in Mexican
Pesos to the extent summarized in Note&nbsp;23 to the
consolidated financial statements.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">PRICEWATERHOUSECOOPERS
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Juan Manuel Ferr&#243;n Sol&#237;s
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Audit Partner
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "CONSOLIDATED BALANCE SHEETS" -->
<DIV align="left"><A NAME="020"></A></DIV>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Notes 1, 2, 3 and 4)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Expressed in thousands of</FONT></B>

<DIV align="center">
<B><FONT size="2">constant Mexican pesos as of December&nbsp;31,
2001</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="10" align="center" valign="top">
    <B><FONT size="2">ASSETS</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">CURRENT ASSETS:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents (Note&nbsp;4c.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">415,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of escrow account (Note&nbsp;10b.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">456,337</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade, net of Ps.210,891 and Ps.221,684 of
    allowance for doubtful accounts in 2001 and 2000, respectively
    (Note&nbsp;4e.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">595,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">637,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Due from related parties (Note&nbsp;5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,788</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recoverable taxes and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">650,274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">580,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,246,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,223,535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories&nbsp;&#151; Net (Note&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,355,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,616,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investments (Note&nbsp;7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment&nbsp;&#151; Net
    (Note&nbsp;8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,469,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,550,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term portion of escrow account
    (Note&nbsp;10b.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">478,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets&nbsp;&#151; Net (Note&nbsp;9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,637,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,707,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Excess of cost of investments in subsidiaries
    over book value&nbsp;&#151; Net of accumulated amortization of
    Ps.814,301 in 2001 and Ps.662,977 in 2000 (Note&nbsp;4j.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,075,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,089,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,571,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,474,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="10" align="center" valign="top">
    <B><FONT size="2">LIABILITIES AND STOCKHOLDERS&#146;
    EQUITY</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">CURRENT LIABILITIES:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable (Note&nbsp;10g.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt (Note&nbsp;10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,344,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">764,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">546,858</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable to suppliers, short-term
    (Note&nbsp;11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Due to related parties (Note&nbsp;5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,082</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxes and other payables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">865,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,092,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax (Note&nbsp;12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Employee profit sharing (Note&nbsp;12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,669</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,007,062</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,297,257</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt (Note&nbsp;10)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,211,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,517,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable to suppliers, long-term
    (Note&nbsp;11)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Due to related parties (Note&nbsp;5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accounts payable, long-term (Notes&nbsp;4d.
    and 4m.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,419</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,408,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,843,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commitments and contingencies (Note&nbsp;13)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE
SHEETS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV align="center">
<B><FONT size="2">(Notes 1, 2, 3 and 4)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Expressed in thousands of</FONT></B>

<DIV align="center">
<B><FONT size="2">constant Mexican pesos as of December&nbsp;31,
2001</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">STOCKHOLDERS&#146; EQUITY:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contributed capital (Notes&nbsp;14, 15 and 16):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,754,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,822,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital contributed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,329,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,329,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,083,746</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,151,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earned capital (Note&nbsp;16):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated profits (losses):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">For prior years
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(761,828</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">360,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">For the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,242,834</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(742,845</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total majority stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,037,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,605,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,443</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,162,908</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,630,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,571,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,474,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "CONSOLIDATED INCOME STATEMENTS" -->
<DIV align="left"><A NAME="021"></A></DIV>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED INCOME STATEMENTS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Notes 1, 2, 3 and 4)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Expressed in thousands of</FONT></B>

<DIV align="center">
<B><FONT size="2">constant Mexican pesos as of December&nbsp;31,
2001</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,634,306</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,200,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,285,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephone equipment sales and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">607,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">528,713</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">497,061</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,782,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of services
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,532,366</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,464,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,221,938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of telephone equipment sales and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">378,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,910,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,820,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,528,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,330,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,909,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,254,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,076,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,923,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,643,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,408,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,621,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other operating income (Note&nbsp;8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">307,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57,059</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(423,318</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,067</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other expenses (income)&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Integral financing cost (gain):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">808,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">982,462</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">331,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange (gain) loss&nbsp;&#151; Net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(224,793</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(180,953</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain from monetary position
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(266,625</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(450,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(752,903</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317,260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(602,357</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity participation in net (profit) loss of
    associated companies and net (gain) loss on sale of equity
    investments (Notes&nbsp;2 and 7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,518</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) profit from continuing operations before
    assets tax, income tax and minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(367,801</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(991,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">511,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provisions for:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">611,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from continuing operations before minority
    interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(514,205</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,147,839</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(99,473</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(493,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,131,378</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(79,073</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Profit) loss from discontinued operations (net
    of income tax) (Note&nbsp;19)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,865</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss after discontinued operations and before
    extraordinary item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(493,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(80,821</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Extraordinary item:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of tax loss carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Loss) profit after extraordinary item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(493,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of the adoption of the new
    accounting pronouncement (Note&nbsp;4d.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss) profit for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average number of shares of common stock
    outstanding (thousands)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic net (loss) profit per share of common stock
    (pesos):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit (loss) from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Extraordinary item
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of the adoption of the new
    accounting pronouncement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic net (loss) profit per share of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY" -->
<DIV align="left"><A NAME="022"></A></DIV>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS&#146; EQUITY</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">For the Years Ended December 31, 2001, 2000
and 1999</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Notes 1, 2, 3 and 4)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Expressed in thousands of constant Mexican
pesos as of December&nbsp;31, 2001</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="16%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Accumulated profits (losses)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capital</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Legal</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">comprehensive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Minority</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">stockholders&#146;</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">subscribed</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">contributions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">reserve</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Prior years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">For the year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">income</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">interest</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">equity</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balance at December&nbsp;31, 1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,031,253</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">92,831</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,075</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,919,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,657,470</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(868,820</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,037</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,684,706</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Application of 1998 net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,657,470</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,657,470</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Increase in capital stock from the capitalization
    of stockholders&#146; debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">446,805</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">446,805</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Effects of reorganization
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(6,347,584</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(92,831</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(5,075</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,576,670</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">868,820</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24,248</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">24,248</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Effects of rights and primary offerings
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">247,812</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">168,974</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">416,786</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Increase in minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,330</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,330</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive profit for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">379,668</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">379,668</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balance at December&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,378,286</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">168,974</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">379,668</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,615</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,964,543</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Application of 1999 net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">360,685</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(379,668</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Increase in capital stock from the primary
    offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">443,908</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,160,223</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,604,131</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Decrease in minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(12,172</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(12,172</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive loss for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">196,911</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(925,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balance at December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,822,194</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,329,197</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">360,685</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">196,911</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">25,443</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,630,900</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Application of 2000 net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,122,513</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Increase in capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">932,355</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">932,355</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Increase in minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">99,642</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">99,642</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Comprehensive loss for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Balance at December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,754,549</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,329,197</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(761,828</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">196,911</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">125,085</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,162,908</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2"> GRUPO IUSACELL, S.&nbsp;A. DE C.&nbsp;V. AND
SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION" -->
<DIV align="left"><A NAME="023"></A></DIV>

<DIV align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CHANGES IN
FINANCIAL POSITION</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Notes&nbsp;1, 2, 3 and 4)</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Expressed in thousands of constant</FONT></B>

<DIV align="center">
<B><FONT size="2">Mexican pesos as of December&nbsp;31,
2001</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Operating activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(493,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,131,378</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(79,073</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Items not requiring the use of resources:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,408,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,621,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity participation in net (gain)&nbsp;loss of
    associated companies and net (gain)&nbsp;loss on sale of equity
    investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,518</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,694</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,098,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,280,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,575,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by (used for) operating
    activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">168,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(417,981</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Related parties, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(90,597</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,841</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,305</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recoverable taxes and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,933</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,107</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(157,265</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(388,630</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxes and other payables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(304,367</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54,077</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(60,217</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Employee profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,664</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(425</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,323</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(568</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operating activities before
    discontinued operations, extraordinary item and cumulative
    effect of the adoption of the new accounting pronouncement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,065,789</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,479,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">846,523</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of the adoption of the new
    accounting pronouncement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,478</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of tax loss carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit (loss)&nbsp;from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,748</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,059,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,488,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,305,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Financing activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,498,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,155,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Principal payments on long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,121,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,190,881</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from related parties financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Decrease) increase in notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,357</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(840,430</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">932,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of rights and primary offerings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">416,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated effect of deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in capital stock from the capitalization
    of stockholders&#146; debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">446,805</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources provided by financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">777,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,178,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Investing activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,933,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,140,344</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,708,907</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sale (purchase)&nbsp;of common stock of
    associated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,066</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Acquisition of Portatel, net of cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(495,320</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in telephones to be amortized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(521,782</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,088,139</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(862,577</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Decrease (increase)&nbsp;in escrow account
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">495,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">507,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,442,475</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(254,833</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(149,179</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(479,606</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Resources used for investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,706,468</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,889,874</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,499,631</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (decrease)&nbsp;increase in cash and cash
    equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(271,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(623,281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">984,311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at the beginning of the
    year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,310,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">326,094</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at the end of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">415,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,310,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>

<DIV>&nbsp;</DIV>

<!-- link1 "NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="024"></A></DIV>

<DIV align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">As of December&nbsp;31, 2001, 2000 and
1999</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Except as otherwise noted, expressed</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">in thousands of constant Mexican pesos as of
December&nbsp;31, 2001.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Amounts expressed in U.S. Dollars are in
thousands.</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">Note 1&nbsp;&#151; Entity, Nature of Business
and Principal Stockholders</FONT></B>

<P align="left">
<B><FONT size="2">Entity and nature of business:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a part of the recapitalization and
restructuring plan of Grupo Iusacell, S.A. de C.V., a new
holding company, Nuevo Grupo Iusacell, S.A. de C.V. was
incorporated on August&nbsp;6, 1998 to acquire and hold all of
the outstanding shares of Grupo Iusacell, S.A. de C.V. On
March&nbsp;1, 2000, both companies changed their names: Nuevo
Grupo Iusacell, S.A. de C.V. changed its name to Grupo Iusacell,
S.A. de C.V. (New Iusacell), and Grupo Iusacell, S.A. de C.V.
changed its name to Grupo Iusacell Celular, S.A. de C.V. (Old
Iusacell). In July 1999, New Iusacell initiated an offer to
exchange its two series of common stock for the four series of
common stock of Old Iusacell then outstanding on a one for one
basis. As a result of the exchange, New Iusacell acquired 99.5%
of Old Iusacell shares when the offer expired on August&nbsp;10,
1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the exchange offer, New Iusacell had
nominal assets and liabilities and no operations. New Iusacell
also did not have any contingent liabilities or commitments. For
accounting purposes, New Iusacell is the successor business to
Old Iusacell, and the figures presented in the financial
statements and notes for dates prior to the exchange offer are
the consolidated financial information of Old Iusacell and its
subsidiaries. New Iusacell and its subsidiaries (Old Iusacell
and its subsidiaries prior to the recapitalization) are referred
to collectively herein as the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately after the first exchange offer, New
Iusacell completed both a rights offer of 18,405,490&nbsp;shares
of its series&nbsp;V common stock, raising U.S.$12,884 in
proceeds, and a primary offer of 23,596,780&nbsp;shares of its
series&nbsp;V common stock, raising U.S.$23,847 in net proceeds
(after commissions). Total net proceeds to the Company from the
rights and primary offerings amounted to Ps.416,786
(U.S.$36,731). New Iusacell&#146;s principal stockholders at
that time sold an aggregate of 101,403,220&nbsp;shares of its
series&nbsp;V common stock, resulting in a 40.4% ownership
interest for each such shareholder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;1, 2000, New Iusacell launched a
second exchange offer and at its conclusion, Old Iusacell&#146;s
ADS depositary, The Bank of New York, converted the remaining,
non-exchanged Old Iusacell ADSs into New Iusacell shares. As a
result of these transactions, New Iusacell increased its
ownership in Old Iusacell to 99.99%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2000, New Iusacell launched a primary
public offering under which New Iusacell sold&nbsp;10,529,700
series&nbsp;V ADSs at a price of U.S.$.015125 per ADS raising
Ps.1,604,131 (U.S.$159,370) in net proceeds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;15, 2000, New Iusacell launched a
private purchase offer under which the Company expected to
purchase the remaining Old Iusacell shares not tendered during
the two exchange offers. Pursuant to this private offer, New
Iusacell purchased a total of 9,717 series&nbsp;L shares of Old
Iusacell and 392 series&nbsp;D shares of Old Iusacell. When this
offer expired on September&nbsp;29, 2000, there were
38,684&nbsp;shares of Old Iusacell not owned by New Iusacell.
These 38,684&nbsp;shares represented 0.002% of the total
outstanding shares of Old Iusacell at December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;30, 2001, Old Iusacell&#146;s
stockholders approved a 30,000 to 1&nbsp;reverse stock split.
Upon implementation of the reverse split in the second quarter
of 2001, the Company increased its ownership in Old Iusacell to
100%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;27, 2001, at an ordinary and
extraordinary stockholders&#146; meetings, the Company&#146;s
stockholders approved a capital stock increase for Ps.932,355
(U.S.$100,000) through the issuance of 224,461,739 series&nbsp;A
shares and 210,320,870 series&nbsp;V shares. The Company&#146;s
major stockholders&#146; subscribed
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">their proportional part of the increase and the
Company launched a rights offering for the unsubscribed
series&nbsp;V shares. When the offer expired, a total of
82,046,734 series&nbsp;V shares where subscribed, leaving
40,694,059 series&nbsp;V shares unsubscribed, which were then
subscribed by Verizon Communications, Inc. (Verizon) through
some of its subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Old Iusacell is a holding company incorporated on
October&nbsp;6, 1992. Its subsidiaries are primarily engaged in
the wireless telecommunications business and hold concessions to
operate cellular telephone systems in five market areas (each a
Region) in Mexico. New Iusacell, through Old Iusacell, holds the
non-wire line cellular concessions for Region&nbsp;5
(Guadalajara), Region&nbsp;6 (Leon), Region&nbsp;7 (Puebla), a
cellular authorization for Region&nbsp;9 (Mexico City), and in
2001, acquired the company that holds the concession for
Region&nbsp;8 (M&#233;rida) (Note&nbsp;2).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New Iusacell subsidiaries also provide long
distance services, nationwide and international paging services
and, starting on December 2001, provide commercial wireless
personal communication services (PCS)&nbsp;in Regions&nbsp;1 and
4 in northern Mexico.
</FONT>

<P align="left">
<B><FONT size="2">Principal stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 1997, after execution of a definitive
agreement between Old Iusacell&#146;s principal stockholders and
approval by the Mexican government, Bell Atlantic Corporation
(Bell Atlantic) assumed management control of Old Iusacell from
Carlos Peralta and companies and individuals controlled by or
related to him (together, the Peralta Group). After the
incorporation of New Iusacell, Bell Atlantic also has management
control of New Iusacell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;30, 2000, Bell Atlantic and GTE
Corporation, completed their merger, creating Verizon.
References made to Verizon with respect to dates prior to
June&nbsp;30, 2000 are references to Bell Atlantic prior to its
acquisition of GTE Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;4, 2001, after obtaining the
authorization of the Mexican regulatory agencies and the
finalization of a stockholders&#146; agreement between the
Peralta Group and Vodafone Group Plc (Vodafone), the Peralta
Group and Vodafone closed the transaction under which the
Peralta Group sold its 34.5% ownership in New Iusacell to
Vodafone. Verizon and Vodafone hold substantial ownership
interests (direct or indirect) in New Iusacell.
</FONT>

<P align="left">
<B><FONT size="2">Note 2&nbsp;&#151; Acquisitions, Dispositions
and Company Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 1999, the Company liquidated its
investment in Compa&#241;&#237;a Colombiana de Telefon&#237;a
Celular, S.A. (Telecel) and recorded a loss of Ps.56,621 before
taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2000, the Company incorporated three new
subsidiaries: Iusacell Infraestructura, S.A. de C.V. and
Iusacell Infraestructura de M&#233;xico, S.A. de C.V., for the
purchase and lease of communications equipment, and Iusacell
Arrendadora, S.A. de C.V., for the lease and sublease of towers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, Cellular Solutions de M&#233;xico, S.A.
de C.V. was merged into Iusacell, S.A. de C.V. The merger was
recorded as of December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company incorporated two new
subsidiaries: Iusacell PCS de M&#233;xico, S.A. de C.V. for the
financing of the development of the PCS services in
Regions&nbsp;1 and 4, and Iusatel USA, Inc. to be engaged in the
long distance business in the United States of America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;22, 2001, the Company sold its 65%
equity interest in Satelitr&#243;n, S.A. de C.V. As a result of
the sale, the Company recorded a gain of Ps.3,976 (U.S.$429)
before taxes.
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Acquisition of Grupo Portatel, S.A. de
C.V.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;19, 2001, Old Iusacell completed
the acquisition of a 78.34% ownership in Grupo Portatel, S.A. de
C.V. and its subsidiaries (Portatel) for Ps.522,533
(U.S.$56,588). The Company also reached an agreement to acquire
the remaining the 21.66% ownership in Portatel for U.S.$16,150.
The Company closed the acquisition of this remaining ownership
on February&nbsp;8, 2002. Portatel is engaged in the wireless
communications business and holds the concession to operate
cellular telephone systems in the Region&nbsp;8, which covers
the Mexican states of Yucat&#225;n, Campeche, Quintana Roo,
Chiapas and Tabasco in the southeast of Mexico.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated income statements of the Company
include the consolidated results of Portatel beginning
October&nbsp;19, 2001. The assets acquired and liabilities
assumed were recorded at estimated fair values as determined by
the Company&#146;s management based on information currently
available, on current assumptions as to future operations and
independent appraisals. A summary of the assets acquired and
liabilities assumed in the acquisition is as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="83%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Estimated fair values:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets acquired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">516,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liabilities assumed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(152,831</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill (amortized by the straight-line method
    over the remaining life of the concession)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">522,533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Company Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the laws established by the Mexican
government, due to Verizon&#146;s control of New Iusacell, New
Iusacell may not own the majority of the voting stock of Mexican
companies that hold concessions to provide telecommunications
services other than cellular service. As of November 1998, Old
Iusacell and Jos&#233; Ram&#243;n Elizondo, a then director of
New Iusacell (the Mexican National), entered into a joint
venture formation agreement (the Agreement) pursuant to which
they agreed to participate together in the microwave frequencies
leasing, long distance, local telephony, PCS and paging
businesses. Old Iusacell and the Mexican National agreed that
Old Iusacell would own 94.9% of the economic interest and 49% of
the voting shares of Iusatel, S.A. de C.V. (Iusatel), the
Company&#146;s long distance concessionaire,
Iusatelecomunicaciones, S.A. de C.V. (Iusatelecomunicaciones),
the Company&#146;s fixed wireless local telephony operation,
Punto-a-Punto Iusacell, S.A. de C.V. (Punto-a-Punto Iusacell), a
microwave frequencies concessionaire and Iusacell PCS, S.A. de
C.V. (Iusacell PCS), which holds concessions for 1.9GHz
frequencies in Regions&nbsp;1 and 4. Iusatel,
Iusatelecomunicaciones, Punto-a-Punto Iusacell and Iusacell PCS
are each referred herein as a Non-Cellular Subsidiary and
together, the Non-Cellular Subsidiaries. The Mexican National
owns 5.1% of the economic interest and 51% of the voting shares
of these companies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Mexican National does not have the unilateral
right to approve actions at the shareholder or board level of
the Non-Cellular Subsidiaries. Under each company&#146;s
by-laws, all shareholder or board actions must also be approved
by the majority of the shares held by Old Iusacell (or New
Iusacell) or a majority of the board members designated by Old
Iusacell (or New Iusacell), respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Agreement, together with each joint venture
company&#146;s by-laws, enable Old Iusacell or New Iusacell, as
the case may be, to have management control over the day-to-day
operations and financial administration of the Non-Cellular
Subsidiaries. The Mexican National cannot alone, among other
things, select, terminate or determine the compensation of
management or establish operating and capital decisions in the
ordinary course of business.
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Old Iusacell signed a joint venture agreement
with a Mexican company which holds a fifteen-year concession to
provide nationwide and international paging services through
July 2009. As of December&nbsp;31, 2001, Infotelecom is owned
49%, 49% and 2%, by Old Iusacell, Banorte, S.A. (which acquired
Infomin, S.A. de C.V.&#146;s interest in Infotelecom in exchange
for the retirement of debt) and the Mexican National,
respectively. Old Iusacell committed to contribute up to
U.S.$10,500. As of December&nbsp;31, 2000, Old Iusacell had
invested all U.S.$10,500. If a partner does not fulfill its
responsibilities under the joint venture agreement, sanctions
could cause such partner to lose its investment and incur a
penalty of up to U.S.$1,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The subsidiaries of New Iusacell, which are
included in the consolidated financial statements, are the
following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Economic interest</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(direct or indirect)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">as of December&nbsp;31</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Subsidiary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(%)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(%)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell PCS, S.A. de C.V. (Regions&nbsp;1 and 4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell PCS de M&#233;xico, S.A. de
    C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Infraestructura, S.A. de
    C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Arrendadora, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell Infraestructura de M&#233;xico, S.A. de
    C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Old Iusacell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">S.O.S. Telecomunicaciones, S.A. de C.V.
    (Region&nbsp;9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusacell, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sistecel, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Comunicaciones Celulares de Occidente, S.A. de
    C.V. (Region&nbsp;5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sistemas Telef&#243;nicos Port&#225;tiles
    Celulares, S.A. de C.V. (Region&nbsp;6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telecomunicaciones del Golfo, S.A. de C.V.
    (Region&nbsp;7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inflight Phone de M&#233;xico, S.A. de
    C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inmobiliaria Montes Urales&nbsp;460, S.A. de
    C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mexican Cellular Investments, Inc.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusanet, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Promotora Celular, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatelecomunicaciones, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Grupo Iusacell Nicaragua, S.A.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Satelitr&#243;n, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Infotelecom, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Punto a Punto Iusacell, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Grupo Portatel, S.A. de C.V. and subsidiaries
    (Region&nbsp;8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatel, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Iusatel USA, Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 3&nbsp;&#151; Basis of
Presentation</FONT></B>

<P align="left">
<B><FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of
presentation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s consolidated financial
statements have been prepared in conformity with Mexican GAAP.
The consolidated financial statements have been presented in
thousands of constant Mexican pesos as of December&nbsp;31, 2001
as required by Bulletin&nbsp;B-10, &#147;Recognition of the
Effects of Inflation on Financial Information&#148;, as amended,
issued by the MIPA (Bulletin&nbsp;B-10).
</FONT>

<P align="left">
<B><FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
financial statements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Those companies in which the Company holds 50% or
more of the capital stock and/or exercises control over
operating and financing activities are included in the
consolidated financial statements. In addition, while the
Company owns less than 50% of the voting common stock of the
Non-Cellular Subsidiaries, it consolidates them because it
exercises management control over their day-to-day operations
and financial administration by appointment of the stockholders
and other arrangements (Note&nbsp;2). All significant
inter-company balances and transactions have been eliminated in
consolidation.
</FONT>

<P align="left">
<B><FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Use of
estimates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of financial statements in
conformity with Mexican GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
</FONT>

<P align="left">
<B><FONT size="2">Note 4&nbsp;&#151; Accounting
Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the Company&#146;s significant
accounting policies is as follows:
</FONT>

<P align="left">
<B><FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Monetary
unit</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements are presented in Mexican
pesos (Ps.), the currency that, based on Mexican laws, must be
used to prepare the accounting records of the Company and its
Mexican subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effects of
inflation on the financial statements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of the
Company have been prepared in accordance with
Bulletin&nbsp;B-10. The Third Amendment to Bulletin&nbsp;B-10
requires the restatement of all comparative financial statements
to constant Mexican pesos as of the date of the most recent
balance sheet presented. Accordingly, the consolidated financial
statements have been restated as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The balance sheet amounts as of December&nbsp;31,
    2000 presented in the consolidated financial statements have
    been restated to constant Mexican pesos as of December&nbsp;31,
    2001 based on the National Consumer Price Index (NCPI) published
    by Banco de M&#233;xico (the Mexican Central Bank).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consolidated income statements for the current
    and prior years have been restated to constant Mexican pesos as
    of December&nbsp;31, 2001 using the NCPI from the periods in
    which the transactions occurred.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Bulletin&nbsp;B-12, &#147;Statement of Changes in
    Financial Information&#148;, issued by the MIPA
    (Bulletin&nbsp;B-12), addresses the presentation of the
    statement of changes in financial position when financial
    statements have been restated to constant Mexican pesos as of
    the latest balance sheet date. Bulletin&nbsp;B-12 identifies the
    origin and application of resources representing differences
    between beginning and ending balance sheet amounts in constant
    Mexican pesos, excluding the effect of holding non-monetary
    assets.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-11
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">Bulletin&nbsp;B-12 also provides that monetary
    and foreign exchange gains and losses should not be eliminated
    from resources provided by operating or financing activities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The items that originate from the recognition of
effects of inflation on financial information are as follows:
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I> Restatement
of non-monetary assets</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Inventories are valued at the average price of
the purchases made during the period and are restated using the
NCPI, without exceeding net realizable value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the Fifth Amendment to
Bulletin&nbsp;B-10, property and equipment, net, and
depreciation for the year are restated using the NCPI, without
exceeding net realizable value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment are depreciated using the
straight-line method, based on the restated values. During the
second quarter of 2001, the Company completed a technical review
of the remaining useful lives of certain analog and digital
network equipment. As a result, the weighted-average useful life
for certain communications equipment is now ten years compared
with the previous 8.7&nbsp;years. This change represented a
reduction of approximately Ps.452,000 in depreciation expense
for the year. The average annual rates of depreciation used by
the Company are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(%)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(%)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Communications equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transportation equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular rental telephones
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company does not capitalize integral
financing cost for assets under construction, unless the
integral financing cost generated by loans are directly
attributable to those assets. For the years ended
December&nbsp;31, 2001 and 2000, the Company did not capitalize
integral financing cost. Integral financing costs capitalized
during 1999 were Ps.184,718.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investments in associated companies are accounted
for using the equity method based on the associated
company&#146;s equity and are adjusted for the effects of
inflation in accordance with Bulletin&nbsp;B-10.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Restatement of stockholders&#146;
    equity</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The contributed and earned capital accounts
include the effect of restatement determined by applying the
NCPI factor from the date capital was contributed or earned. The
restatement represents the amount required to maintain the
contributions and accumulated results in constant Mexican pesos
as of December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The excess or deficit from restatement of capital
account is an element of stockholders&#146; equity that includes
surplus or deficit from holding non-monetary assets, which
represents the excess or deficit in specific values of net
non-monetary assets in comparison with the increase attributable
to general inflation as measured by the NCPI.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Integral financing (gain)
    cost</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Integral financing (gain) cost is comprised of
net interest expense, foreign exchange gains and losses, gains
and losses from net monetary position and fluctuations in the
market value of hedge derivative contracts on
foreign-denominated debt.
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Foreign exchange gains and losses on transactions
denominated in currencies other than Mexican pesos result from
fluctuations in exchange rates between the date transactions are
recorded and the date of settlement or period end.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gains and losses from net monetary position
represent the effects of inflation, as measured by the NCPI, on
the Company&#146;s monetary assets and liabilities at the
beginning of each month. If monetary liabilities exceed monetary
assets, there is a gain from monetary position. If monetary
liabilities are less than monetary assets, there is a resulting
loss from monetary position.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">c.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Cash and cash equivalents</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2000, the MIPA issued Bulletin&nbsp;C-1,
&#147;Cash&#148;, applicable to all Mexican companies beginning
January&nbsp;1, 2001. This Bulletin provides guidance for the
valuation of foreign currencies and precious metals as currency.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash and cash equivalents consist primarily of
bank deposits. The Company invests its excess cash in deposits
with major banks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As the Company follows the practices mentioned in
the Bulletin, the adoption of this Bulletin did not have a
material effect on the Company&#146;s financial statements and
disclosures.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">d.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Financial instruments</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective January&nbsp;1, 2001,
Bulletin&nbsp;C-2, &#147;Financial Instruments&#148;, issued by
the MIPA (Bulletin&nbsp;C-2), requires that all financial
instruments be recorded in the balance sheet at their fair value
and changes in the fair value be recorded in each period in the
income statement. Bulletin&nbsp;C-2 also requires that
derivative financial instruments used for hedging purposes be
recorded in the balance sheet and valued using the same
valuation criteria used to value the hedged asset or liability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s financial instruments consist
principally of cash and cash equivalents, restricted cash,
accounts receivable and payable, notes payable, long-term debt,
and foreign currency and interest hedge contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company use derivative financial instruments
to manage the risk of variable interest rates and foreign
currency exchange fluctuations, which under Bulletin&nbsp;C-2,
are classified as hedge transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The carrying amounts of financial instruments, as
reflected in the balance sheet, approximate their fair value as
of December&nbsp;31, 2001, except for long-term debt which has a
quoted market value and for the foreign currency and interest
rate hedge contracts, which as of January&nbsp;1, 2001, are
valued using the same valuation criteria used to value the
hedged asset or liability (Note&nbsp;21).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the adoption of this new
accounting pronouncement, the Company recognized a cumulative
loss on derivative financial instruments of Ps.6,478 as of
January&nbsp;1, 2001. Prior to January&nbsp;1, 2001, the Company
recorded interest rate and foreign currency hedge contracts on a
cash basis.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">e.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Allowance for doubtful accounts</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company cancels service to customers with
invoices that are 60&nbsp;days past due. The allowance for
doubtful accounts represents the Company&#146;s estimate of the
probable loss inherent in all accounts receivable based on
general historical trends of customer performance and factors
surrounding the specific customer&#146;s credit risk. The
Company wrote off accounts receivable for Ps.119,225 and
Ps.42,657 in 2001 and 2000, respectively. The charge to income
for the year for the allowance for doubtful accounts amounted to
Ps.108,432, Ps.94,531 and Ps.105,526 in 2001, 2000 and 1999,
respectively.
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">f.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Investment in associated companies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company carries under the equity method
long-term investments in associated companies in which it owns
between 20% and 50% of the company&#146;s voting common stock
and over which the Company can exercise significant influence.
Under the equity method, such investments are carried at cost
adjusted for the Company&#146;s share of the net income or
losses of these companies and the effects of restatement of
non-monetary assets in the associated companies. The effects of
transactions with such associated companies are eliminated
before applying the equity method.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">g.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Cellular telephones</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of cellular telephones given to
customers under exclusive service contracts is amortized on a
straight-line basis based on the nature and terms of the service
contracts to match costs with the timing of earned revenues.
During the second quarter of 2001, the Company decided to reduce
the amortization period of cellular telephones from an average
of eighteen months to twelve months. This change represented an
increase of approximately Ps.184,347 in amortization expense for
the year. The cost of such telephones is included in other
assets, net of accumulated amortization, and does not exceed
market value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the end of the contract term, the customer
keeps the cellular telephone. In the event of an early
termination of an exclusive service contract, the customer
either (i)&nbsp;is required to return the phone to the Company
or (ii)&nbsp;acquires the telephone at its book value on the
date of termination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of cellular telephones sold to customers
is recorded as cost of sales based on the average cost of such
telephones. Telephones leased to customers are included in fixed
assets and are depreciated over the initial lease period,
generally two years.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">h.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Concessions</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs related to the acquisition of concessions
granted by the Mexican government to provide cellular telephone
services have been capitalized and are included in other assets.
Such costs are amortized on a straight-line basis over the
initial term of the respective concession. The Mexican
government requires the Company&#146;s compliance with the
specific terms of each concession. Through December&nbsp;31,
2001, the Company had complied substantially with such
requirements, except for certain informational requirements of
the Mexican authorities. The Company believes that such
noncompliance does not expose it to any risk of concession
forfeiture, or any other material liability.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">i.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Advertising</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Advertising costs are expensed as incurred. The
cost of prepaid media advertising (including television air
time, magazine, directory and other print media) is deferred and
recorded in other assets until the advertising airtime or space
is used, at which time, such cost is recognized as an operating
expense. Advertising expense amounted to Ps.430,993, Ps.349,851
and Ps.260,344 for 2001, 2000 and 1999, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">j.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Excess of cost of investments in subsidiaries
    over book value</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The excess of cost over the book value of net
assets of acquired subsidiaries is amortized on a straight-line
basis over twenty years. Amortization expense was Ps.169,833,
Ps.164,998 and Ps.193,023 in 2001, 2000 and 1999, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">k.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Evaluation of long-lived assets</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company evaluates the recoverability of its
long-lived assets when events and circumstances indicate that
such assets might be impaired. The Company determines impairment
by comparing the undiscounted
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">cash flows estimated to be generated by these
assets to their respective carrying amounts. In the event
impairment exists, a loss is recognized based on the amount by
which the carrying value exceeds the fair value of the asset. If
quoted market prices for an asset are not available, fair market
value is determined primarily using the anticipated cash flows
discounted at a rate commensurate with the risk involved. Losses
on property and equipment to be disposed of are determined in a
similar manner, except that fair market values are reduced for
the cost to dispose.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">l.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Deferred income taxes and employee profit
    sharing</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of January&nbsp;1, 2000, the Company adopted
the provisions of revised Bulletin&nbsp;D-4, &#147;Accounting
Treatment of Income Tax, Assets Tax and Employee Profit
Sharing&#148;, issued by the MIPA, (Bulletin&nbsp;D-4). This
revised Bulletin significantly modifies the previous accounting
treatment for the calculation of deferred taxes by the partial
liability method to a method based on comprehensive assets and
liabilities. The new method requires the recognition of future
tax consequences based on the difference between the financial
statements and tax basis of assets and liabilities&nbsp;&#151;
temporary differences&nbsp;&#151; as of the date of the
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accumulated effect at the beginning of the
year, because of the adoption of Bulletin&nbsp;D-4, increased
the deferred tax asset by Ps.173,102 and increased
stockholders&#146; equity by the same amount. There was no net
effect to income for the years ended December&nbsp;31, 2001 and
2000, since the Company decided to increase the net deferred
income tax asset and offset it by the creation of an allowance
to reduce the value of the tax losses carry forward
(Note&nbsp;12).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Employee profit sharing is a statutory labor
obligation payable to employees and determined, for each
subsidiary with employees, on its pretax income, as adjusted, in
accordance with the provisions of Mexican labor and tax laws.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">m.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Seniority premiums</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with Mexican labor law, the
Company&#146;s employees are entitled to seniority premiums upon
retirement after 15&nbsp;years of service or upon dismissal,
disability or death. The Company follows Bulletin&nbsp;D-3,
&#147;Labor Obligations&#148;, issued by the MIPA
(Bulletin&nbsp;D-3). Under Bulletin&nbsp;D-3, the actuarially
determined projected benefit obligation is computed using
estimates of salaries that will be in effect at the time of
payment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Personnel not yet eligible for seniority premiums
are also included in the determination of the obligation with
necessary adjustments made in accordance with the probability
that these employees will reach the required seniority. At
December&nbsp;31, 2001, the average seniority of the eligible
employees was less than 4&nbsp;years. The Company&#146;s
liability and related costs for seniority premiums are
immaterial for all periods presented.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In accordance with Mexican labor law, the Company
is liable for severance payments to employees who are dismissed
under certain circumstances. Such compensation is expensed when
paid.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has no employee pension plans and
does not provide for post-retirement benefits.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">n.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Profit (loss) per share</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bulletin&nbsp;B-14, &#147;Earnings per
Share&#148;, issued by the MIPA (Bulletin&nbsp;B-14), requires
disclosure in the income statement of the basic net profit
(loss) per share and diluted profit (loss) per share, and the
per share effect of any extraordinary item affecting the net
profit or loss for the year. Basic profit (loss) per share is
computed by dividing profit (loss) available to common
stockholders by the weighted-average number of common shares
outstanding for the year. The computation of diluted profit
(loss) per share is similar to basic profit (loss) per share,
except that the denominator is increased to include the number
of additional common
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">shares that would have been outstanding if the
potentially dilutive common shares had been issued. For the
years ended December,&nbsp;31, 2001, 2000 and 1999, the Company
did not compute nor disclose diluted profit (loss) per share
since it was not required by Bulletin&nbsp;B-14 because, for
those years, the Company incurred losses from continuing
operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">o.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Revenue recognition</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cellular air time is recorded as revenue as
service is provided except for revenue from the sale of prepay
cards which is recognized at the date of sale. The Company
recognizes the revenue on the sale of prepay cards at the date
of sale rather than on a deferred basis because the length of
the average consumption period for such prepay cards is not
significant, i.e., approximately one to one and a half months,
and it is not material to results of operations for all periods
presented. Sales and cost of sales of equipment and related
services are recorded when goods are delivered and services are
provided. Cellular access charges are billed in advance and
recognized when the services are provided. Other revenues,
mainly from paging and long distance services, are recognized
when the related services are provided.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">p.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Foreign currency transactions</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Foreign currency transactions are recorded at the
exchange rates in effect at the transaction date. Assets and
liabilities denominated in foreign currencies are translated to
Mexican pesos using the exchange rates in effect at the time of
settlement or valuation at each balance sheet date, with the
resulting exchange differences being recognized as exchange
gains or losses.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">q.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Comprehensive income (loss)</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company adopted Bulletin&nbsp;B-4,
&#147;Comprehensive Income&#148;, issued by the MIPA,
(Bulletin&nbsp;B-4), effective January&nbsp;1, 2001. Based on
Bulletin&nbsp;B-4, the comprehensive income (loss) includes the
Company&#146;s consolidated net loss and any other item that,
because of specific accounting guidance, is recorded directly as
a part of stockholders&#146; equity, and which are not capital
stock increases, decreases and/or distributions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The comprehensive income (loss) line included in
the consolidated statement of stockholders&#146; equity
represents the result of the performance of the Company during
the year (Note&nbsp;20).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">r.</FONT></B></TD>
    <TD>
    <B><FONT size="2">New accounting pronouncements</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, the MIPA issued the revised
Bulletin&nbsp;C-9, &#147;Liabilities, Provisions, Contingent
Assets and Liabilities and Commitments&#148;
(Bulletin&nbsp;C-9), which establishes a methodology for
valuation, presentation and disclosure of liabilities and
provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for
commitments. The revised Bulletin&nbsp;C-9 states that
(i)&nbsp;all contingent assets that have a practical true
realization must be accounted and disclosed in the financial
statements; (ii)&nbsp;contingent assets that have a probable
realization cannot be accounted for in the financial statements,
but must be disclosed; and (iii)&nbsp;contingent assets that do
not have a probable realization and cannot be accounted for in
the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it
represents significant fixed assets additions. The provisions of
Bulletin&nbsp;C-9 are required to be applied beginning on
January&nbsp;1, 2003, although early adoption is recommended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, in December 2001, the MIPA issued
revised Bulletin&nbsp;C-8, &#147;Intangible Assets&#148;
(Bulletin&nbsp;C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a
future economic benefit. Revised Bulletin C-8 states that
pre-operating costs should be expensed as a period cost, unless
they could be classified as development costs. Bulletin&nbsp;C-8
requires that intangible assets with finite useful lives should
be amortized over its useful life. The provisions of
Bulletin&nbsp;C-8 are required to be applied beginning on
January&nbsp;1, 2003, although early adoption is recommended.
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management is currently evaluating the impact
that the adoption of Bulletin&nbsp;C-8 and Bulletin&nbsp;C-9
will have on its consolidated financial statements.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;5&nbsp;&#151; Related
Parties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until April&nbsp;4, 2001, the Peralta Group held
substantial ownership interest in the Company. The Peralta Group
holds ownership interests in various other entities, primarily
Industrias Unidas, S. A. de C. V. (IUSA) and related entities,
which still are customers of or suppliers to the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Related party accounts receivable, including
interest, are with IUSA and related entities and amounted to
Ps.1,333 and Ps.5,788 at December&nbsp;31, 2001 and 2000,
respectively. Accounts receivable result from the sale of
cellular telephone services and operating lease contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounts and notes payable to related parties,
including interest, as of December&nbsp;31, are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Verizon
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,074</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vodafone
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,082</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounts payable result from services rendered by
the seconded employees assigned by Verizon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Old Iusacell made advance payments of U.S.$15,000
to Northern Telecom (CALA) Corporation (Nortel) in 1994. Legal
counsel believed that Nortel is legally obligated to refund the
U.S.$15,000 advance to Old Iusacell. Therefore in 2000, Verizon
acquired rights to a refund of the advance from Nortel to be
applied in future purchases by Verizon from Nortel, in exchange
for a dollar-for-dollar reduction in payables by the Company to
Verizon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;8, 2001, in connection with the
negotiations for the purchase of Portatel, Verizon through one
of its affiliates, provided the Company with financing for
U.S.$7,800 which consisted of a two-year note payable due
May&nbsp;8, 2003, bearing interest at a fixed annual interest
rate of 11.5%. Interest and principal are payable at the
maturity of the note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is an analysis of the related party
transactions described above:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,088</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,790</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,088</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular telephones repair expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Technical expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,154</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,744</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,397</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,438</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,544</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 6&nbsp;&#151; Inventories, Net</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, inventories, net,
consisted of the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular telephones and accessories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less: Allowance for obsolete and slow-moving
    inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110,756</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51,329</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">246,493</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">239,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goods in transit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,808</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advances to suppliers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">249,388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note 7&nbsp;&#151; Investment:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, the Company&#146;s
investments were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Entity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investment</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Editorial Celular, S.A. de C.V.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">40.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">40.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">AMCEL
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,689</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,178</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Editorial Celular, S.A. de C.V. is accounted for
by the equity method. For each of the three years in the period
ended December&nbsp;31, 2001, the Company&#146;s share of net
earnings (losses)&nbsp;of Editorial Celular, S.A. de C.V. was of
Ps.2,542, (Ps.19,647) and Ps.2,462, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the years ended December&nbsp;31, 2001 and
1999, the gain (loss)&nbsp;on sale of equity investments was of
Ps.3,976 and (Ps.56,622), respectively.
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 8&nbsp;&#151; Property and Equipment,
Net</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December&nbsp;31, property and equipment, net, consisted of:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings and facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,623,380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,605,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Communications equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,193,060</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,614,109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">183,236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Transportation equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,691</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,106</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computer equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,446,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,142,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular rental telephones
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,137</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,399</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,546,727</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,611,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,625,589</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,207,703</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,921,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,403,514</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,978</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Construction in progress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,480,969</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">934,314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advances to suppliers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">959</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152,991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.9,469,044</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.8,550,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
expense was Ps.1,247,149, Ps.1,292,146 and Ps.788,430 for 2001,
2000 and 1999, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December 1999,
the Company entered into a series of agreements with MATC
Celular, S. de R.&nbsp;L. de C. V. (an affiliated company of
American Tower Corporation) (&#147;MATC Celular&#148;). These
agreements, among other things, gave MATC Celular the right to
acquire approximately 350 existing Old Iusacell non-strategic
towers. During 2001, Old Iusacell and some of its subsidiaries
sold 244 non-strategic towers to MATC Celular, for Ps.348,754
(U.S.$36,600) generating a gain on the sale, before taxes, of
Ps.307,886. As a part of this agreement, a subsidiary of New
Iusacell signed a lease contract for the same towers with MATC
Celular for a minimum mandatory term of ten years, a term that
could be automatically extended for two additional periods of
five years each (Note&nbsp;13a.).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, Bulletin D-5,
&#147;Leases&#148;, (Bulletin D-5) establishes the general
criteria for capital and operating lease transactions.
Sale-leaseback transactions are recognized with the use of the
general criteria of Bulletin D-5. The timing of the recognition
of a gain derived from sale-leaseback transactions should be
based on the subsequent lease classification criteria of the
leaseback portion of the transaction. If the subsequent
leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed, whereas, if the subsequent
leaseback is accounted for as a capital lease, the gain is
deferred and amortized in proportion with the estimated useful
life of the asset leased. Based upon this criteria, the
sale-leaseback agreement with MATC Celular was recorded by the
Company as an operating lease and consequently, the Ps.307,886
gain was recognized at the date of the sale and has been
recorded as other operating income in the consolidated income
statement for the year ended December&nbsp;31, 2001.
</FONT>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 9&nbsp;&#151; Other Assets, Net</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December&nbsp;31, other assets consisted of the following:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Concessions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,472,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,094,698</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular telephones
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,322,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,919,915</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">358,095</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">383,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Advance payments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">502,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">268,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pre-operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes (Note 12)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,063,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,140,372</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,426,763</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,433,372</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.2,637,035</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.2,707,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Concessions and
cellular telephone amortization expense was Ps.1,202,243,
Ps.951,833 and Ps.639,570 in 2001, 2000 and 1999, respectively.
</FONT>

<P align="left">
<B><FONT size="2">Note 10&nbsp;&#151; Notes Payable and
Long-Term Debt</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001 and 2000, the
long-term debt of the Company consisted of the following:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars 2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">U.S.$150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,375,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,504,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,209,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,511,422</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BNP credit agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BNP refaccionario loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,564</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amended and restated syndicated loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">265,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,435,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term bank loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">846,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eximbank financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">504,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commerzbank financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BBVA Bancomer handset facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">789,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,238,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,861,671</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,344,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">U.S.$786,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.7,211,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.6,517,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior notes
due 2004</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;25, 1997, Old Iusacell completed an
offering of long-term, senior notes due July&nbsp;15, 2004 for
U.S.$150,000, accruing interest at a fixed rate of 10%, payable
semi-annually starting January&nbsp;15, 1998 (the Notes Due
2004). The Notes Due 2004 are redeemable at the option of Old
Iusacell, in whole or in part, at any time on or after
July&nbsp;15, 2001 starting at a redemption price of 105.0% of
principal amount plus accrued interest, if any, declining to
102.5% after July&nbsp;15, 2002, and finally to 100.0% after
July&nbsp;15, 2003.
</FONT>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Notes Due 2004 may also be redeemed at a
price equal to 100.0% of principal amount plus accrued interest,
if any, in the case of legal changes adversely affecting the
treatment of the withholding taxes on payments to holders of the
Notes Due 2004.
</FONT>

<P align="left">
<B><FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior notes
due 2006</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;9, 1999, New Iusacell completed
an offering of long-term, senior notes due December&nbsp;1, 2006
for U.S.$350,000, accruing interest at a fixed rate of 14.25%,
payable semi-annually starting June&nbsp;1, 2000 (the Notes Due
2006). New Iusacell invested approximately U.S.$133,600 of the
net proceeds of the offering in securities in escrow to secure
the first six semi-annual payments in full of the interest on
the Notes Due 2006. This investment is restricted as to
withdrawal and may only be utilized to meet the Company&#146;s
interest commitment on the Notes Due 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to December&nbsp;1, 2002, New
Iusacell may redeem in the aggregate up to 35% of the original
principal amount of the Notes Due 2006 with the proceeds of one
or more public equity offerings by New Iusacell at a redemption
price of 114.25% of principal amount plus accrued interest, if
any. The Notes Due 2006 may also be redeemed at a price equal to
100.0% of principal amount plus accrued interest, if any, in the
case of legal changes adversely affecting the treatment of the
withholding taxes on payments to holders of the Notes Due 2006.
</FONT>

<P align="left">
<B><FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BNP credit
agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;12, 2000, a subsidiary of New
Iusacell obtained financing to acquire microwave transmission
equipment. The financing consists of a seven-year secured term
facility provided by BNP Paribas in the principal amount of up
to U.S.$30,479. At December&nbsp;31, 2001, U.S.$20,197 of this
facility had been drawn down.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Loans outstanding under the BNP credit agreement
provide for interest at a rate per annum equal to 0.6% above
six-month LIBOR. The BNP credit agreement also includes a
commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest
under the credit agreement are paid semi-annually starting on
December 2000. Fees under the credit agreement are paid
quarterly starting on September 2000. Principal payments are due
in ten equal installments starting in December 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001 and for
the period from July&nbsp;12 to December&nbsp;31, 2000, the
weighted-average interest rates were 2.52% and 7.17%,
respectively.
</FONT>

<P align="left">
<B><FONT size="2">d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BNP
refaccionario loan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;12, 2000, a subsidiary of New
Iusacell obtained financing to acquire microwave transmission
equipment. The financing consists of a four year secured term
facility provided by BNP Paribas in the principal amount of
U.S.$5,379. At December&nbsp;31, 2001, U.S.$3,564 of this
facility had been drawn down.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Loans outstanding under the BNP refaccionario
loan provide for interest at a rate per annum equal to 2% above
six-month LIBOR. The BNP refaccionario loan also includes a
commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest
under the refaccionario loan is paid semi-annually starting on
December 2000. Fees under the credit agreement are paid
quarterly starting on September 2000. Principal payments are due
in four equal installments starting in December 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001 and for
the period from July&nbsp;12 to December&nbsp;31, 2000, the
weighted-average interest rates were 3.92% and 8.57%,
respectively.
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amended and
restated syndicated loan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;29, 2001, Old Iusacell completed
the restructuring of its long-term bank loan, its revolving
credit facility, and the payment of the Eximbank financing and
the Commerzbank financing by entering into an amended and
restated senior secured loan agreement (the amended and restated
syndicated loan), which consists of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;The Tranche A Loan for an aggregate
    principal amount of U.S.$189,805 for the purpose of refinancing
    existing indebtedness under the long-term bank loan and the
    revolving credit facility and under a certain bridge loan used
    to pay the January 2001 principal amortization payments under
    the long-term bank loan and the revolving credit facility.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;The Tranche B Loan for an aggregate
    principal amount of U.S.$75,817 for the purpose of paying
    existing indebtedness under the Eximbank financing and the
    Commerzbank financing and under a certain bridge loan used to
    pay also in January 2001 a principal amortization payment under
    the Commerzbank financing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended and restated syndicated loan provides
for interest at a rate per annum equal to one, two, three or six
month LIBOR at Old Iusacell&#146;s option plus a spread ranging
from, depending on Old Iusacell&#146;s leverage ratio, 1.75% to
2.25% with quarterly interest payments which began on
May&nbsp;29, 2001. Principal installments will be due beginning
2004 through 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There was no gain or loss recognized from this
loan restructuring.
</FONT>

<P align="left">
<B><FONT size="2">f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Covenants and
collateral</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amended and restated syndicated loan, the BNP
credit agreement, the BNP refaccionario loan, the Notes Due 2004
and the Notes Due 2006 contain certain restrictive covenants,
including the maintenance of certain financial ratios,
restrictions on incurring additional debt, limitations on
capital expenditures and restrictions on the sale or lease of
Old Iusacell&#146;s assets. As of December&nbsp;31, 2001 and
2000, New Iusacell and Old Iusacell had complied with such
covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;30, 2000, Old Iusacell obtained
the Fourth Amendment to the long-term bank loan and the
revolving credit facility. On the same date, Old Iusacell also
obtained a waiver, consent and second amendment to the Eximbank
financing and to the Commerzbank financing (the Second
Amendment). The Second Amendment and the Fourth Amendment
allowed the Company, among other things, to: (i)&nbsp;dispose of
certain telecommunications equipment (Note 8c.) under certain
conditions such as the funds obtained on the sale be used to
acquire additional assets; (ii)&nbsp;the sublease of such
communications equipment by Old Iusacell or any of its
subsidiaries; (iii)&nbsp;the sale of one of Old Iusacell&#146;s
subsidiaries, Satelitr&#243;n, S. A. de C.V.; (iv)&nbsp;the
release of the mortgage of a real property and (v)&nbsp;Old
Iusacell&#146;s incurrence on or before March&nbsp;31, 2001 of
unsecured indebtedness with maturities not to exceed 12 months
of an aggregate principal amount of not more than U.S.$20,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;7, 2001 the Amended and Restated
syndicated loan was amended and a waiver and consent was granted
in order to allow Old Iusacell to (i)&nbsp;create liens
encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or
other interest hedging agreement up to the principal amount of
indebtedness of Old Iusacell and its subsidiaries with floating
rate of interest; (ii)&nbsp;loan or advance to New Iusacell in
lieu of paying dividends at such times and in such amounts as
shall be necessary to permit New Iusacell to pay scheduled
interest (including any tax gross&#150;up with respect thereto)
and principal payments as and when due in respect of the Notes
due 2006; and (iii)&nbsp;loan or advance to New Iusacell in lieu
of paying dividends in an amount not to exceed U.S.$5,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Old Iusacell&#146;s obligations under the amended
and restated syndicated loan are unconditionally guaranteed,
jointly and severally, by the principal operating and
concession-holding subsidiaries of Old Iusacell and
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">are secured by the pledge of substantially all
capital stock and equity interests held by Old Iusacell and by
all cellular concessions, and by a first lien on substantially
all assets used in connection with or related to such
concessions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company&#146;s
long-term debt matures as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Years ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican pesos</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,381</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">254,539</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,333,991</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,254,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">387,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,550,817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007 and thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">789,383</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,238,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">g.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes
payable</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, notes payable consisted
of the following:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. Dollars</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Handset facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 2001, Old Iusacell obtained a handset
acquisition financing facility from Banco Santander Mexicano,
which consisted of a one-year senior unsecured credit facility
in a principal amount of U.S.$12,000. Loans outstanding under
this facility provided for interest at an annual rate of
6.9938%. Interest is paid quarterly and the principal was paid
on February&nbsp;19, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2000, Old Iusacell obtained a credit
facility from Banco Santander Mexicano, to be used solely to
acquire cellular handsets, in the principal amount of
U.S.$12,000. Loans outstanding under this facility provided for
interest at an annual rate of LIBOR plus 1.85%. The Company drew
down the entire U.S.$12,000 during December 2000. This facility
was repaid on February&nbsp;8, 2001.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;11&nbsp;&#151; Notes Payable to
Suppliers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, notes payable to
suppliers consisted of the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Short-term:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Motorola Facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The TV Azteca Facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total short-term
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Long-term:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Harris Facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">The Motorola Facility</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;31, 2000, Portatel, through one of
its subsidiaries, obtained a five-year credit facility from
Motorola Credit Corporation (Motorola) to be used solely to
acquire communications equipment, in the principal amount of
U.S.$9,106 (the Motorola Facility). Drawdowns under the Motorola
Facility were available for one year. Loans outstanding under
the Motorola Facility accrue interest at a variable annual rate
of six-month LIBOR plus 6%. Principal and interest are payable
in April 2002. Portatel drew down the entire U.S.$9,106 during
2000 and 2001. As a part of the agreement, Portatel was required
to keep an escrow account to deposit monthly the accrued
interest on the loans outstanding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Motorola Facility contains certain
restrictive covenants including the maintenance of certain
financial ratios and restrictions on the payment of dividends.
As of December&nbsp;31, 2001, Portatel had complied with such
covenants.
</FONT>

<P align="left">
<B><FONT size="2">The TV Azteca Facility</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;5, 2001, the Company, through
one of its subsidiaries, obtained a credit facility from TV
Azteca, S. A. de C. V. to be used solely to acquire television
air time, in the principal amount of Ps.40,000 (the TV Azteca
Facility). The facility provides for interest at a variable
annual rate of TIIE times 1.5. Principal and interest are
payable in six monthly installments starting January&nbsp;31,
2002.
</FONT>

<P align="left">
<B><FONT size="2">The Harris Facility</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August&nbsp;18, 2000, the Company, through one
of its subsidiaries, obtained a line of credit from its supplier
Harris, S. A. de C. V., for the construction and installation of
communications equipment. The line of credit consists of a
five-year unsecured facility in a principal amount of
U.S.$6,900. During 2001 and 2000, the Company drew down
U.S.$3,825 and U.S.$2,550, respectively, under this facility.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Loans outstanding under this facility bear
interest at an average term rate of LIBOR plus 1.25%. Interest
is paid semiannually starting in June&nbsp;15, 2001. Principal
payments are due in six semi-annual installments starting on
June 2003.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;12&nbsp;&#151; Income Tax, Net
Assets Tax and Employee Profit Sharing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, 2000 and 1999, the
provision for income taxes consisted of current income tax and
assets tax of Ps.146,404, Ps.156,335 and Ps.611,378,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Old Iusacell has filed annual consolidated income
tax returns since the tax year beginning January&nbsp;1, 1994.
Starting the year ended December&nbsp;31, 2000, New Iusacell is
the holding company for tax consolidation purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The statutory income tax rate in Mexico is 35%.
As a result of the amendment to the income tax law enacted on
January&nbsp;1, 2002, the 35% statutory income tax rate will be
reduced annually starting in 2003, and continue to decrease
until the statutory rate is 32% in 2005. Consequently, the
effect of the gradual decrease in the statutory Income Tax rate
will reduce the deferred tax asset in 2003. For the years ended
December&nbsp;31, 2001 and 2000, the Company generated tax
losses of Ps.206,244 and Ps.595,402, respectively. For the year
ended December&nbsp;31, 1999 the Company generated a tax profit
of Ps.1,315,683.
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001 and 2000, the main
temporary differences the Company recognizes for the calculation
of deferred income taxes were as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">221,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Liability accruals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax losses carry forwards and tax credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,878,807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,699,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(253,689</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(249,388</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,044,465</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,388,102</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephones to be amortized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(174,968</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(731,636</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Concessions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(308,239</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,847</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Temporary differences
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,379,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,606,011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income tax asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">482,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">562,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(309,741</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(381,386</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred income tax asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has recorded a net deferred tax asset
of Ps.173,102 reflecting, mainly, the benefit of tax loss carry
forwards, which expire in varying amounts between 2005 and 2010.
Realization is dependent on generating sufficient taxable income
prior to expiration of the loss carry forwards. Although
realization is not assured, management believes it is more
likely than not that most of the net deferred tax asset at
December&nbsp;31, 2001 will be realized based on the
Company&#146;s business plan estimate of future taxable income
over the next five years in an amount sufficient to utilize the
net deferred tax losses recorded as of December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s estimate of future taxable
income is based primarily on and supported by (i)&nbsp;the
significant improvement in operating performance through 2001,
as evidenced by the success of the implementation of the Verizon
wireless business model. This model has produced strong
subscriber annual compound growth of 50% through 2001, improved
revenues mainly driven by subscriber growth and lower network
and operating costs, (ii)&nbsp;Vodafone&#146;s strong experience
and success in the prepay market, (iii)&nbsp;additional increase
in revenues generated by the Calling Party Pays feature with an
important taxable operating margin, (iv)&nbsp;the change in the
income tax law to increase the useful lives for network
equipment from 3.3&nbsp;years to 12.5&nbsp;years, representing
an important decrease in depreciation expense for income tax
purposes and (v)&nbsp;an increase in 2001 of the potential
effects of additional cost cutting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of the deferred tax asset considered
realizable could be reduced in the near term if estimates of
future taxable income during the carry forward periods are
reduced.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001 and 2000, the
Company had a valuation allowance of Ps.309,741 and Ps.381,386,
respectively, to reduce its deferred tax assets to estimated
realizable value. The valuation allowance primarily relates to
the deferred tax assets arising from tax loss carry forwards and
tax credits.
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company had the
following net operating losses for income tax purposes that may
be carried forward and applied against future taxable earnings:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year of loss</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of loss</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">year</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1995
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.771,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1996
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1997
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">545,001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2007</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">461,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2008</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">595,402</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">206,244</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2011</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These losses are indexed for inflation from the
year incurred to the sixth month of the year utilized.
Accordingly, these amounts include inflation up to June 2001.
Due to the restructuring of the Company related to
Verizon&#146;s assumption of management control (Note 2), the
Company did not include additional tax losses for Ps.982,749,
relating to one of its subsidiaries, Iusatelecomunicaciones, and
may not be able to apply these losses against other
subsidiaries&#146; profits in 2002 and beyond.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1.8% net assets tax is calculated on the
average value of substantially all assets less certain
liabilities. This tax is required to be paid if this computation
exceeds the amount of income tax. The 1.8% net assets tax paid
may be utilized as a credit against future income tax in the
years in which the Company generates an income tax in excess of
the assets tax. The assets tax is available as a carry forward
for up to ten years and is subject to restatement based on the
NCPI when used. As of December&nbsp;31, 2001, net assets tax
available as a carry forward was Ps.428,025 which expires in
2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Employee profit sharing, generally 10%, is
computed on taxable income, with adjustments to exclude
inflationary effects and the restatement of depreciation
expense. In the years ended December&nbsp;31, 2001 and 2000, the
Company did not generate any taxable income for profit sharing
purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effective rate reconciliation as of
December&nbsp;31, was as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss (profit)&nbsp;on continuing operations
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(367,801</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(991,504</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">511,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statutory Income Tax rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax (benefit)&nbsp;expense at statutory
    rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(128,730</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(347,026</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179,167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Add (deduct):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory purchases less cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,505</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,897</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,006</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(234,589</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184,671</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(333,843</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Differences between interest and inflationary
    gains or losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">154,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,778</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,414</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Telephones to be amortized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41,492</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,442</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,557</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33,752</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161,606</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income Tax (benefit)&nbsp;expense for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72,185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(269,177</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effective rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net assets tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 13&nbsp;&#151; Commitments and
Contingencies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the Company had the
following commitments and contingent liabilities:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has
    entered into operating lease agreements for administrative
    offices, sales branches and service facilities and since 2001,
    operating lease agreements with MATC Celular for the lease of
    towers (Note&nbsp;8c.). These lease agreements expire at various
    dates through 2011, and some agreements contain options for
    renewal. Lease expense was Ps.157,159, Ps.164,074 and Ps.129,954
    for the years ended December&nbsp;31, 2001, 2000 and 1999,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Future annual minimum rental payments under
    existing leases as of December&nbsp;31, 2001 are as follows:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">237,189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">228,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">218,801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">862,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,081,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may
    have contingent liabilities for taxes and penalties that the tax
    authorities may assess based on audits of prior years&#146; tax
    returns. During 1997, the Mexican tax authorities completed an
    audit of three companies of the Company (Old Iusacell, Iusacell,
    S. A. de C. V. and SOS Telecomunicaciones, S. A. de C. V.). As a
    result of those investigations, Old Iusacell was assessed and
    paid a Ps.21,881 penalty in 1999 by the tax authorities for an
    incorrectly deducted interest expense. The tax authorities have
    claimed no other assessment.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April 1998,
    Old Iusacell learned that the Montes Urales property was subject
    to two liens. Such liens were not identified when Inmobiliaria
    Montes Urales 460, S. A. de C. V. was acquired in 1994, nor was
    Old Iusacell notified of such liens subsequent to the
    acquisition. To date, the liens have not been removed and it is
    uncertain as to when the liens will be removed, if at all and
    consequently, Old Iusacell is not be able to sell the property.
    Such property is being leased to third parties.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Old Iusacell has
    certain commitments derived from its joint venture agreement
    with Infomin, S.&nbsp;A. de&nbsp;C.&nbsp;V. (Note&nbsp;2).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During April
    2001, Iusatel, a subsidiary of the Company, reached an agreement
    to settle the outstanding amounts due related to the special
    projects implemented by Tel&#233;fonos de M&#233;xico,
    S.&nbsp;A. de&nbsp;C.&nbsp;V. (Telmex) to permit competition in
    long distance telephony. Iusatel agreed to pay for its portion
    of such special projects in two parts: (i)&nbsp;a fixed payment
    of approximately U.S.$13,600, payable in twelve equal monthly
    installments beginning in April 2001, and (ii)&nbsp;a
    U.S.$0.0053 per full minute, usage-based surcharge to the local
    wire line interconnection rate from January&nbsp;1, 2001 through
    December&nbsp;31, 2004 for long distance calls terminated in
    Telmex&#146;s local wire line network.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iusacell, S. A.
    de C.V., a subsidiary of the Company, decided to sue and seek
    compensatory damages from one of the Company&#146;s distributors
    as a result of the latter&#146;s decision to breach their
    distribution agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">g.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
    January&nbsp;1, 2002 the Mexican Congress approved a tax law
    reform that assesses an additional 10% excise tax on certain
    wireless telecommunications services. In February 2002, the
    Company filed an injunction action to challenge the Mexican
    government&#146;s implementation of the tax.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note 14&nbsp;&#151; Contributed
Capital</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the years ended December&nbsp;31, 2001,
2000 and 1999, the following transactions took place:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;10, 1999, the Technical
Committee approved the subscription of 70,004 series&nbsp;L
shares of Old Iusacell for the Executive Employee Stock Purchase
Plan (the Stock Purchase Plan).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;3, 1999, Old Iusacell converted an
amount of Ps.446,805 (U.S.$31,000) into 44,285,714 series&nbsp;A
shares of Old Iusacell. The 44,285,714 series&nbsp;A shares of
Old Iusacell were initially subscribed by Verizon, of which 50%,
or 22,142,857, of such shares, were then sold to Carlos Peralta.
There was no gain or loss recognized from the sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;10, 1999, the Company concluded a
corporate reorganization. The Company&#146;s corporate
reorganization included the following transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An exchange offer
    by New Iusacell of its series&nbsp;A and V ADSs and shares, for
    Old Iusacell&#146;s series&nbsp;A, B, D and L ADSs and shares on
    a one-for-one basis. At the end of the exchange offer,
    approximately 6,890,617 series&nbsp;D and L&nbsp;shares were not
    tendered.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stockholders
    of Old Iusacell who participated in the exchange were also
    offered the option to purchase an aggregate of 22,419,716
    series&nbsp;V shares of New Iusacell, in the form of ADSs or
    shares. A total of 18,405,490 series&nbsp;V shares were
    subscribed. Total proceeds amounted to Ps.146,193 (U.S.$12,884).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Primary and
    secondary offerings under which New Iusacell sold 23,596,780
    series&nbsp;V shares, and Verizon and the Peralta Group sold
    101,403,220 series&nbsp;V shares of New Iusacell. Total proceeds
    for the primary offering amounted to Ps.270,593 (U.S.$23,847).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;1, 2000, New Iusacell launched a
second exchange offer of its series&nbsp;V ADS and shares, for
Old Iusacell&#146;s series&nbsp;D and L ADSs and shares on a
one-for-one basis. At the end of the second exchange offer, New
Iusacell exchanged 5,670,360 series&nbsp;V shares for 33,070 Old
Iusacell series&nbsp;D shares and 5,637,290 Old Iusacell
series&nbsp;L shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2000, Old Iusacell&#146;s ADS
depositary, The Bank of New York, converted 1,171,464
series&nbsp;L shares that had previously been held in the form
of series&nbsp;L ADSs into New Iusacell&#146;s series V shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2000, New Iusacell launched a primary
public offering under which New Iusacell sold 10,529,700
series&nbsp;V ADSs at a price of U.S.$.015125 per ADS.
Pre-emptive stockholder rights were exercised for 71,752
series&nbsp;V shares. Proceeds from the offering amounted to
Ps.1,604,131 (U.S.$159,370) net of expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the September&nbsp;29, 2001 Stockholders&#146;
Meeting, the Company&#146;s stockholders approved a capital
increase of up to Ps.932,355 (U.S.$100,000) through the issuance
of 224,461,739 series&nbsp;A shares and 210,320,870
series&nbsp;V shares. The increase was subscribed by the
principal stockholders&#146; of the Company and through a public
rights offering.
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The changes in the number of shares of common
stock for the period January&nbsp;1, 1999 through
December&nbsp;31, 2001 are as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Old Iusacell&#146;s shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">New Iusacell&#146;s shares</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series D</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series L</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Series V</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of 1/01/99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">891,753,409</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,562,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186,904,725</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151,326,154</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock for the Stock Purchase
    Plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70,004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock through the
    capitalization of debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,285,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exchange offer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(936,039,123</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,562,450</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(186,844,813</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(144,565,453</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">736,821,995</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">536,189,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rights offer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,405,490</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Primary offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,596,780</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of 12/31/99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,830,705</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">736,830,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">578,200,864</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of second exchange offer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33,070</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,808,754</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,841,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of primary offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,297,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock upon exercise of
    preemptive rights
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of private offering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(392</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,717</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of 12/31/00
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">736,830,745</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">690,411,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of the reverse stock split
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,450</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,234</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Issuance of common stock for the capital stock
    increase
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">224,461,739</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,320,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance as of 12/31/01
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">961,292,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">900,732,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each series&nbsp;A and series&nbsp;V share
entitles the holder to one vote at any general meeting of the
stockholders of New Iusacell. Series&nbsp;A stockholders are
entitled to vote at a special meeting of the series A
stockholders to elect seven of the twelve members of the Board
of Directors and the corresponding alternate directors.
Series&nbsp;V stockholders are entitled to vote at a special
meeting of the series&nbsp;V stockholders to elect five of the
twelve members of the Board of Directors and the corresponding
alternate directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New Iusacell&#146;s bylaws require that, unless a
stockholders&#146; meeting resolves otherwise, any capital
increase effected pursuant to a capital contribution be
represented by new series A and V shares in proportion to the
number of shares of each such series outstanding. The bylaws
provide that the series&nbsp;V shares may not exceed 50% less
one share of New Iusacell&#146;s capital stock.
</FONT>

<P align="left">
<B><FONT size="2">Note 15&nbsp;&#151; Executive Employee Stock
Purchase Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Stock Purchase Plan is administered by a
management trust with the assistance of the trust division of a
Mexican bank. Under the Stock Purchase Plan, a committee, which
is composed of certain executive officers of the Company (the
Technical Committee), determines to which executive employees
series&nbsp;V shares of New Iusacell will be offered for
purchase (prior to the exchange offer the shares subject to the
Stock Purchase Plan were series&nbsp;L shares of Old Iusacell,
which were exchanged for series&nbsp;V shares of the Company).
The Technical Committee also determines the number of
series&nbsp;V shares to be offered for purchase to such
executive employees, the purchase price per share, the vesting
schedule, the payment terms and all other terms and conditions
thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of series&nbsp;V shares that may be
subject to purchase rights granted under the Stock Purchase Plan
cannot exceed 4.9% of the aggregate number of issued and
outstanding New Iusacell shares.
</FONT>

<P align="center"><FONT size="2">F-29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of the changes of the stock options for
employees for the year ended December&nbsp;31, is presented
below.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">exercise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.10.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,695,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,899,890</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;9.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">659,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">681,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,603,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,210,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,660</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cancelled/Forfeited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">659,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.92</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">681,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,532,996</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at the end of the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,485,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.84</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,695,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares exercisable at year end
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,826,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,804,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,092,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes Stock Purchase
Plan options outstanding as of December&nbsp;31, 2001, 2000 and
1999:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Weighted-average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">exercise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Range of prices</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.4.31 - 9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,812,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">5.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;7.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,525,285</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;7.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.46 - 14.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,882,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">6.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,566,949</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.4.31 - 9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,695,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">4.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,695,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;7.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.46 - 15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,789,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">5.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,108,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.4.31 - 9.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">3.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,036,417</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;7.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.46 - 15.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,448,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">4.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,789,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note&nbsp;16&nbsp;&#151; Earned
Capital</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican law, a legal reserve must be
created and increased annually by 5% of the annual net earnings
until it reaches 20% of the nominal amount of a
corporation&#146;s capital stock. This reserve is not available
for dividends, but may be used to reduce a deficit or be
transferred to capital.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends paid will be free of income tax if paid
out of the Net Taxable Income Account (CUFIN). A 35% rate will
be paid on the amount exceeding the balance of the CUFIN by
multiplying the dividend paid by a factor of 1.5385. The
applicable tax will be payable by the Company, and it may be
credited against the income tax the Company is subject to in the
following three fiscal years. Dividends paid will not be subject
to any tax withholding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the balance on the
CUFIN is approximately Ps.133,419. New Iusacell currently cannot
pay dividends under the covenants for the Notes Due 2006.
</FONT>

<P align="center"><FONT size="2">F-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">inflation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock subscribed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;5,923,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;831,351</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.6,754,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,209,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,329,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated profits from prior years
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,421,153</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">659,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(761,828</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(300,276</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(199,713</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;5,601,511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,436,312</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.7,037,823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31, 2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Historical value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">inflation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock subscribed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;4,994,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;827,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;5,822,194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,209,952</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,329,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated profits from prior years
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(324,247</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">684,932</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">360,685</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,096,906</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,607</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,809</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;4,973,210</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.1,632,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.&nbsp;6,605,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note 17&nbsp;&#151; Foreign Currency
Position</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The balance sheet as of December&nbsp;31 includes
assets and liabilities denominated in U.S. Dollars, as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monetary liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">896,115</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">879,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net monetary liability position in U.S. Dollars
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">653,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">719,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equivalent in nominal Mexican pesos
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.5,991,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.6,913,156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001 and 2000, most of
the communications equipment and inventories of cellular
telephones and accessories are of foreign origin (Notes&nbsp;6
and 8).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, 2000 and 1999, interest income and
interest expense on assets and liabilities denominated in U.S.
Dollars were as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,459</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,017</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,558</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">U.S.$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,361</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equivalent in nominal Mexican Pesos
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.739,814</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.639,609</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.335,880</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Operating results for the years ended
December&nbsp;31, 2001, 2000 and 1999 include depreciation and
amortization expenses, related to fixed assets and inventories
of foreign origin.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exchange rates as of December&nbsp;31, 2001
and 2000 were Ps.9.1695 and Ps.9.6098, per U.S.&nbsp;Dollar,
respectively. At the issuance date of these financial
statements, March&nbsp;1, 2002, the exchange rate in effect was
Ps.9.1303 per U.S.&nbsp;Dollar.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;18&nbsp;&#151; Project 450</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 1994, Old Iusacell created a subsidiary to
provide fixed wireless local telephony services using the
450&nbsp;MHz frequency band (Project&nbsp;450). At
December&nbsp;31, 2001 and 2000, Old Iusacell&#146;s investment
in Project&nbsp;450 amounted to Ps.31,080 and Ps.35,309,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Given the capabilities of digital technology and
the success the Company has had thus far with its deployment,
the Company is exploring alternatives for providing local
telephony service, including fixed or limited zone wireless
service in the 800&nbsp;MHz and 1.9&nbsp;GHz bands.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;19&nbsp;&#151; Discontinued
Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1998, Old Iusacell decided to
discontinue the operations of Cellular Solutions, a subsidiary
entity dedicated to the sale of accessories for cellular
handsets. Cellular Solutions transferred all its existing
inventories as of December&nbsp;31, 1998 to another subsidiary
of Old Iusacell and terminated all of Cellular Solutions&#146;
employees during January and February 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financial information regarding Cellular
Solutions as of and for the years ended December&nbsp;31, 2000
and 1999, was as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,070</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,755</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">422</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Loss from operations before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Profit) loss on disposal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,865</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (profit)&nbsp;loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,865</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note&nbsp;20&nbsp;&#151; Comprehensive
Income</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the years ended December&nbsp;31, 2001, 2000
and 1999, comprehensive income consisted of the following:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss) profit for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other comprehensive income:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated effect of deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">196,911</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(925,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Note&nbsp;21&nbsp;&#151; Financial
Instruments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company determines the fair value of
outstanding financial instruments as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash
    equivalents: the carrying value approximates fair value due to
    its short-term nature.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash:
    the Company estimates fair value of restricted cash, which is
    held in U.S.A. treasury bonds, based on public rates available
    for U.S.&nbsp;treasury bonds of the same duration.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
    receivable and payable: the carrying value approximates fair
    value due to its short-term nature.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable:
    Carrying value approximates fair value due to its short-term
    nature.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt:
    the Company estimates the fair value of its long-term debt based
    on public and current rates available for debt of the same
    remaining duration.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivatives: the
    Company determines the fair value of derivative financial
    instruments as follows:
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Foreign-currency exchange forward
contracts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company purchases foreign-currency exchange
forward contracts with contract terms of up to three years to
protect itself against the adverse effect that exchange rate
fluctuations may have on foreign currency-denominated
liabilities, principally U.S.&nbsp;dollars.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, 2000 and 1999, the Company used
derivative instruments to hedge its foreign-currency exposure of
approximately 50% of the principal and interest payments coming
due over the next year. In August and October 2001, the Company
also used foreign-currency exchange forward contracts to hedge
its exchange rate exposure on the senior notes due 2004 for
U.S.$150,000 and its interest payments of U.S.$51,000. These
derivatives were highly effective since a foreign currency rate
change on the forward contract is offset by a corresponding
change in the value of the hedged loan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These contracts are at a fixed price and have
maturity dates through July 2004 and forward rates ranging from
U.S.$9.1707 to U.S.$12.8035.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001, due to
the strength of the Mexican Peso to the U.S.&nbsp;Dollar, the
Company recognized an exchange loss of Ps.16,759 on the
derivatives, which was offset by the gain on the hedged
liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is exposed to credit loss from
counterpart nonperformance, but does not anticipate any such
loss from the foreign-currency exchange forward rate contracts,
which are with major financial institutions.
</FONT>

<P align="left">
<B><FONT size="2">Interest rate collars</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 1998, Old Iusacell entered into an
interest rate collar agreement for a notional amount of
U.S.$35,000 until July&nbsp;30, 2002. The collar agreement
limits the maximum effective LIBOR cost to 6.12% if six-month
LIBOR is lower than 7.12% and 7.12% if LIBOR equals or exceeds
7.12%. Old Iusacell can participate in a decline in LIBOR to
5.30%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;26, 1999, Old Iusacell entered
into an additional interest rate collar agreement to limit the
maximum interest rate, which must be paid on U.S.$15,000 of its
floating rate debt until July 2002. This collar agreement limits
the maximum effective LIBOR cost to 5.82% if six-month LIBOR is
lower than 6.82% and 6.82% if LIBOR equals or exceeds 6.82%. Old
Iusacell can participate in a decline in LIBOR to 4.75%.
</FONT>

<P align="center"><FONT size="2">F-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001, due to
the significant decrease in the LIBOR interest rates, the
Company recognized additional interest expense of Ps.5,390 for
the interest rate collars, which was offset by the lower
interest expense on its floating rate debt. Accordingly, these
derivatives were highly effective.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.$50,000 aggregate notional amount of the
interest rate collar agreements does not quantify risk or
represent assets or liabilities of the Company, but is used in
the determination of cash settlements under the agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is exposed to credit loss from
counterpart nonperformance, but does not anticipate any such
loss from the interest rate collar agreements, which are with a
major financial institution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, the fair values of financial
instruments were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">415,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">415,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restricted cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">451,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">935,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">936,665</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,246,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,246,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,223,535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,223,535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,753,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,753,089</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,639,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,639,510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency hedge contracts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(169,416</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(44,181</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest rate collars
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,460</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,391</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,375,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,416,688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,504,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,459,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Senior notes due 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,209,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,450,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,511,422</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,467,529</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BNP credit agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,083</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BNP refaccionario loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,682</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amended and restated syndicated loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,435,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,435,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term bank loan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057,913</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revolving credit facility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">846,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">846,330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Eximbank financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">504,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">504,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commerzbank financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,389</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">BBVA Bancomer handset facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Note&nbsp;22&nbsp;&#151; Segment
Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s segment data is prepared in
accordance with International Accounting Standard No.&nbsp;14
(revised). Reportable segments are those that are based on the
Company&#146;s method of internal reporting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has three reportable segments that it
operates and manages as strategic business units that offer
different products and services. The Company measures its
reportable segments based on operating profit (loss), including
inter-segment revenues and corporate expenses that are allocated
to the operating segments and excluding any non-recurring items.
Inter-segment transactions are accounted for at current market
prices. The Company evaluates the performance of its segments
and allocates resources to them based on earnings before
interest, taxes, depreciation and amortization (EBITDA) and
operating income (loss). The accounting policies underlying the
reported segment data are the same as those described in the
summary of significant accounting policies (Note&nbsp;4).
</FONT>

<P align="center"><FONT size="2">F-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s three reportable segments and
their principal activities are:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Cellular</FONT></I><FONT size="2">&nbsp;&#151;
The Company operates and provides wireless cellular telephone
services in five of the nine Regions in the Mexican market. The
Company serves customers in large metropolitan areas such as
Mexico City, Guadalajara, Le&#243;n, Puebla and M&#233;rida. The
Company&#146;s services include &#147;value added services&#148;
such as voice mail and caller identification of incoming calling
numbers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Long
distance</FONT></I><FONT size="2">&nbsp;&#151; The Company
provides long distance services for which its first natural
market is its cellular subscriber base. The Company is also
providing these services to residential and commercial entities.
The Company uses its own switches and transmission equipment and
a combination of fiber optic lines, microwave links, satellite
transmission and lines leased from Telmex to provide these
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other
businesses</FONT></I><FONT size="2">&nbsp;&#151; The Company
provides paging, local telephony, microwave links and data
transmission services. It has concessions for PCS services which
started to be provided at the end of 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tables below present information about
reportable segments for the years ended December&nbsp;31, 2001,
2000 and 1999 under Mexican GAAP measurement:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December 31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Long</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reconciling</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cellular</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">distance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">businesses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">items(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">consolidated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; third party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,881,162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,478</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,241,437</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; affiliates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,012,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">632,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,378,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,023,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,023,707</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,475,508</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,916</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,627,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,073</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating profit (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(419,392</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(117,818</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(612,266</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">555,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57,059</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,056,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,902</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,015,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">547,134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,562,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,683,281</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">934,973</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,117,069</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,735,323</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,163,631</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,571,692</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,541,316</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,482</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">162,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,793,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,793,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December 31, 2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Long</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reconciling</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cellular</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">distance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">businesses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">items(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">consolidated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; third party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,550,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,785</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,732,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,175</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,729,710</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; affiliates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,773,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">529,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">668,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,971,291</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,971,291</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,303,326</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,416,717</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,740</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,408,977</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating profit (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131,636</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(123,002</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(160,486</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(415,124</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,194</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(423,318</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,171,690</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32,408</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(137,689</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,001,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,934</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,985,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,821,641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,120,342</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,064,373</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,006,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,531,581</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,474,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,762,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">306,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,150,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,150,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">Year Ended December 31, 1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Long</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reconciling</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cellular</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">distance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">businesses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">segments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">items(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">consolidated</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; third party
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,470,081</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126,160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,029</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,781,270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,701</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,782,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenues&nbsp;&#151; affiliates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,065,321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">392,312</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">509,132</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,966,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,966,765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and<BR>
    amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,557,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,097</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,627,975</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,952</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,621,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating profit (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(136,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(81,571</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116,403</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,067</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,658,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75,182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72,214</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,511,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99,384</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,610,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,529,401</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">362,663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">817,651</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,709,715</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(834,991</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,874,724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,817,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,513</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,949,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,949,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA as used by the Company is operating profit
    (loss)&nbsp;plus the sum of depreciation and amortization. The
    Company&#146;s reconciliation of EBITDA to consolidated net
    profit (loss)&nbsp;under Mexican GAAP as of December&nbsp;31,
    2001, 2000 and 1999, is as follows:
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,562,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,985,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,610,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,619,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,408,977</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,621,023</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other (expense)&nbsp;income, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Integral financing (cost)&nbsp;gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(317,260</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(548,539</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">602,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity participation in net gain (loss) of
    associated companies and net gain (loss) on sale of equity
    investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,647</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54,160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(146,404</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(156,335</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(150,889</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit (loss)&nbsp;from discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,865</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,748</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of the adoption of the new
    accounting pronouncements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,478</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reconciling items primarily reflect inter-segment
    eliminations and certain non-recurring items.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Note 23&nbsp;&#151; Significant Differences
Between Mexican GAAP and United States Generally Accepted
Accounting Principles</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s consolidated financial
statements are prepared on a Mexican GAAP basis, which differs
in certain significant respects from United States generally
accepted accounting principles (U.S. GAAP).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reconciliation to U.S. GAAP does not include
the reversal of the adjustments to the financial statements for
the effects of inflation required under Mexican
Bulletin&nbsp;B-10. The application of Bulletin&nbsp;B-10
represents a comprehensive measure of the effects of price-level
changes in the financial statements based on historical cost for
Mexican and U.S. accounting purposes. The principal differences,
other than inflation accounting, between Mexican and U.S. GAAP
are listed below together with an explanation, where
appropriate, of the adjustments that affect consolidated net
income for each of the three years in the period ended
December&nbsp;31, 2001, 2000 and 1999 and stockholders&#146;
equity as of December&nbsp;31, 2001 and 2000.
</FONT>

<P align="left">
<B><FONT size="2">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
income taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note&nbsp;4m., as of
January&nbsp;1, 2000, the Company adopted revised
Bulletin&nbsp;D-4. Under the new methodology of
Bulletin&nbsp;D-4, the Company recognized future tax
consequences based on the difference between the financial
statements and tax basis of assets and liabilities&nbsp;&#151;
temporary differences&nbsp;&#151; as of the date of the
financial statements. Until December&nbsp;31, 1999, deferred
income taxes were provided for identifiable, non-recurring
timing differences (those expected to reverse over a definite
period of time) at rates in effect at the time such differences
originated, and benefits from tax loss carryforwards were not
allowed to be recognized before the period in which the
carryforward was utilized. For purposes of the reconciliation to
U.S. GAAP, the Company has applied Statement of Financial
Accounting Standards (SFAS)&nbsp;No.&nbsp;109, &#147;Accounting
for Income Taxes&#148;, for all periods presented.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS 109 requires an asset and liability method
of accounting whereby deferred taxes are recognized for the tax
consequences of all temporary differences between the financial
statement carrying amounts and the
</FONT>

<P align="center"><FONT size="2">F-36
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">related tax basis of assets and liabilities.
Under U.S. GAAP, the effect on deferred taxes of a change in tax
rate is recognized in income in the period that includes the
enactment date.
</FONT>

<P align="left">
<B><FONT size="2">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-operating
costs</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, the Company capitalized
certain pre-operating costs, primarily related to the
development of the PCS network. Under U.S. GAAP, pre-operating
costs are expensed as incurred.
</FONT>

<P align="left">
<B><FONT size="2">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative
financial instruments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note&nbsp;21, the Company has
entered into interest rate collar agreements to hedge an
aggregate notional amount of U.S.$50,000 of its floating rate
debt. Additionally, the Company purchased foreign-currency
forward exchange contracts, which at December&nbsp;31, 2001,
hedged a notional amount of U.S.$201,000 in debt. The Company
employs risk management strategies using foreign currency
forwards and interest rate collar agreements. The Company does
not hold derivatives for trading purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note&nbsp;4e., effective
January&nbsp;1, 2001, the Company adopted Bulletin&nbsp;C-2,
which requires that all financial instruments, including those
used for hedging purposes, be recorded in the balance sheet at
their fair value and changes in the fair value to be recorded in
the income statement for each period. Bulletin&nbsp;C-2 also
requires that derivative financial instruments used for hedging
purposes, be recorded in the balance sheet and valued using the
same valuation criteria used to value the hedged asset or
liability. Based on this valuation criteria, under Mexican GAAP
since the hedged liabilities are not carried at fair value, the
Company did not record the derivative financial instruments
related to those hedged liabilities at fair value but rather,
the Company keeps the derivative financial instruments valued at
the exchange rate at the end of the year. Prior to
January&nbsp;1, 2001, derivative financial instruments were
recorded on a cash basis under Mexican GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;30, 1999 Old Iusacell entered
into a foreign currency hedge utilizing forward-rate contracts,
hedging its exchange rate exposure for up to U.S.$77,000 or
approximately 50% of the principal and interest payments coming
due over the period April 2000 to April 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under U.S. GAAP, effective January&nbsp;1, 2001,
the Company adopted SFAS&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities&#148;, as amended
by SFAS&nbsp;137 and 138. Under SFAS&nbsp;133, all derivatives
are also recognized on the balance sheet at their fair value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s derivative financial
instruments are classified as cash flow hedges based on certain
criteria established by SFAS 133. Accordingly, the effective
portion of the gain or loss of the hedged instrument is reported
in accumulated other comprehensive income, and its ineffective
portion is reported in earnings. All of the Company&#146;s
derivatives were considered highly effective. The portion of
accumulated other comprehensive income to be reclassified into
earnings over the next 12&nbsp;months is expected to be
immaterial.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to January&nbsp;1, 2001, the differential
to be paid or received as interest rates changed was accrued and
recognized as an adjustment of interest expenses at the balance
sheet date. Additionally, the related amount payable or
receivable from counter-parties was included in accrued other
expenses at the balance sheet date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cumulative effect on the adoption of this new
accounting pronouncement amounted to Ps.6,478 as of
January&nbsp;1, 2001.
</FONT>

<P align="left">
<B><FONT size="2">d.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain from the
exchange of non-monetary assets</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the Company entered into a fiber optic
cable swap agreement with Telereuni&#243;n to exchange certain
long-distance fiber optic cables fair valued at Ps.142,679.
Under Mexican GAAP, the Company recorded the transaction as both
an acquisition (at the carrying value of the asset sold) and
sale of fixed assets based on the contract amount, resulting in
a gain on the sale of Ps.137,397, for the year ended
December&nbsp;31,
</FONT>

<P align="center"><FONT size="2">F-37
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">2001. Under U.S. GAAP, because the assets
exchanged are similar productive assets and, on a net basis, no
cash was exchanged, the transaction does not result in the
recognition of earnings. Consequently, under U.S. GAAP, the
acquisition and sale would not have been recorded.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1998, the Company entered into
another similar fiber optic cable swap agreement with Bestel for
Ps.244,663, resulting in a gain on the sale of Ps.213,063 that
was not recorded under U.S. GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cumulative effect of this type of
transactions at December&nbsp;31, 2001 is Ps.350,460.
</FONT>

<P align="left">
<B><FONT size="2">e.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale-leaseback
transaction with MATC Celular</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note 8c., during 2001 the Company
sold and leased-back 244 non strategic towers to MATC Celular.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, sale-leaseback transactions
are recognized with the use of the general criteria for capital
and operating lease transactions pursuant to Bulletin&nbsp;D-5,
&#147;Leases&#148;. The timing of the recognition of a gain
derived from sale-leaseback transactions should be based on the
subsequent lease classification criteria of the leaseback
portion of the transaction. If the subsequent leaseback is
accounted for as an operating lease, full immediate gain
recognition is allowed whereas if the subsequent leaseback is
accounted for as a capital lease, the gain is deferred and
amortized in proportion with the estimated useful life of the
asset leased. Based upon these criteria, the sale-leaseback
agreement with MATC was recorded by the Company as an operating
lease and consequently, the Ps.307,886 gain was recognized at
the date of the sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under U.S. GAAP, SFAS&nbsp;28, &#147;Accounting
for Sales with Lease Backs&#148;, this sale-leaseback
transactions should be recognized as a single financing
transaction in which any profit or loss on the sale is deferred
and amortized by the seller, who becomes the lessee. As the
Company retained &#147;more than a minor part but less than
substantially all&#148; of the use of the assets leased and the
profit on the sale does not exceed the present value of the
minimum lease payments, the Company deferred Ps.270,879 of the
gain at the transaction date. In addition, as the leaseback
qualified as an operating lease, the Company is amortizing the
deferred gain against the gross rental charged to expense over
the lease term. Consequently, the U.S. GAAP net income for the
year ended December&nbsp;31, 2001 was decreased Ps.261,124.
</FONT>

<P align="left">
<B><FONT size="2">f.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mexican GAAP allows, but does not require,
capitalization of financing costs as part of the cost of assets
under construction. Financing costs capitalized include interest
costs, gains from monetary position and foreign exchange losses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">U.S. GAAP requires the capitalization of interest
during the construction of qualifying assets. In an inflationary
economy, such as Mexico, acceptable practice is to capitalize
interest net of the monetary gain on the related Mexican Peso
debt, but not on U.S. dollar or other stable currency debt.
U.S.GAAP does not allow the capitalization of foreign exchange
losses.
</FONT>

<P align="left">
<B><FONT size="2">g.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
of goodwill</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, the Company amortizes
goodwill on a straight-line basis over a period of 20&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2001, the FASB issued SFAS&nbsp;141,
&#147;Business Combinations,&#148; and No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets.&#148; SFAS&nbsp;141
supercedes Accounting Principles Board Opinion
(APB)&nbsp;No.&nbsp;16, &#147;Business Combinations&#148; and
amends or supercedes a number of related interpretations of
APB&nbsp;16. SFAS&nbsp;141 eliminates the pooling-of-interests
method of accounting for business combinations and changes the
criteria to recognize intangible assets apart from goodwill.
SFAS&nbsp;142 supercedes APB&nbsp;17, &#147;Intangible
Assets.&#148; Under
</FONT>

<P align="center"><FONT size="2">F-38
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">SFAS&nbsp;142, goodwill and indefinite-lived
intangible assets are no longer amortized but are reviewed
annually, or more frequently if impairment indicators arise, for
impairment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS 141 is effective for any business
combination accounted for by the purchase method that is
completed after June&nbsp;30, 2001. Accordingly, the Company
applied SFAS&nbsp;141 to the Portatel acquisition and
SFAS&nbsp;142 to the intangible assets acquired therein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The provisions of SFAS&nbsp;142 are required to
be applied to goodwill and other intangible assets acquired
prior to July&nbsp;1, 2001 starting with fiscal years beginning
after December&nbsp;15, 2001. The Company expects that due to
the adoption of SFAS&nbsp;141 and 142, amortization of
approximately Ps.169,833, corresponding to all of the
Company&#146;s goodwill at December&nbsp;31, 2001, will not be
recorded during 2002, which previously would have been.
</FONT>

<P align="left">
<B><FONT size="2">h.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of
inflation accounting on U.S. GAAP adjustments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to determine the net effect on the
financial statements of recognizing certain of the adjustments
described above, it is necessary to recognize the effects of
applying the Mexican GAAP inflation accounting principles (see
Note 4b.) to such adjustments.
</FONT>

<P align="left">
<B><FONT size="2">i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority
interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, the minority interest in
consolidated subsidiaries is presented as a separate component
within the stockholders&#146; equity section of the consolidated
balance sheet. For U.S. GAAP purposes, minority interest is not
included in stockholders&#146; equity and accordingly, is
excluded to arrive at U.S. GAAP stockholders&#146; equity.
</FONT>

<P align="left">
<B><FONT size="2">j.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for
consolidation of facilities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the year ended December&nbsp;31, 1996, the
Company recorded a provision for consolidation of facilities
related to the sale of its then corporate headquarters. Since
the Company has not had the ability to remove such headquarters
from operations, under U.S. GAAP, pursuant to the provisions of
SFAS 121, &#147;Accounting for the Impairment of Long-Lived
assets and for Long-Lived Assets to Be Disposed Of,&#148; an
impairment charge would not have been recorded at
December&nbsp;31, 1996, therefore, for U.S. GAAP, the provision
is reversed.
</FONT>

<P align="center"><FONT size="2">F-39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<B><FONT size="2">k.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income
(loss)&nbsp;and stockholders&#146; equity under U.S.
GAAP</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of net
(loss)&nbsp;profit and stockholders&#146; equity adjusted to
take into account certain material differences between Mexican
GAAP and U.S. GAAP:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit under Mexican GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes (Note&nbsp;23a.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,885</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pre-operating costs (Note&nbsp;23b.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(38,383</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(78,522</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Derivative financial instruments (Note&nbsp;23c.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,732</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain from the exchange of non-monetary assets,
    net (Note&nbsp;23d.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(116,091</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on the sale lease-back transaction
    (Note&nbsp;23e.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(261,124</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalized interest (Note&nbsp;23f.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill (Note&nbsp;23g.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest (Note&nbsp;23i.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of inflation accounting on U.S. GAAP
    adjustments (Note&nbsp;23h.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">288</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(253</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22,345</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit under U.S. GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(809,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,135,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">272,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average number of shares outstanding
    basic (thousands)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,495,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,396,672</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,286,844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and diluted net (loss)&nbsp;profit per
    share (pesos)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect on the loss per share calculation for
the cumulative effect of the adoption of the new accounting
pronouncement was de minimus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The weighted-average number of shares outstanding
under the Stock Purchase Plan at December&nbsp;31, 2001 and 2000
was 6,485,124, and 7,695,234 at December&nbsp;31, 1999. Because
of the anti-dilutive effect, outstanding options during 2001 and
2000 are not included in the computation of diluted
(loss)&nbsp;per share for 2001 and 2000. Dilutive profit per
share for 1999 would not have differed from basic.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity under Mexican GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,162,908</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,630,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pre-operating costs (Note&nbsp;23b.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(136,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(97,617</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Derivative financial instruments (Note&nbsp;23c.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(183,876</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain from the exchange of non-monetary assets,
    net (Note&nbsp;23d.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(329,154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(213,063</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on the sale lease-back transaction
    (Note&nbsp;23e.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(261,124</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalized interest (Note&nbsp;23f.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill (Note&nbsp;23g.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest (Note&nbsp;23i.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(117,207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,443</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for consolidation of facilities
    (Note&nbsp;23j.)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity under U.S. GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,253,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,314,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-40
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Provided below is an analysis of changes in
stockholders&#146; equity under U.S. GAAP:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Opening balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,314,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,846,010</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">932,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss for the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(809,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,135,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other comprehensive income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(184,325</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Closing balance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,253,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,314,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">l)&nbsp;Discontinued operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described in Note&nbsp;19, in December 1998,
Old Iusacell decided to discontinue the operations of its
subsidiary, Cellular Solutions, which was in the business of
selling accessories for cellular handsets, and consequently,
recognized a gain (loss)&nbsp;from discontinued operations
amounting to Ps.8,865 and (Ps.1,748), for the years ended
December&nbsp;31, 2000 and 1999, respectively. Under U.S. GAAP,
the closing of this subsidiary does not constitute a
discontinued operation under APB No.&nbsp;30. Accordingly, the
gain (loss)&nbsp;from discontinued operations is recorded as
operating income (expense).
</FONT>

<P align="left">
<B><FONT size="2">m)&nbsp;Extraordinary item</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, the utilization of the
Company&#146;s tax loss carryforwards in 1999 is classified as
an extraordinary item and presented as a separate line item in
the consolidated income statement. Under U.S. GAAP, the
utilization of the Company&#146;s tax loss carryforward is
recorded as a component of the taxation expense.
</FONT>

<P align="left">
<B><FONT size="2">n)&nbsp;Depreciation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Mexican GAAP, depreciation is not included
in the measure of gross profit. Under U.S. GAAP, Ps.1,225,843,
Ps.1,292,146 and Ps.788,430 for the years ended
December&nbsp;31, 2001, 2000 and 1999, respectively, are
reclassified to cost of sales.
</FONT>

<P align="left">
<B><FONT size="2">o)&nbsp;Supplementary U.S. GAAP
disclosures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1)&nbsp;Cash flow information
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under U.S. GAAP, SFAS&nbsp;95, &#147;Statement of
Cash Flows&#148;, a statement of cash flows is required, which
presents only movements in cash and excludes non-cash items.
SFAS 95 does not provide any specific guidance with respect to
inflation-adjusted financial statements. However, it is accepted
practice to adjust cash flows from operating activities for the
monetary gains and losses and unrealized foreign exchange gains
and losses.
</FONT>

<P align="center"><FONT size="2">F-41
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000(*)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999(*)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Operating activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit under U.S. GAAP
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(809,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,135,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">272,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net loss to cash
    provided (used in) by operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,225,843</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,292,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">788,430</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,370,087</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,116,831</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">832,593</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on the sale of towers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,762</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity in (profit)&nbsp;loss of associated
    companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,542</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,647</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,462</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on sale of equity investments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,976</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase in allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in allowance for
    obsolete and slow-moving inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,443</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes and employee profit sharing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on net monetary position and foreign
    exchange losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(491,706</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(433,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(911,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in operating assets and liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Increase) decrease in:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(145,240</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,707</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(645,696</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56,917</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(82,115</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts payable and related parties
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">154,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxes and other payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(262,303</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">221,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(210,683</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,334</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">724</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(571</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,087,024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,211,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">864,317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Financing activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from notes payable and long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">808,073</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">702,018</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,953,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments of notes payable and long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(752,605</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,360,242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(789,454</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Decrease (increase)&nbsp;in escrow account
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">437,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">507,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,442,475</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from related parties financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of equity offerings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">932,355</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,604,131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">416,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,501,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,453,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,137,895</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000(*)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999(*)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Investing activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,943,364</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,140,344</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,708,907</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sales of investments in associated
    companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,976</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,602</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,066</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from the sale of towers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">358,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Acquisition of Portatel, net of cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(495,320</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchase of other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(738,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,021,313</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,263,661</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash used in investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,814,441</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,181,259</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,978,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Translation and inflation effects in cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,093</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(107,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,271</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (decrease)&nbsp;increase in cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(271,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(623,281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">984,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,310,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">326,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash at the end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">415,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">687,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,310,405</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">467,908</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">877,034</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">390,386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,784</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">102,516</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Supplemental disclosures of non-cash activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Conversion of debt to equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">446,805</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(*)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Certain reclassifications were made in prior
    years to conform to classifications used in the most recent year.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2)&nbsp;The assets tax charged to the provision
for assets tax for the years ended December&nbsp;31, 2001, 2000
and 1999 was as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Assets tax not offset by current taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.150,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,885</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.146,404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.156,335</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.164,774</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3)&nbsp;Deferred income taxes
</FONT>

<P align="center"><FONT size="2">F-43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Significant components of deferred income taxes
under U.S.&nbsp;GAAP are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31, 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">SFAS 109</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">SFAS 109</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">applied to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">applied to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican GAAP</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. GAAP</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balances</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73,812</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73,812</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating loss carryforwards and tax credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,357,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,357,582</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reorganization reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain from the exchange of non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pre-operating costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Derivative financial instruments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain on the sale lease-back transaction
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91,393</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(309,741</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(284,834</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(594,575</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,146,578</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,180,298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">715,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">715,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular telephones to be amortized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61,239</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Concessions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,894</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalized interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">973,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,720</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,007,196</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,102</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">December 31, 2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">SFAS 109</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">SFAS 109</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">applied to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">applied to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mexican GAAP</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S. GAAP</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balances</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">adjustments</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,589</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,589</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating loss carryforwards and tax credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,294,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,294,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reorganization reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gain from the exchange of non-monetary assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pre-operating costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(381,386</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(108,682</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(490,068</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,017,209</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,017,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">485,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">485,836</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cellular telephones to be amortized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Concessions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Derivative financial instruments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred tax liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">836,491</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">836,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4)&nbsp;Stock Purchase Plan
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note&nbsp;15, the Company has a
fixed stock option plan, the Stock Purchase Plan. This plan
grants options to purchase New Iusacell common stock at a price
equal to the market price of the stock at the date of the grant.
The Company applies APB&nbsp;25, &#147;Accounting for Stock
Issued to Employees,&#148; and related interpretations in
accounting for its plan. The Company has adopted the
disclosure-only provisions of SFAS&nbsp;123, &#147;Accounting
for Stock Based Compensation&#148;. The Company recognizes no
compensation expense for its Stock Purchase Plan as the exercise
price of the options equals the market price of the stock on the
grant date. If the Company had elected to recognize compensation
expense based on the fair value at the grant dates for 2001,
2000 and 1999, in accordance with the provisions of
SFAS&nbsp;123, net (loss) profit and earnings per share would
have been changed to the following pro forma amounts:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Under Mexican GAAP:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.(499,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.(1,122,513</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.379,668</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(507,367</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,132,767</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368,163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and fully diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(loss)&nbsp;profit per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Under U.S. GAAP:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net (loss)&nbsp;profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.(809,088</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.(1,135,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Ps.272,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(816,466</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,145,969</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">261,143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="17"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic and fully diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">As reported</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.81</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(loss)&nbsp;profit per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Pro forma</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These results may not be representative of the
effects on pro forma net income for future years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company determined the pro forma amounts
using the Black-Scholes option-pricing model based on the
following weighted-average assumptions:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend yield
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected volatility
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk-free interest rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected lives (in years)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5)&nbsp;New Accounting Pronouncements
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FASB recently issued SFAS 143,
&#147;Accounting for Obligations Associated with the Retirement
of Long-Lived Assets&#148;, which is effective for fiscal years
beginning after June&nbsp;15, 2002. The objectives of
SFAS&nbsp;143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation
and its associated asset retirement cost.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the FASB issued SFAS No.&nbsp;144
&#147;Accounting for the Impairment of Long-Lived Assets&#148;
(SFAS 144) which supersedes SFAS No.&nbsp;121 &#147;Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed Of&#148; (SFAS 121), and APB No.&nbsp;30,
&#147;Reporting the Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and
Transactions&#148;. SFAS 144 provides new guidance on
(1)&nbsp;the recognition of impairment losses on long-lived
assets to be held and used or to be disposed of and (2)&nbsp;how
the results of a discontinued
</FONT>

<P align="center"><FONT size="2">F-46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151; (Continued)</FONT></B>

<P align="left">
<FONT size="2">operation are to be measured and presented. It
also broadens the definition of what constitutes a discontinued
operation. It is effective for fiscal years beginning after
December&nbsp;15, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April of 2002, the FASB issued SFAS 145,
&#147;Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No.&nbsp;13, and Technical Corrections.&#148;
As a result, companies will no longer be allowed to classify
gains and losses from extinguishments of debt as extraordinary
items unless they meet the criteria of APB 30. Gain and losses
from extinguishments of debt that have been classified as
extraordinary in prior years that do not meet the criteria of
APB 30 shall be reclassified on a going forward basis. In
addition, SFAS 145 requires that capital leases that are
modified so that the resulting lease agreement is classified as
an operating lease be accounted for under the sale-leaseback
provisions of SFAS 28 or 98, as applicable, instead of SFAS 13.
The provisions of this statement with regard to SFAS 4 will be
effective for fiscal years beginning after May&nbsp;15, 2002,
and those for SFAS 13 will be effective for transactions
occurring after May&nbsp;15, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is presently evaluating the impact,
if any, that these new standards will have on its consolidated
financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6)&nbsp;U.S. GAAP requires the desegregation of
the account balances as disclosed below. There is no similar
requirement under Mexican GAAP. As of December&nbsp;31, the
account balances were as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recoverable taxes and other:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interconnection fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">142,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recoverable VAT
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321,840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204,624</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,093</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">217,878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">650,274</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">580,646</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxes and other payables:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxes and rights payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205,595</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178,413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">164,560</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">537,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">749,679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">865,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,092,652</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7)&nbsp;A significant portion of our trade
receivables is represented by a small number of distributors. In
2001, our three largest distributors accounted for 44% and 24%
of our net trade accounts receivables as of December&nbsp;31,
2001 and 2000. Management has established certain measures to
reduce the risk associated with this concentration such as
certain guarantees and property liens. Management believes that
this distributor concentration will be reduced over time as the
size of our operations grows. However, results of operations
could be negatively affected, at least in the short term, if any
defaults on payment occur with respect to these distributors.
</FONT>

<P align="left">
<B><FONT size="2">Note&nbsp;24&nbsp;&#151; Subsequent
Events</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As mentioned in Note&nbsp;13c., the Montes Urales
property was subject to a lien. On May&nbsp;29, 2002, the
Company&#146;s complaint was resolved in its favor.
Consequently, the lien will be lifted in the Public Registry of
Property.
</FONT>

<P align="center"><FONT size="2">F-47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GRUPO IUSACELL</FONT></B>

<P align="center">
<B><FONT size="2">SCHEDULE&nbsp;II&nbsp;&#151; VALUATION AND
QUALIFYING ACCOUNTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years Ended 1999, 2000 and 2001</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(Amounts expressed in Thousands of Mexican
Pesos (Ps.)</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">with Purchasing Power as of December&nbsp;31,
2001)</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Charged to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Charged to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">beginning</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">costs and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">end of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of period</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">accounts</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deductions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">period</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for obsolete and slow-moving inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,443</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,408</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51,329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,587</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,756</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105,526</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">Ps.</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94,531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42,657</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">221,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">221,684</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,432</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">210,891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">S-II
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "ITEM 19. EXHIBITS" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="left">
<B><FONT size="2">ITEM&nbsp;19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXHIBITS</FONT></B>

<P align="left">
<FONT size="2">Documents filed as exhibits to this annual report.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">No.</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">By-laws (estatutos) of Grupo Iusacell, S.A. de
    C.V effective April&nbsp;30, 2002. (incorporated herein by
    reference to Exhibit&nbsp;1 of Grupo Iusacell&#146;s Annual
    Report on Form&nbsp;20-F for fiscal 2000)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Shareholders Agreement dated as of March&nbsp;30,
    2001 by and among Iusacell, Bell Atlantic Latin America
    Holdings, Inc., Bell Atlantic International, Inc., Bell Atlantic
    New Zealand Holdings, Inc. and Vodafone Americas B.V.
    (incorporated herein by reference to Exhibit&nbsp;2(a) of Grupo
    Iusacell&#146;s Annual Report on Form&nbsp;20-F for fiscal 2000)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of December&nbsp;16, 1999
    among Grupo Iusacell, S.A. de C.V., Verizon Communications Inc.
    and The Bank of New York, as trustee. (incorporated herein by
    reference to Exhibit&nbsp;4.1 of the Registration
    Statement&nbsp;F-4&nbsp;&#151; Registration
    Number&nbsp;333-95547).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indenture dated as of July&nbsp;25, 1997 among
    Grupo Iusacell Celular, S.A. de C.V., certain subsidiaries of
    Iusacell Celular, S.A. de C.V. and First Union National Bank, as
    trustee. (incorporated herein by reference to Exhibit&nbsp;4.1
    of the Registration Statement&nbsp;F-4&nbsp;&#151; Registration
    Number&nbsp;333-37431).
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement for Equipment, Furnish and Installation
    for Iusacell&#146;s Cellular Network, dated as of
    December&nbsp;10, 1997 among Grupo Iusacell Celular, S.A. de
    C.V., Lucent Technologies World Services, Inc. and Lucent
    Technologies de M&#233;xico, S.A. de C.V. pursuant to which
    Grupo Iusacell Celular, S.A. de C.V. (incorporated herein by
    reference to Exhibit&nbsp;A of Iusacell Celular Annual Report on
    Form&nbsp;20-F for fiscal 1997)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amended and Restated Credit Agreement, dated as
    of July&nbsp;25, 1997, as amended and restated as of
    March&nbsp;29, 2001 among Grupo Iusacell Celular, S.A. de C.V.
    and JP Morgan, as sole Bookrunner and Lead Arranger, and The
    Chase Manhattan Bank, as Administrative Agent and Collateral
    Agent, BNP Paribas, Citibank N.A., The Toronto-Dominion Bank and
    BBVA Bancomer S.A., as Arrangers. (incorporated herein by
    reference to Exhibit&nbsp;4(b) of Grupo Iusacell&#146;s Annual
    Report on Form&nbsp;20-F for fiscal 2000)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment and Waiver dated as of
    December&nbsp;7, 2001, to the Amended and Restated Credit
    Agreement, dated as of July&nbsp;25, 1997, as amended and
    restated as of March&nbsp;29, 2001 among Grupo Iusacell Celular,
    S.A. de C.V., the lenders party thereto, and JP Morgan Chase
    Bank as Administrative Agent and Collateral Agent.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">7</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Computation of earnings to fixed charges.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">List of subsidiaries
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">115
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">GLOSSARY OF TELECOMMUNICATIONS TERMS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">1XRTT:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A member of CDMA 2000 which is a family of
    standards that defines the radio interface allowing a smooth
    transition from CDMA (1S-95) systems. This family of standards
    involve some variants and the services, offerings, such as voice
    and packet data on a single carrier (1XRTT), data only (1X-DO).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Analog:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A transmission method employing a continuous
    electrical signal that varies in amplitude or frequency in
    response to changes in sound, light, position, etc., impressed
    on a transducer in the sending device.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A range of frequencies between two defined limits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">CDMA:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Code Division Multiple Access, the
    highest-capacity commercial digital standard available. CDMA
    increases capacity by transmitting a large number of
    simultaneous conversations over a single channel, assigning
    unique codes that can be re-assembled at the receiving end.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Cellular A-band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide cellular
    wireless service between 825-835 MHz and between 870-880 MHz of
    the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Cellular B-band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide cellular
    wireless service between 835-845 MHz and between 880-890 MHz of
    the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Channel:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A pathway for the transmission of information
    between a sending point and a receiving point.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Covered POPS:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The number of POPs in a defined area for whom a
    cellular signal is accessible.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">CPP:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Calling Party Pays is a cellular telephony
    payment structure in which the party that places a call to a
    cellular telephone is billed for interconnection access, and the
    recipient is not billed for the airtime charges corresponding to
    the call.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Digital:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A method of storing, processing and transmitting
    information through the use of distinct electronic or optical
    pulses that represent the binary digits 0 and 1. Digital
    transmission and switching technologies employ a sequence of
    discrete, distinct pulses to represent information, as opposed
    to the continuous analog signal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Hertz:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The unit measuring the frequency with which an
    alternating electromagnetic signal cycles through the zero-value
    state between lowest and highest states. One hertz (abbreviated
    Hz) equals one cycle per second; KHz (kilohertz)&nbsp;stands for
    thousands of hertz; MHz (megahertz)&nbsp;stands for millions of
    hertz; and GHz (gigahertz)&nbsp;stands for billions of hertz.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">IMTS:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Improved mobile telephone service; IMTS systems
    are analog mobile telephone systems that employ a single
    powerful radio base station to communicate with IMTS mobile
    telephones that are within approximately a 25-mile radius.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">LATA:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Local access and transport area; an area in which
    a local exchange carrier is permitted to provide service as
    designated by the 1982 United
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">116
</FONT>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"></TD>
    <TD width="1%"></TD>
    <TD width="75%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">States federal court decree resulting from
    antitrust litigation brought by the United States Department of
    Justice against AT&#38;T corporation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PCS:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Personal communications services. PCS represents
    a digital wireless communications service with the ability to
    provide features such as voice, video and data applications,
    short messaging, voicemail, caller identification, call
    conferencing and call forwarding.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PCS A-Band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide PCS
    wireless services between 1.850-1.865 GHz and between
    1.930-1.945 GHz of the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PCS B-Band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide PCS
    wireless services between 1.870-1.885 GHz and between
    1.950-1.965 GHz of the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PCS D-Band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide PCS
    wireless services between 1.865-1.870 GHz and between
    1.945-1.950 GHz of the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PCS E-Band:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The range of frequencies used to provide PCS
    wireless services between 1.885-1.890 GHz and between
    1.965-1.970 GHz of the radio spectrum.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Penetration Rate:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A cellular operator&#146;s subscribers within a
    defined area derived by total POPs within that area.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">POPs:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The population for a particular area based on the
    2000 Mexican census. Population figures for 1996, 1997, 1998 and
    1999 have been calculated by applying the forecast annual
    population growth rate for 1995, as published by the Instituto
    Nacional de Estad&#237;stica, Geograf&#237;a e Inform&#225;tica
    (the National Institute of Statistics, Geography and Information
    Processing, &#147;INEGI&#148;) to the official 1990 census
    figures. Population figures for 2001 have been calculated by
    applying the forecast annual population growth rate for 2001 to
    the data derived from the 2000 Mexico census. Where the
    population information is set forth without reference to a year,
    the information given is as of December&nbsp;31, 2001. The SCT
    divides Mexico into nine geographic Regions for the provision of
    cellular service (individually a &#147;Region&#148; and
    collectively the &#147;Regions&#148;). Information regarding the
    numbers of POPs within a given Region has been calculated using
    the national population growth rate, as published by INEGI.
    Information regarding the number of POPs within a given city has
    been calculated using the growth rate for that city, as
    published by INEGI, which may not be the same as the national
    growth rate published by INEGI. The number of POPs in any Region
    or other geographic area should not be confused with the current
    number of users of wireless services in that Region or other
    geographic area and is not indicative of the number of users of
    wireless services in the future.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Roaming:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A service offered by mobile communications
    providers which allows a subscriber to use his or her telephone
    while in the service area of another carrier.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">Switch:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">A device that opens or closes circuits or selects
    the paths or circuits to be used for transmission of
    information. Switching is the process of interconnecting
    circuits to form a transmission path between users.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">TDMA:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Time division multiple access, a standard of
    digital cellular technology, which provides more call carrying
    capacity than analog, but less than CDMA, by interlacing
    conversations on a single channel through time-sharing methods.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">117
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of Section&nbsp;12
of the Securities Exchange Act of 1934, the registrant certifies
that it meets all requirements for filing on Form&nbsp;20-F and
has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">GRUPO IUSACELL, S.A. DE C.V.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="2%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ PETER H. BURROWES
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Peter H. Burrowes
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">President and Director General
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="2%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ RUSSELL A. OLSON
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="38%"></TD>
    <TD width="62%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Russell A. Olson
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Executive Vice President Finance, and
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Chief Financial Officer
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Date: June&nbsp;28, 2002
</FONT>

<P align="center"><FONT size="2">118
</FONT>
</BODY>
</HTML>
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{"company-data": {"conformed-name": "GRUPO IUSACELL SA DE CV", "cik": "0001089695", "assigned-sic": "4813", "irs-number": "000000000", "state-of-incorporation": "O5", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-14938", "film-number": "02692123"}, "business-address": {"street1": "PROLONGACION PASEO DE LA REFORMA 1236", "street2": "COLONIA SANTA FE DELEGACION CUAJIMALPA", "city": "MEXICO", "state": "O5", "zip": "05348 DF", "phone": "5251094400"}, "mail-address": {"street1": "PROLONGACION PASEO DE LA REFORMA 1236", "street2": "COLONIA SANTA FE DELEGACION CUAJIMALPA", "city": "MEXICO", "state": "O5", "zip": "05348"}, "former-company": {"former-conformed-name": "NUEVO GRUPO IUSACELL SA DE CV", "date-changed": "19990629"}}
GRUPO IUSACELL, S.A. DE C.V.
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION
    12(b) or (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
or
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
    2001
or
o
TRANSITION REPORT PURSUANT TO SECTION 13
    or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period
    from           to
COMMISSION FILE NUMBER 1-12500
Grupo Iusacell, S.A. de C.V.
(Exact name of Registrant as specified in its
charter)
Iusacell Group, Inc.
(Translation of Registrant's name into
English)
United Mexican States
(Jurisdiction of incorporation or
organization)
Prolongación Paseo de la Reforma
1236
Colonia Santa Fe
Delegación Cuajimalpa
05348 Mexico, D.F.
(Address of principal executive
offices)
Securities registered or to be registered
pursuant to Section 12(b) of the Act.
Title of each class
Name of each exchange on which registered
American depositary shares,
each representing 10 series V shares
New York Stock Exchange
Series V shares
New York Stock Exchange*
*
Not for trading, but only in connection with the
    registration of American depositary shares, pursuant to the
    requirements of the Securities and Exchange Commission.
Securities registered or to be registered
pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each
of the issuer's classes of capital or common stock as of
the close of the period covered by the Annual Report:
Series A Capital
Stock         961,292,484
shares
Series V Capital
Stock          900,732,310
shares
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.    Yes
þ
No
o
Indicate by check mark which financial statement
item the registrant has elected to follow:
Item 17
o
Item 18
þ
TABLE OF CONTENTS
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
ITEM 4. INFORMATION ON THE COMPANY
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8. FINANCIAL INFORMATION
ITEM 9. THE OFFER AND LISTING
ITEM 10. ADDITIONAL INFORMATION
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. RESERVED
ITEM 16. RESERVED
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED INCOME STATEMENTS
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
1ST AMENDMENT AND WAIVER TO A/R CREDIT AGREEMENT
COMPUTATION OF EARNINGS TO FIXED CHARGES
LIST OF SUBSIDIARIES
Table of Contents
TABLE OF CONTENTS
Page
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS
1
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
1
ITEM 3.
KEY INFORMATION
2
ITEM 4.
INFORMATION ON THE COMPANY
16
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
51
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
78
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
86
ITEM 8.
FINANCIAL INFORMATION
90
ITEM 9.
THE OFFER AND LISTING
91
ITEM 10.
ADDITIONAL INFORMATION
96
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK
110
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES
112
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
113
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS
113
ITEM 15.
RESERVED
113
ITEM 16.
RESERVED
113
PART III
ITEM 17.
FINANCIAL STATEMENTS
114
ITEM 18.
FINANCIAL STATEMENTS
114
ITEM 19.
EXHIBITS
115
i
Table of Contents
FORWARD-LOOKING INFORMATION
This Annual Report contains various
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 as amended (the
"Act"), and Section 21E of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"),
including statements regarding, among other things, the
financial performance and operating plans for Grupo Iusacell,
S.A. de C.V. These statements are based upon the current beliefs
of our management, as well as on assumptions made by management
based upon information currently available to it. The words
"believe," "expect," "likely" and
"anticipate" and similar expressions identify some of
these forward-looking statements. These statements are subject
to various risks and uncertainties and other factors which may
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Should management's assumptions prove
incorrect, actual results may vary materially and adversely from
those anticipated or projected. Readers are cautioned not to
place undue reliance on such forward-looking statements, which
speak only as of their respective dates. We undertake no
obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise.
The following factors, as well as other factors
described in this Annual Report, could cause actual results to
differ materially from such forward-looking statements:
•
Material adverse changes in the business
    environment in Mexico, such as a change in value of the peso,
    the imposition of exchange controls, an increase in inflation
    levels and economic downturns;
•
Material adverse changes in the regulatory
    environment in Mexico;
•
Our ability to adapt to rapid technological
    change, develop new technologies and hire and retain qualified
    personnel;
•
Our ability to obtain debt or equity financing
    necessary to pursue business opportunities; and
•
Our ability to compete against other
    telecommunications service providers.
"Iusacell" means Grupo Iusacell,
S.A. de C.V. This company was formerly known as Nuevo Grupo
Iusacell, S.A. de C.V.
"Iusacell Celular" means Grupo
Iusacell Celular, S.A. de C.V. This company was formerly known
as Grupo Iusacell, S.A. de C.V. Iusacell owns 100% of the
capital stock of Iusacell Celular.
On June 30, 2000, Bell Atlantic Corporation,
our principal shareholder, which holds its interest in Iusacell
through various subsidiaries, acquired GTE Corporation in a
merger of equals, renaming itself as "Verizon
Communications Inc." The subsidiaries which directly hold
Iusacell capital stock remained unchanged. As a result of the
foregoing, the term "Verizon" in this Annual Report
refers to Verizon Communications Inc. or its subsidiaries, as
the context requires. We continue to use the term "Bell
Atlantic" in this Annual Report to refer to Bell Atlantic
Corporation and its subsidiaries in connection with events prior
to June 30, 2000.
Iusacell's equity securities trade on the
New York and Mexican stock exchanges. Both Iusacell and Iusacell
Celular have publicly traded debt securities.
Unless otherwise specified, all references to
"U.S. dollars," "dollars," "U.S.$"
or "$" are to United States dollars, and references to
"Ps." and "pesos" are to Mexican pesos. We
publish our financial statements in pesos that are adjusted to
reflect changes in purchasing power due to inflation. Thus,
unless otherwise specified, our financial data is presented in
constant pesos with purchasing power as of December 31,
2001. Amounts presented in this Annual Report may not add up or
may be slightly inconsistent due to rounding.
Unless otherwise specified, this Annual Report
contains translations of peso amounts into U.S. dollars solely
for the convenience of the reader based on the exchange rate
reported by the Federal Reserve Bank of New York as its noon
buying rate for pesos, which we refer to as the Noon Buying
Rate, at December 31, 2001, which was Ps.9.156 per
U.S.$1.00. These currency conversions should not be construed as
representations that the peso amounts actually represent such
dollar amounts. Additionally, these conversions should not
ii
Table of Contents
be construed as representations that these peso
amounts have been, could have been or could be converted into
U.S. dollars at those or any other rates of exchange.
We will provide without charge to each person to
whom this Annual Report is delivered, upon written or oral
request, a copy of any or all of the documents incorporated by
reference into this Annual Report (other than exhibits, unless
such exhibits are specifically incorporated by reference in such
documents). Written requests for such copies should be directed
to Grupo Iusacell, S.A. de C.V., Prolongación Paseo de la
Reforma 1236, Colonia Santa Fe, Delegación Cuajimalpa,
05348 Mexico, D.F., Attention: Carlos Moctezuma, Investor
Relations Manager. E-mail requests may be directed to
investor.relations@iusacell.com.mx. Telephone requests may be
directed to 011-52-55-5109-5759.
iii
Table of Contents
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS
A.     Directors and
Senior Management
Not applicable.
B.     Advisers
Not applicable.
C.     Auditors
Not applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED
    TIMETABLE
Not applicable.
1
Table of Contents
ITEM 3.
KEY INFORMATION
A.     Selected
Financial Data
The following tables present selected
consolidated financial data of Iusacell and its consolidated
subsidiaries. We have derived this data from the audited
consolidated financial statements of Iusacell as of
December 31, 2001, 2000, 1999, 1998 and 1997 and for each
of the five years in the period then ended including the audited
consolidated financial statements of Iusacell as of
December 31, 2001 and 2000 and for each of the three years
in the period ended December 31, 2001, which we refer to as
the Consolidated Financial Statements, appearing elsewhere in
this Annual Report, and you should read this information in
conjunction with the Consolidated Financial Statements.
Prior to August 10, 1999, when Iusacell
completed a corporate restructuring, Iusacell had minimal assets
and liabilities and no operations or contingent liabilities. For
accounting purposes, Iusacell is the successor business to Grupo
Iusacell, S.A. de C.V., the holding and operating company
prior to the restructuring. Iusacell currently owns 100% of the
capital stock of Iusacell Celular.
The Consolidated Financial Statements have been
prepared in accordance with Mexican generally accepted
accounting principles, which we refer to as Mexican GAAP, which
differs in certain significant respects from United States
generally accepted accounting principles, which we refer to as
U.S. GAAP. Pursuant to Mexican GAAP, we have prepared the
Consolidated Financial Statements and the selected financial
data presented below in accordance with Bulletin B-10 of
the Mexican Institute of Public Accountants ("MIPA"),
which provides for the recognition of certain effects of
inflation.
Until December 31, 1996, Bulletin B-10
required Iusacell to restate non-monetary assets at current
replacement cost, and to restate non-monetary liabilities using
the National Consumer Price Index (
Indice Nacional de Precios
al Consumidor
), also referred to as the INPC. Beginning on
January 1, 1997 and throughout the periods presented in
this Annual Report, Bulletin B-10 has required Iusacell to
restate non-monetary assets (other than inventory) using the
INPC. Throughout the periods presented in this Annual Report,
Bulletin B-10 has also required Iusacell to restate the
components of shareholders' equity using the INPC and to
record gains or losses in purchasing power from holding monetary
liabilities or assets.
In addition, Bulletin B-10 requires
restatement of all financial statements to constant pesos as of
the date of the most recent balance sheet presented.
Accordingly, we have restated all data in the Consolidated
Financial Statements and in the selected financial data set
forth below in constant pesos with purchasing power as of
December 31, 2001. We have not reversed the effect of these
inflation accounting principles in the reconciliation of
Iusacell's net profit (loss) and stockholders'
equity to U.S. GAAP.
Note 23 to the Consolidated Financial
Statements presents the principal differences, other than
inflation accounting, between Mexican GAAP and U.S. GAAP
applicable to us and contains a reconciliation of
Iusacell's net profit (loss) and stockholders'
equity to U.S. GAAP.
The U.S. dollar amounts provided in the
selected financial data below are translations from the
corresponding peso amounts, solely for the convenience of the
reader, at the Noon Buying Rate at December 31, 2001, which
was Ps. 9.156 per U.S.$1.00. You should not construe these
translations as representations that the peso amounts actually
represent such U.S. dollar amounts or could be converted
into U.S. dollars at the rate indicated as of any dates
mentioned in this Annual Report or at all.
2
Table of Contents
As of and for the Year Ended December 31,
1997
1998
1999
2000
2001
2001
(Thousands of
(Thousands of constant pesos as of December 31, 2001,
U.S. dollars,
except per share and operating data)(1)
except per share
and operating
data)(2)
Income Statement Data:
Mexican
    GAAP
:
Revenues:
Services
Ps.
2,338,563
Ps.
3,129,223
Ps.
4,285,910
Ps.
5,200,997
Ps.
5,634,306
U.S.$
615,368
Telephone equipment sales and other
480,939
479,512
497,061
528,713
607,131
66,310
Total revenues
2,819,502
3,608,735
4,782,971
5,729,710
6,241,437
681,678
Cost of sales:
Cost of services
779,275
979,220
1,221,938
1,464,120
1,532,366
167,362
Cost of telephone equipment sales and other
305,285
256,570
306,557
355,996
378,093
41,295
Total cost of sales
1,084,560
1,235,790
1,528,495
1,820,116
1,910,459
208,657
Gross profit
1,734,942
2,372,945
3,254,476
3,909,594
4,330,978
473,021
Operating expenses
1,127,168
1,377,041
1,643,520
1,923,935
2,076,698
226,813
Depreciation and amortization
881,889
1,015,655
1,621,023
2,408,977
2,619,225
286,067
450 project write-down
0
1,254,028
0
0
0
0
Other operating income
0
0
0
0
307,886
33,627
Operating (loss)
(274,115
)
(1,273,779
)
(10,067
)
(423,318
)
(57,059
)
(6,232
)
Other income (expense), net
0
169,547
(26,225
)
0
0
0
Integral financing cost (gain):
Interest expense, net
376,139
285,378
331,499
982,462
808,678
88,322
Foreign exchange loss (gain), net
73,445
1,068,692
(180,953
)
16,783
(224,793
)
(24,551
)
(Gain) on net monetary position
(443,613
)
(867,468
)
(752,903
)
(450,706
)
(266,625
)
(29,120
)
Total
5,971
486,602
(602,357
)
548,539
317,260
34,651
Equity participation in net income (loss) of
    associated companies
238,971
31,763
(54,160
)
(19,647
)
6,518
713
Provision for equipment impairment(3)
1,406,352
0
0
0
0
0
(Loss) income before asset tax, income tax,
    minority interest, extraordinary item and discontinued operations
(1,447,467
)
(1,559,071
)
511,905
(991,504
)
(367,801
)
(40,170
)
Provision for:
Asset tax
68,705
82,048
150,889
156,335
146,404
15,990
Income tax
0
0
460,489
0
0
0
Total
68,705
82,048
611,378
156,335
146,404
15,990
(Loss) from continuing operations before minority
    interest, extraordinary item and discontinued operations
(1,516,172
)
(1,641,119
)
(99,473
)
(1,147,839
)
(514,205
)
(56,160
)
Minority interest
314
7,214
20,400
16,461
20,694
2,260
(Loss) from continuing operations before
    extraordinary item and discontinued operations
(1,515,858
)
(1,633,905
)
(79,073
)
(1,131,378
)
(493,511
)
(53,900
)
Extraordinary item(4)
0
0
460,489
0
Cumulative effect of the adoption of the new
    accounting pronouncement
0
0
0
0
6,478
708
Loss (gain) from discontinued operations(5)
0
(23,565
)
(1,748
)
8,865
0
0
Net (loss) profit
(1,515,858
)
(1,657,470
)
379,668
(1,122,513
)
(499,989
)
(54,608
)
(Loss) per share from continuing operations
(1.41
)
(1.
46
)
(0.
06
)
(0.
81
)
(0.
33
)
(0.04
)
Net (loss) profit per share
(1.41
)
(1.
48
)
0.
30
(0.
80
)
(0.
33
)
(0.04
)
Weighted-average number of shares outstanding
1,070,825
1,121,396
1,286,844
1,396,672
1,495,140
3
Table of Contents
As of and for the Year Ended December 31,
1997
1998
1999
2000
2001
2001
(Thousands of
(Thousands of constant pesos as of December 31, 2001,
U.S. dollars,
except per share and operating data)(1)
except per share
and operating
data)(2)
U.S.
    GAAP
:(6)
Total revenues
Ps.
2,950,592
Ps.
3,631,765
Ps.
4,782,971
Ps.
5,729,710
Ps.
6,104,040
U.S.$
666,671
Operating (loss) profit
(1,879,991
)
(1,077,832
)
(88,589
)
(433,547
)
(470,668
)
(51,405
)
Net (loss) income
(1,029,047
)
(1,646,622
)
272,648
(1,135,715
)
(809,088
)
(88,367
)
Basic and diluted (loss) profit per share(7)
(0.86
)
(1.
47
)
0.
21
(0.
81
)
(0.
54
)
(0.06
)
Balance Sheet Data:
Mexican
    GAAP
:
Working capital
Ps.
(394,759
)
Ps.
(1,535,455
)
Ps.
920,845
Ps.
(680,873
)
Ps.
348,812
U.S.$
38,097
Property and equipment, net
4,568,613
6,781,945
7,702,422
8,550,620
9,469,044
1,034,190
Total assets
10,116,025
12,685,133
16,874,724
16,474,775
16,571,692
1,809,927
Total debt
3,366,606
5,690,125
9,005,212
7,982,062
7,348,281
802,565
Total stockholders' equity
5,043,988
4,684,706
5,964,543
6,630,900
7,162,908
782,318
Capital stock
9,673,373
11,031,253
5,378,286
5,822,194
6,754,549
737,718
U.S.
    GAAP:
(6)
Working capital
Ps.
(636,312
)
Ps.
(1,725,717
)
Ps.
688,990
Ps.
(959,202
)
Ps.
147,919
U.S.$
16,155
Property and equipment, net
4,568,613
6,568,881
7,702,812
8,337,557
9,236,234
1,008,763
Total assets
11,121,148
13,194,081
17,372,671
17,000,588
17,077,131
1,865,130
Total debt
3,366,606
5,703,843
9,011,140
7,982,062
7,348,281
802,565
Minority interest
17,538
1,037
37,615
25,443
117,207
12,801
Total stockholders' equity
4,989,688
4,687,426
5,839,773
6,314,679
6,253,621
683,008
Other Financial Data:
Mexican
    GAAP
:
EBITDA(8)
Ps.
607,774
Ps.
995,904
Ps.
1,610,956
Ps.
1,985,659
Ps.
2,562,166
U.S.$
279,835
EBITDA margin(9)
22%
28%
34%
35%
41%
41%
Capital expenditures(10)
Ps.
1,071,452
Ps.
4,135,522
Ps.
1,949,657
Ps.
2,150,446
Ps.
1,981,919
U.S.$
216,461
Interest expense, net
376,139
285,378
331,499
982,462
808,678
88,322
Ratio of earnings to fixed charges(11)
—
—
2.
59
—
—
—
U.S.
    GAAP
:(6)
EBITDA(8)
Ps.
(998,103
)
Ps.
1,198,824
Ps.
1,532,433
Ps.
1,975,430
Ps.
2,125,262
U.S.$
232,117
Cash Flow Data:(12)
Mexican
    GAAP
:
Net resources (used) provided by operating
    activities
Ps.
(341,860
)
Ps.
870,685
Ps.
1,305,264
Ps.
1,488,701
Ps.
2,059,311
U.S.$
224,914
Net resources used in investing activities
(1,750,251
)
(4,404,047
)
(4,499,631
)
(2,889,874
)
(2,706,468
)
(295,595
)
Net resources provided by financing activities
2,110,769
3,681,395
4,178,678
777,892
375,534
41,015
U.S.
    GAAP
:(6)
Net cash provided by operating activities
Ps.
119,199
Ps.
2,178,802
Ps.
864,317
Ps.
1,211,776
Ps.
1,087,024
U.S.$
118,723
Net used in investing activities
(1,550,729
)
(4,190,986
)
(2,978,634
)
(3,181,259
)
(2,814,441
)
(307,388
)
Net cash provided by financing activities
1,450,190
2,160,216
3,137,895
1,453,297
1,501,887
164,033
Operating Data:
Covered POPs(13)
65,847,614
66,712,645
67,591,791
68,376,034
89,917,967
N/A
Subscribers(14)
Postpaid
199,964
277,014
352,289
442,594
404,075
—
Prepay
200,159
478,361
970,509
1,238,625
1,451,091
—
Total subscribers
400,123
755,375
1,322,798
1,681,219
1,855,166
—
Gross subscriber additions
406,353
747,720
788,438
1,092,895
1,051,089
—
Average subscribers(15)
387,765
742,601
1,290,558
1,637,481
1,721,072
—
Average monthly postpaid churn(16)
2.94%
2.
58%
2.
96%
3.
51%
3.
76%
—
Penetration(17)
0.61%
1.
13%
1.
96%
2.
46%
2.
10%
—
Average monthly MOUs per subscriber(18)
105
87
91
94
117
—
Nominal average monthly mobile wireless revenue
    per subscriber(19)
Ps.
464
Ps.
361
Ps.
335
Ps.
322
Ps.
370
U.S.$
40.4
Nominal cost to acquire a new subscriber(20)
Ps.
5,326
Ps.
3,477
Ps.
3,277
Ps.
3,270
Ps.
2,677
U.S.$
292
4
Table of Contents
(1)
In accordance with Mexican GAAP, financial data
    for all periods covered by the Consolidated Financial Statements
    as well as the other financial data presented in this Annual
    Report, unless otherwise indicated, has been restated in
    constant pesos with purchasing power as of December 31,
    2001. Restatement of peso amounts is made by multiplying the
    relevant nominal peso amount for the relevant period by the
    inflation index for the period from the end of the period to
    which such nominal peso amount relates through December 31,
    2001. The inflation indices used in this Annual Report are
    1.5155 for 1997, 1.2777 for 1998, 1.1376 for 1999 and 1.0440 for
    2000.
(2)
Peso amounts were converted to U.S. dollars
    at the Noon Buying Rate for December 31, 2001, which was
    Ps. 9.156 per U.S.$1.00. Such conversions should not be
    construed as representations that the peso amounts actually
    represent such U.S. dollar amounts or could be converted
    into U.S. dollars at the rate indicated, or at all.
In determining the peso amounts of our
    U.S. dollar-denominated obligations at December 31,
    2001 in the Consolidated Financial Statements, under Mexican
    GAAP, however, we applied the exchange rate published by Banco
    de México (the Mexican Central Bank) on December 31,
    2001 which was Ps. 9.1695 per U.S.$1.00. The difference
    between the Noon Buying Rate and the Banco de México
    exchange rate causes certain inconsistencies between references
    to U.S. dollar amounts in this Annual Report and the actual
    outstanding U.S. dollar amounts of our
    U.S. dollar-denominated obligations. For example, our
    actual total debt outstanding, excluding trade notes payable, at
    December 31, 2001 was U.S.$801.4 million. In preparing
    the Consolidated Financial Statements, we multiplied this dollar
    amount by Ps. 9.1695; (the Banco de México exchange
    rate at December 31, 2001) to arrive at
    Ps. 7,348.3 million of total debt, excluding trade
    notes payable. For purposes of this Annual Report, we have
    converted this peso amount to U.S. dollars for the
    convenience of the reader by dividing it by Ps. 9.156 (the
    Noon Buying Rate at December 31, 2001) to arrive at
    U.S.$802.6 million of total debt, excluding trade notes
    payable.
As a result of the combined effect of the
    restatement of the financial data in constant pesos with
    purchasing power as of December 31, 2001 and the
    convenience translation of peso amounts into U.S. dollars,
    the amounts shown for certain balance sheet items are not equal
    to the actual amounts outstanding.
(3)
For U.S. GAAP purposes, the impairment
    charge relating to the analog communications equipment is
    recorded as an operating expense.
(4)
For 1999, the extraordinary item represents the
    utilization of tax loss carryforwards available to us which,
    under Mexican GAAP, is required to be classified as an
    extraordinary item. Under U.S. GAAP, the utilization of tax
    loss carryforwards is recorded as a component of tax expense.
(5)
In December 1998, we discontinued the operations
    of our subsidiary Cellular Solutions de México, S.A.
    de C.V., which sold cellular handset accessories. This
    company transferred all its existing inventories as of
    December 31, 1998 to another of our subsidiaries and
    terminated all its employees during January and February 1999.
    See Note 19 to the Consolidated Financial Statements. Under
    U.S. GAAP, the closing of this subsidiary does not
    constitute a discontinued operation under APB No.30.
    Accordingly, the gain (loss) from discontinued operations
    is recorded as operating income (expense).
(6)
See Note 23 to the Consolidated Financial
    Statements.
(7)
Diluted (loss) profit per share for the
    years ended December 31, 1997, 1998, 2000 and 2001 is equal
    to basic (loss) income per share because the potential drawdowns
    and conversions under the subordinated convertible facility with
    Bell Atlantic and the shares outstanding under the executive
    employee stock purchase plan are excluded from the computation
    of diluted (loss) profit per share because to include them would
    have been antidilutive for the periods presented. For the years
    ended December 31, 1997 and 1998, the number of potentially
    antidilutive shares that were excluded from the computation of
    diluted (loss) profit per share to account for the drawdowns and
    conversions under the facility with Bell Atlantic were
    214,285,714 and 69,285,714 shares, respectively, and for
    the years ended December 31, 1997, 1998, 2000 and 2001 for
    the shares outstanding under the executive employee stock
    purchase plan were 6,485,124, 6,485,124, 7,969,894 and
    7,812,5000 respectively.
Diluted (loss) profit per share for the year
    ended December 31, 1999 is equal to basic
    (loss) profit per share.
5
Table of Contents
(8)
EBITDA as used in this Annual Report is operating
    (loss) plus the sum of depreciation and amortization and, in
    1997 under U.S. GAAP the 450 project non-cash
    write-down and is presented because we believe that EBITDA
    provides useful information regarding our debt service ability.
    EBITDA should not be considered in isolation or as a substitute
    for our consolidated income statements or the consolidated
    statements of changes in financial position prepared in
    accordance with Mexican GAAP or as a measure of profitability or
    liquidity. EBITDA as presented in this Annual Report (under both
    Mexican GAAP and U.S. GAAP) differs from EBITDA as defined
    in the instruments governing Iusacell and Iusacell
    Celular's senior notes and Iusacell Celular's senior
    refinancing secured loan (as described herein). In particular,
    EBITDA in this Annual Report has not been reduced to reflect the
    additional expenses that Iusacell Celular would have incurred
    had it expensed the cost of cellular telephones it gives to its
    postpaid customers rather than amortized such cost over
    12 months, in accordance with its current practice under
    Mexican GAAP, as permitted under U.S. GAAP. EBITDA is not
    (i) a measure determined under U.S. GAAP, (ii) an
    alternative to U.S. GAAP operating income (loss) or net
    income (loss), or (iii) a measure of liquidity or cash
    flows as determined under U.S. GAAP. EBITDA does not
    represent discretionary funds. EBITDA, as calculated by us, may
    not be comparable to similarly titled measures reported by other
    companies.
(9)
EBITDA margin is calculated by dividing EBITDA by
    the total revenues for the respective period.
(10)
Capital expenditures include fixed asset
    purchases, capitalized labor costs, the capitalization of
    interest costs related to long-term debt incurred in connection
    with the acquisition of property, plant and equipment, trade-in
    credits received from Lucent Technologies for exchanging our
    previous analog network for a digital and analog network
    supplied by Lucent Technologies and, in some cases, the net
    value of long distance fiber acquired in swaps for Iusacell long
    distance fiber. In 1999 and 2000, pursuant to a waiver from its
    bank lenders, and beginning in 2001, pursuant to the terms of
    its senior refinancing secured loan, Iusacell Celular excluded
    capitalized interest cost from capital expenditures in
    determining its compliance with capital expenditure limitations
    set forth in its debt covenants. For 1998 and 1999, pursuant to
    waivers from its lenders, Iusacell Celular excluded Lucent
    trade-in credits from capital expenditures in determining its
    compliance with the capital expenditures limitations set forth
    in its debt covenants. Beginning in 2001, pursuant to the terms
    of Iusacell Celular's senior refinancing secured loan, all
    Lucent trade-in credits have been excluded from capital
    expenditures in determining compliance with such debt covenants.
    See Item 5, "Operating and Financial Review and
    Prospects — Liquidity and Capital
    Resources — Capital Expenditures."
(11)
The ratio of earnings to fixed charges covers
    continuing operations. For this purpose, earnings are calculated
    as income or loss before taxes plus (i) integral financing
    cost, including amortization of capitalized interest,
    (ii) the interest portion of annual rent expense and
    (iii) losses from less than 50%-owned affiliates. Fixed
    charges include the expensed and capitalized portions of
    integral financing cost. Earnings were inadequate to cover fixed
    charges in 1997, 1998, 2000 and 2001. The fixed charge coverage
    deficiency for the years ended December 31, 1997, 1998,
    2000 and 2001 amounted to Ps. 1,517.8 million
    (U.S.$165.8 million), Ps. 2,588.5 million
    (U.S.$288.7 million), Ps. 914.0 million
    (U.S.$99.8 million) and Ps. 279.6 million
    (U.S.$30.5), respectively.
(12)
Under Mexican GAAP, the cash flow data represents
    changes in financial position and has been adjusted for
    inflation and includes certain non-cash items, such as monetary
    gains and losses and foreign exchange gains and losses and, as a
    result, is not comparable with the respective U.S. GAAP
    cash flow data. Under U.S. GAAP, the effect of inflation
    adjustments has been included in the separate line item
    "Gain on net monetary position and foreign exchange
    losses" in Note 23 to the Consolidated Financial
    Statements.
(13)
Covered POPs is the aggregate number of POPs in
    the geographic regions in which we provide mobile wireless
    services for whom our mobile wireless signal is accessible and
    whom we therefore have the potential to serve. POPs means points
    of presence, or population, for a given area based on census
    data published by Mexico's National Institute of
    Statistics, Geography and Information Processing
(Instituto
    Nacional de Estadística, Geografía e
    Informática)
.
(14)
Unless otherwise indicated, subscribers refer to
    the total number of mobile wireless customers included in our
    subscriber base in the geographic regions we cover at the end of
    the respective periods. Mobile wireless subscribers for the
    periods presented include cellular subscribers and PCS
    subscribers. In
6
Table of Contents
December 2001, we began providing limited
    commercial PCS services in Monterey and Tijuana. A prepay
    customer is included as a subscriber if, at the end of the
    period, such customer's telephone number has not yet been
    deactivated. See Item 4, "Information on the
    Company — Business Overview — Mobile
    Wireless Services — Prepay Customers."
(15)
Average subscribers represents the rolling
    monthly average number of subscribers for the respective periods.
(16)
Effective January 1, 1998, we changed the
    methodology by which we determine average monthly postpaid
    churn. Average monthly postpaid churn for a given period is now
    calculated by dividing the sum of all postpaid subscribers
    disconnected during such period by the sum of the
    beginning-of-month postpaid subscribers for each of the months
    in such period, expressed as a percentage. Average monthly
    postpaid churn for 1997, which was 2.88% under the old
    methodology, has been restated under the new methodology. See
    Item 4, "Information on the Company —
    Business Overview — Mobile Wireless
    Services — Postpaid Churn" and Item 5,
    "Operating and Financial Review and Prospects —
    Results of Operations."
(17)
Penetration represents the end-of-period
    subscribers divided by the end-of-period population in the
    geographic regions we cover, expressed as a percentage.
(18)
Effective January 1, 1998, we changed the
    methodology by which we determine average monthly minutes of use
    (MOUs) per subscriber. Average monthly MOUs per subscriber for a
    given period are now calculated by dividing total MOUs for the
    period by the sum of the monthly average number of subscribers
    for each of the months in such period. Average monthly MOUs per
    subscriber for 1997, which was 98 under the old methodology, has
    been restated under this methodology. Effective January 1,
    2000, we again changed the methodology by which we determine
    average monthly MOUs in order to conform to standards applied by
    other Verizon international affiliates. Under the current
    methodology, average monthly MOUs now include minutes of use
    from incoming calls to postpaid customers, which had previously
    been excluded. Both the previous and the current methodologies
    include minutes of use from incoming calls to prepay customers.
    Average monthly MOUs for 1999, which were 77 under the
    methodology effective in 1998 and 1999, have been restated under
    the current methodology. See Item 5, "Operating and
    Financial Review and Current Prospects — Results of
    Operations." When reporting average monthly MOUs per
    subscriber, we exclude "incoming calls only" prepay
    subscribers and the MOUs they generate.
(19)
Effective January 1, 1998, we changed the
    methodology by which we determine nominal average monthly mobile
    wireless revenue per subscriber (ARPU). ARPU for a given period
    is now calculated by dividing the sum of the monthly revenue and
    other cellular revenues for each of the months in the period by
    the sum of the monthly average mobile wireless subscribers for
    each of the months in such period. ARPU for 1997, which was
    Ps. 451 under the old methodology, has been restated under
    this methodology. Effective January 1, 2000, we again
    changed the methodology by which we determine ARPU in order to
    conform to standards applied by other Verizon international
    affiliates. Under the current methodology, ARPU now excludes
    revenues generated from the sale of handsets and accessories to
    postpaid customers. Both the previous and the current
    methodologies exclude revenues generated from the sale of
    handsets and accessories to prepay customers. ARPU for 1999,
    which was Ps. 346 under the methodology effective in 1998
    and 1999, has been restated under the current methodology. See
    Item 5, "Operating and Financial Review and
    Prospects — Results of Operations." When
    reporting ARPU, we exclude "incoming calls only"
    prepay subscribers and the revenue they generate.
(20)
Through December 31, 1999, nominal cost to
    acquire a new subscriber represented sales, marketing and
    advertising costs associated with postpaid plans, plus the costs
    of cellular phones we gave to postpaid customers, for the
    respective period (in nominal pesos) divided by the gross
    postpaid customer additions for such period. Effective
    January 1, 2000, we changed the methodology by which we
    determine nominal cost to acquire a new subscriber in order to
    conform to standards used by other Verizon international
    affiliates and more accurately reflect postpaid customer
    acquisition costs. The new methodology includes only handset
    subsidies and sales commissions and excludes allocations of
    advertising and overhead costs. Nominal cost to acquire a new
    subscriber for 1999, which was Ps. 3,527 under the old
    methodology, has been restated under the new methodology.
    Nominal cost to acquire a new subscriber for 1997 and 1998 have
    not been restated under the new methodology.
7
Table of Contents
Exchange
Rates
The following table sets forth, for the periods
indicated, the period-end, average, high and low Noon Buying
Rates expressed in nominal pesos per U.S. dollar. The Noon
Buying Rate on June 20
,
2002 was Ps. 9.785 per
U.S.$1.00.
Noon Buying Rate(1)
Period End
Average(2)
High
Low
Year ended December 31, 1997
8.070
7.917
8.410
7.717
Year ended December 31, 1998
9.901
9.152
10.630
8.040
Year ended December 31, 1999
9.480
9.563
10.600
9.243
Year ended December 31, 2000
9.618
9.459
10.087
9.183
Year ended December 31, 2001
9.156
9.337
9.972
8.946
Month ended December 31, 2001
9.156
9.158
9.245
9.090
Month ended January 31, 2002
9.152
9.164
9.250
9.095
Month ended February 28, 2002
9.130
9.105
9.170
9.048
Month ended March 31, 2002
9.001
9.064
9.114
9.001
Month ended April 30, 2002
9.375
9.165
9.3750
9.002
Month ended May 31, 2002
9.653
9.510
9.713
9.408
(1)
Source:
Federal
    Reserve Bank of New York
(2)
Average of month-end rates for annual data.
B.     Capitalization
and Indebtedness
Not applicable.
C.     Reasons for
the Offer and Use of Proceeds
Not applicable.
8
Table of Contents
D.     Risk
Factors
Risk Factors Relating to
    Iusacell
We are a holding company and depend on our
    subsidiaries to pay our liabilities.
We are a holding company with no significant
assets other than the stock of our subsidiaries.
In order to pay our obligations, we rely on
income from dividends and other cash flow from our subsidiaries.
Because we are a holding company, the claims of all holders of
our subsidiaries' debt rank senior to our obligations. At
December 31, 2001, our consolidated subsidiaries'
total indebtedness, including trade notes payable, was
Ps. 4,320.9 million (U.S.$471.9 million) and may
increase in the future. Claims of other creditors of our
subsidiaries will also generally have priority over our
obligations. For a description of some of our obligations and
liabilities, see Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital
Resources — Liquidity."
Our current debt agreements prevent our
subsidiaries from paying dividends or making cash available to
us until at least December 2006, except for those payments of
dividends or loans or advances at such times and in such amounts
as shall be necessary to permit Iusacell to pay
(i) scheduled interest (including any tax gross-up) and
principal payments as and when due in respect of our
14 1/4% senior notes due 2006, which we refer to as the
Iusacell senior notes, (ii) so long as no event of default
has occurred and is continuing, scheduled interest (including
any tax gross-up) as and when due in respect of any notes issued
to refinance the Iusacell senior notes, and (iii) so long
as no event of default has occurred and is continuing in an
aggregate amount of up to U.S.$5.0 million to discharge our
liabilities incurred in the ordinary course of business. In
addition, substantially all of our subsidiaries' assets are
pledged to secure their obligations under their existing debt
instruments. Dividends and cash flow from our subsidiaries are
therefore severely restricted by the terms of the outstanding
debt of our subsidiaries and the restrictive covenants that
govern the debt.
Our ability to pay our obligations before
December 2006 will depend on our ability to raise either equity
or debt and our subsidiaries' ability to generate
sufficient cash flow to make dividend payments to us in
compliance with their applicable restrictive covenants. After
December 2006, our ability to pay our liabilities will depend on
our ability to generate sufficient cash flow and/or to access
equity or debt financing. We cannot assure you that we will be
able to raise equity or debt or that our subsidiaries will
generate sufficient cash flow to pay dividends to enable us to
pay our obligations.
Furthermore, the ability of our subsidiaries to
pay dividends is subject to Mexican legal requirements, which in
general terms provide that a Mexican corporation may declare and
pay dividends only out of the profits reflected in its year-end
financial statements, if such payment is approved by its
stockholders and after the creation of required legal reserves
and the absorption or satisfaction of losses suffered in
previous fiscal years.
Additionally, in the event we engage in business
activities at the holding company level and incur associated
liabilities, or otherwise incur liabilities at the holding
company level, we may not have the resources available to
satisfy those liabilities for the reasons discussed above. In
the event that we incur such liabilities, we could be required
to turn to the capital markets or to our principal shareholders
to help us satisfy those liabilities. At that time, we may not
have access to equity or debt financing. In addition, our
principal shareholders are under no obligation to provide
financial resources to us, and there can be no assurance that
they would do so. A material unsatisfied liability at the
holding company level could lead us to bankruptcy or
reorganization or otherwise make it difficult or impossible for
us to comply with our obligations.
We may be unable to service our debt, access
    credit or pursue business opportunities because our subsidiaries
    are highly leveraged and have insufficient cash flow.
Historically, our cash generated from operating
activities has not been sufficient to meet our debt service,
working capital and capital expenditure requirements. We have
relied on the capital markets for new equity and debt financing,
vendor financing, borrowings and equity contributions from our
principal shareholders to meet such funding needs.
As of December 31, 2001, our total
consolidated indebtedness, including trade notes payable, was
Ps. 7,601.8 million (U.S.$830.3 million), or
approximately 51.5% of our total capitalization.
9
Table of Contents
For the years ended December 31, 2000 and
December 31, 2001, our earnings were insufficient to cover
our fixed charges by Ps. 914.0 million (U.S.$99.8
million) and Ps. 279.6 million (U.S.$30.5),
respectively.
The degree to which we are leveraged and the
covenants with which we must comply under our various financing
agreements may adversely affect our ability to finance future
operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better
capitalized competitors and to withstand downturns in our
business or the Mexican economy generally. Our high level of
indebtedness could limit our ability to pursue business
opportunities that may be in our interest and that of holders of
our securities.
We are subject to restrictive
    covenants.
The terms of our and our subsidiaries' debt
impose significant operating and financial restrictions. These
restrictions will affect, and in many respects significantly
limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
•
borrow money;
•
pay dividends on stock;
•
make capital expenditures and other investments;
•
use assets as security in other transactions; and
•
sell certain assets or merge with or into other
    companies.
If we do not comply with these restrictions, we
could be in default even if we can currently pay our debt. In
addition, under our senior refinancing secured loan, we are
required to remain in compliance with certain financial ratios,
and the failure to do so could result in a default under the
facility. In the event of a default under any of our debt which
remains uncured after any applicable grace period, holders of
the relevant debt could demand immediate payment of the
aggregate amount of that debt. Furthermore, this could trigger a
default under certain of our other debt agreements which may
entitle the holders of such debt to accelerate that debt as
well. We may not be able to make such payments. This could lead
to a
concurso mercantil
, a two-stage procedure under
Mexican law commencing with negotiations with our creditors and,
if such negotiations fail to reach an agreement, we would be
declared bankrupt.
We may lose money because of devaluation or
    fluctuation of the peso relative to the U.S. dollar.
While our sales are almost entirely denominated
in pesos, the vast majority of our obligations, and all of our
long-term debt, are denominated in U.S. dollars. As a result,
except for those obligations for which we have hedging
arrangements in place, we are exposed to the risk of devaluation
of the peso relative to the U.S. dollar. The peso appreciated by
4.8% relative to the U.S. dollar during 2001, remained almost
flat during 2000 and appreciated 4.3% against the U.S. dollar in
1999. However, in the past, the peso has depreciated
substantially against the U.S. dollar and may depreciate
significantly in the future. For example, in 1998, the value of
the peso depreciated 22.7% relative to the U.S. dollar.
Declines in the value of the peso relative to the
U.S. dollar could adversely affect our ability to meet U.S.
dollar-denominated obligations, including those under our debt
securities. In addition, any devaluation of the peso may
negatively affect the value of the securities of a Mexican
company with sales in pesos and debt denominated in U.S.
dollars, such as our company.
We face increasing competition which may
    reduce our operating margins.
We face significant competition in our core
mobile wireless services business from Radiomóvil Dipsa,
S.A. de C.V., commonly known as Telcel, in each region in which
we operate. As a subsidiary of América Móvil, S.A. de
C.V., a company spun off from Teléfonos de México,
S.A. de C.V., the former state telephone monopoly known as
Telmex, Telcel has significantly greater internal financial and
other resources than those available to us, nationwide cellular
and personal communications services (PCS) concessions, a
nationwide cellular network and the ability to use Telmex's
installed telecommunications systems. Competition in the Mexican
wireless industry is substantial and we, like Telcel, bear
significant promotional expenses, including the cost of
providing cellular telephones to postpaid subscribers free of
charge or at a substantial discount. In
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addition, competition from Telcel has not always
allowed us to implement price increases to keep pace with
inflation and has occasionally caused us to implement price
rollbacks and reductions. We also face competition from Pegaso
Comunicaciones y Sistemas, S.A. de C.V., which we refer to as
Pegaso, a consortium which includes Leap Communications
International, Inc. ("Leap"), Sprint PCS and a group
of Mexican investors, and from Servicios Profesionales de
Comunicación, S.A. de C.V., which we refer to as
Unefón, an affiliate of TV Azteca, S.A. de C.V. and
Elektra, S.A. de C.V. Telefónica Móviles, S.A.
("Telefónica"), a Spanish telecommunications
service provider, recently announced that it entered into an
agreement to acquire a 65% stake in Pegaso, including the
interests held by Leap and Sprint PCS. Both these service
providers own concessions in all nine wireless service regions
in Mexico and have begun to provide service in Mexico's
principal cities.
We also face increasing competition from Nextel
de México, S.A. de C.V., a provider of enhanced specialized
mobile radio services and satellite telephony.
In addition, we face increasing competition in
providing long distance, paging, wireless local telephony and
data transmission services. The Mexican government may grant
additional concessions to other companies to provide services
similar to or the same as those that we provide.
Besides Telcel and Telefónica, some other
competitors may also have greater financial and other resources,
which may limit our ability to compete effectively.
If we do not obtain significant capital from
    outside sources, we will have to defer the building of our
    wireless infrastructure and our pursuit of long distance and
    data opportunities and may lose the opportunity to generate
    revenues.
In order to implement our operating strategy
through 2004, we will have to incur significant capital
expenditures. We expect our aggregate capital expenditures for
2002, 2003 and 2004, not including capitalized interest, to
total approximately U.S.$600.0 million. We anticipate that
approximately U.S.$250.0 million of such capital
expenditures will be invested during 2002, including capital
expenditures to build out our PCS network in Regions 1 and
4 in northern Mexico (where we acquired concessions to provide
PCS services in 1998) and to increase the quality and coverage
of our cellular network in Region 8 in southern Mexico. We
expect capital expenditures to build out our PCS network in
northern Mexico and to increase the quality and coverage of our
cellular network in southern Mexico not to exceed
U.S.$100.0 million and U.S.$17.0 million in the
aggregate in 2002 and 2003, respectively.
We will need additional external funding in 2002
in order to acquire, build out and operate our PCS network in
northern Mexico. As we make additional investments in our
cellular network and pursue long distance and data
opportunities, we will also need additional external funding in
2003 and beyond. The terms of our PCS concession require us to
expand our network to cover specified portions of the population
of our service regions within certain time periods. The terms of
our concessions may, in the future, require us to make other
significant network investments for which additional funds would
be required. Furthermore, the investments required to keep pace
with technological change, such as third-generation wireless
telecommunication equipment, will require additional capital
resources. We cannot assure you that we will be able to obtain
such additional funds, including funds from either of our
principal shareholders, the capital markets or bank or vendor
financing, on acceptable terms or at all.
Factors over which we have limited or no
    control could impair our ability to implement new services and
    maintain our existing services and, as a result, we may lose
    business to our competitors.
Our ability to extend the implementation of our
wireless cellular and PCS services and to expand our long
distance and data services in accordance with our strategic plan
will depend on a number of factors over which we have limited or
no control. These factors include, among others, our ability to
acquire or renew concessions for spectrum at commercially
acceptable prices, raise sufficient capital, obtain required
governmental approvals, negotiate reasonable interconnection
agreements, obtain rights of way for fiber optic cables,
successfully deploy technologies, secure leases and permits for
cell sites, hire and retain additional qualified personnel and
develop an adequate customer base. Any of these factors could
delay, impede or reduce the
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scope of the implementation of new services and
have a material adverse effect on our existing business,
financial condition and results of operations.
The technology we use may be made obsolete by
    the technology used by our competitors.
All companies in the global telecommunications
industry must adapt to rapid and significant changes in
technology. The technology that we have selected in our wireless
business may be challenged by competition from new or improved
digital technologies supporting wireless service or other
services in the near future. Technological changes may adversely
affect our competitive position, require substantial new capital
expenditures and/or require write-downs of obsolete technology.
We may not have enough management resources to
    be able to expand our business in accordance with our
    plans.
We plan to continue to access additional
opportunities in the wireless business in Mexico. In May 1998,
we won auctions for concessions for a range of frequencies in
the 1.9 GHz band to provide PCS services in Regions 1 and 4
in northern Mexico. In December 2001, we launched commercial PCS
services in Tijuana and Monterrey, the two major cities in those
regions. In February 2002, we completed the acquisition of a
100% ownership interest in Grupo Portatel, S.A. de C.V. and its
subsidiaries, which we refer to collectively as Portatel.
Portatel holds the Cellular A-Band concession and provides
cellular services in Region 8 in southern Mexico. We will
have to devote substantial management resources to take
advantage of these new opportunities and business ventures. In
so doing, we will have to attract and retain qualified
management personnel to keep pace with our rate of growth. If we
are unable to attract and retain qualified management personnel,
our existing business, financial condition and results of
operations could be harmed.
Our strategy to expand our wireless footprint
    in Mexico leads us to consider significant acquisitions from
    time to time that may adversely affect our business, financial
    condition and results of operations.
One of our business strategies is to provide our
customers with access to reliable and high-quality wireless
service throughout Mexico. Providing access in regions where we
do not own concessions through roaming agreements with other
operators does not afford us optimal control over the coverage,
quality and pricing of our service. As a result, from time to
time we explore possibilities of expanding our wireless
footprint in Mexico. For example, we recently acquired Portatel.
Although we believe that transactions such as
acquisitions or joint ventures would significantly strengthen
our competitive position, at the same time they pose a number of
risks and uncertainties for us and for the holders of our
securities. These risks include the possibility that such
acquisitions or joint ventures could involve (i) additional
debt or other liabilities, or the acquisition of operational,
financial, legal, labor or other liabilities, risks or financial
needs, which we may not discover until after the acquisition or
joint venture has been consummated and (ii) an increase in
our capital expenditure requirements. Any of these risks could
result in a material adverse change in our financial condition
and/or ability to service debt. In addition, any acquisition
made with our shares could be dilutive to our shareholders.
Because we cannot foresee all of the risks that
one or more of these acquisitions might involve, should they
occur, it is not possible for us to describe all these risks. As
a result, holders of our securities must be prepared to accept
any deterioration in our prospects, business, financial
condition, results of operations or cash flow stemming from one
or more of these acquisitions.
Mobile wireless fraud increases our
    expenses.
The fraudulent use of mobile wireless
telecommunications networks imposes a significant cost upon
mobile wireless service providers who must bear the cost of
services provided to fraudulent users. We suffer losses of
revenue as a result of fraudulent use and also incur cash costs
due to our obligation to reimburse carriers for the cost of
services provided to some fraudulent users. These cash costs
approximated Ps. 39.5 million (U.S.$4.3 million)
and Ps. 42.8 million (U.S.$4.7 million) in 2000
and 2001, respectively.
Although technology has been developed to combat
the fraudulent use of telecommunications networks, this
technology does not eliminate fraudulent use entirely. We must
make expenditures periodically to acquire and use anti-fraud
technology. In 1998, we spent Ps. 39.9 million
(U.S.$4.4 million) to acquire anti-fraud technology and
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to cover other costs related to fraud detection
and prevention. In 1999, 2000 and 2001, we incurred minimal
expenses for these purposes. However, we cannot assure you that
the anti-fraud technology that we have purchased will continue
to be effective in detecting and preventing fraud. If our
anti-fraud technology becomes obsolete, we will need again to
make expenditures to acquire and use new anti-fraud technology.
A significant portion of our accounts
    receivable is represented by a small number of
    distributors.
In 2001, our three largest distributors accounted
for 44% and 24% of our net trade accounts receivable as of
December 31, 2001 and 2000, respectively. We have
established certain measures to reduce the risk associated with
this concentration, such as certain guarantees and liens.
Although we believe that this distributor concentration will be
reduced over time as the size of our operations grow, our
results of operations could be negatively affected, at least in
the short-term, if any payment defaults occur with respect to
these distributors.
Risk Factors
Relating to Our Shareholders
If Verizon sold all or a substantial part of
    its interest in us, that sale could result in Verizon no longer
    managing our operations, in which case we would have to make an
    offer to repurchase a substantial majority of our debt
    securities.
Verizon currently has the right and power to
elect a majority of the members of our Board of Directors and,
with certain exceptions, unilaterally determine our policies and
strategy.
If Verizon were to sell all or a substantial part
of its direct interest in Iusacell, the sale would cause Verizon
to lose its ability to manage us. Verizon would then no longer
be in a position to determine our policies and strategies,
manage our operations or provide the technical and financial
support that we have historically relied on. It is not possible
for us to describe the strategy that Iusacell would implement
following any such management change.
In addition, any substantial sale by Verizon
would constitute a change of control under Iusacell and Iusacell
Celular debt instruments relating to up to approximately
U.S.$765.6 million of indebtedness. In the event of any
such change of control, Iusacell or Iusacell Celular, as the
case may be, would have to make an offer to repurchase that
indebtedness. We cannot assure you that either Iusacell or
Iusacell Celular, or both, would have sufficient funds or have
the ability to obtain sufficient funds on a timely basis to pay
for any or all of the indebtedness that we may have to
repurchase if that happened.
We rely on Verizon and Vodafone personnel; if
    either Verizon or Vodafone recalled them, we would have fewer
    qualified employees.
Our President and Director General, Chief
Financial Officer, Vice President, Technical Operations, Vice
President, Sales, and Vice President, Long Distance and Data,
are employees of Verizon, and our Senior Vice President,
Marketing, is an employee of Vodafone Group Plc, which we refer
to as Vodafone. The services of each such employee are provided
to us on a secondment basis. We also use the services of a
number of Verizon and Vodafone employees on a consulting basis,
primarily in the areas of network operations, information
systems, strategic planning, marketing and customer care
operations. So long as Verizon controls Iusacell and Vodafone
holds a significant equity interest in Iusacell, we expect these
or other seconded employees and consultants to continue to
provide services to us. If Verizon and Vodafone did not make
these employees available to us, our results of operations and
financial condition could be materially adversely affected.
Risk Factors
Relating to Doing Business in Mexico
The Mexican government may impose additional
    conditions on our concessions or may take them away.
We provide our services pursuant to concessions
granted by the Mexican government. Our activities are subject to
significant government regulation and supervision. The
concessions may be subject to additional conditions or may not
be renewed when they expire. The Mexican government also
reserves the right to revoke, temporarily seize or expropriate
concessions or assets related to a concession for reasons, among
others, of public interest or order such as war, national
disaster or significant public disturbances. Moreover, the
Mexican government may grant additional concessions to potential
competitors to provide services similar to those that we
provide. Any of these developments or other government action
could harm the value of Iusacell's concessions and our
financial condition and results of operations.
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Our financial statements may not give you the
    same information as financial statements prepared under U.S.
    generally accepted accounting principles.
Mexican companies listed on the Mexican Stock
Exchange, including Iusacell, must prepare their financial
statements in accordance with Mexican GAAP. Mexican GAAP differs
in certain significant respects from U.S. GAAP, including, but
not limited to, the treatment of minority interest, purchase
accounting, deferred income taxes, capitalization of
pre-operating costs, derivatives financial instruments, gains
from the exchange of non-monetary assets, the provisioning for
the consolidation of facilities and sale-leaseback transactions.
In particular, all such Mexican companies must incorporate the
effects of inflation directly in their accounting records and in
published financial statements. The effects of inflation
accounting under Mexican GAAP are not eliminated in the
reconciliation to U.S. GAAP, as these inflation-adjusted figures
are considered a more meaningful presentation than historical
cost-based financial reporting for both Mexican and U.S.
accounting purposes. For this and other reasons, the
presentation of Mexican financial statements and reported
earnings may differ from that of companies in other countries.
See Note 23 to our Consolidated Financial Statements.
If Mexico experiences political and economic
    crises, we may lose money.
We are a Mexican company, and all of our
operations are in Mexico. Accordingly, the political and
economic environment in Mexico has a significant impact on our
financial condition and results of operations.
The Mexican government has exercised, and
continues to exercise, significant influence over the Mexican
economy. Mexican governmental actions concerning the economy and
state-owned enterprises could have a significant impact on
Mexican private sector entities in general and on us in
particular, and on market conditions, prices and returns on
Mexican securities, including our securities.
In July 2000, Mexico held national elections,
which were won by Vicente Fox Quezada, the candidate of the
National Action Party (
Partido Acción Nacional
).
This represents the first time that a party other than the
Institutional Revolutionary Party (
Partido Revolucionario
Institucional
) has won the Presidency in more than
70 years. In addition, no single party currently has a
majority in the National Congress. We cannot predict the impact
that this change in administration will have on the Mexican
economy in the years to come.
In the past, Mexico has experienced economic
crises, caused by internal and external factors, characterized
by exchange rate instability, high inflation, high domestic
interest rates, economic contraction, a reduction of
international capital flows, a reduction of liquidity in the
banking sector and high unemployment. These economic conditions
substantially reduced the purchasing power of the Mexican
population and, as a result, the demand for telephony services.
Crises such as these could harm our financial
condition and results of operations and the market value of our
securities.
If the Mexican government imposes exchange
    controls, we may not be able to purchase imported goods or make
    dividend, principal and interest payments in U.S.
    dollars.
In the past, the Mexican economy has experienced
balance of payment deficits and shortages in foreign exchange
reserves. While the Mexican government does not currently
restrict the ability of Mexican or foreign persons or entities
to convert pesos to foreign currencies generally, and U.S.
dollars in particular, it has done so in the past and could do
so again in the future. We cannot assure you that the Mexican
government will not institute a restrictive exchange control
policy in the future. Any such restrictive exchange control
policy could prevent or restrict access to U.S. dollars or other
foreign currencies to purchase imported goods and to meet our
U.S. dollar obligations, such as the payment of dividends or
principal and interest under any debt securities.
Payment of judgments entered against us will
    be in pesos, which may expose holders of our debt securities to
    exchange rate risks.
If a proceeding to enforce our obligations under
any debt securities is brought in Mexico, Mexican law permits us
to pay a resulting judgment in pesos. Under the Mexican Monetary
Law, an obligation payable in
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Mexico in a currency other than pesos may be
satisfied in pesos at the exchange rate in effect on the date
when payment is made.
If a Mexican court declares us to be in
concurso mercantil,
our obligations under any debt
securities:
•
would be converted into pesos at the exchange
    rate prevailing at the time of the court's declaration of
concurso mercantil
and then to
unidades de
    inversión
(UDIs) which are denominated in pesos and
    adjusted periodically for inflation by Banco de México, and
    payment would occur at the time claims of the court-recognized
    creditors are satisfied subject to the priority established by
    law; and
•
would not be otherwise adjusted to take into
    account devaluation of the peso against the U.S. dollar
    occurring after the court's declaration.
The 10% tax on telecommunications services
    approved by the Mexican Congress may adversely affect the
    ability of wireless companies, including Iusacell, to add new
    postpaid customers.
On January 1, 2002, the Mexican Congress
approved a surcharge that assesses an additional 10% federal
excise tax on certain wireless telecommunications services. In
February 2002, we filed an injunctive action (
amparo
)
challenging the Mexican government's implementation of the
tax. According to local media reports and government statements,
several other members of the industry have initiated similar
proceedings. The tax has resulted in a 10% increase in the
monthly bills of postpaid mobile wireless customers and in the
cost of prepay cards in denominations of Ps.200 or more.
High inflation rates in Mexico may decrease
    demand for our services while increasing our costs.
In recent years, Mexico has experienced high
levels of inflation. The annual rate of inflation, as measured
by the Mexican National Consumer Price Index, was 12.3%, 9.0%,
4.4% and 1.4% in 1999, 2000, 2001 and the three-month period
ended March 31, 2002, respectively. High inflation rates
can adversely affect our business and results of operations in
the following ways:
•
Inflation can adversely affect consumer
    purchasing power, thereby adversely affecting consumer demand
    for our services and products; and
•
To the extent inflation exceeds our price
    increases, our prices and revenues will be adversely affected in
    "real" terms.
High interest rates in Mexico could increase
    our financing costs
Mexico has, and is expected to continue to have,
high real and nominal interest rates. The interest rates on
28-day Mexican government treasury securities averaged 21.4%,
15.2%, 11.3% and 7.4% for 1999, 2000, 2001 and the three month
period ended March 31, 2002, respectively. Accordingly, if
we need to incur peso-denominated debt in the future, it will
likely be at high interest rates.
Other Risk
Factors
The terrorist attacks in the United States
    adversely affected the price and liquidity of our shares and our
    ADSs.
Following the terrorist attacks in the United
States on September 11, 2001, there has been substantial
volatility in the international equity markets. The attacks have
also affected the price of our series V shares on the Mexican
Stock Exchange and our series V share American depositary
shares, which we refer to as ADSs, on the New York Stock
Exchange. Any future terrorist attacks or the anticipation of
any such actions may have a further adverse impact on the U.S.
and world economies and thus on demand for our services and on
the liquidity and price of our shares and ADSs in the secondary
market.
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ITEM
4.     INFORMATION ON THE
COMPANY
A.     History and
Development of the Company
Grupo Iusacell, S.A. de C.V., which was known as
Nuevo Grupo Iusacell, S.A. de C.V. until February 29, 2000,
is a
sociedad anónima de capital variable
with
indefinite life organized under the laws of Mexico on
August 6, 1998. Iusacell was formed for the purpose of
acquiring and holding the shares of Grupo Iusacell Celular, S.A.
de C.V., which was known as Grupo Iusacell, S.A. de C.V. until
February 29, 2000, a
sociedad anónima de capital
variable
with indefinite life organized under the laws of
Mexico on October 6, 1992.
Iusacell's commercial name is "Grupo
Iusacell," but our operating subsidiaries market their
products under the single
Iusacell Digital
TM
brand name. Iusacell currently operates entirely in Mexico under
Mexican legislation, although our participation in the U.S.
capital markets makes us also subject to certain securities laws
of the United States.
Iusacell Celular was formed in 1992 to hold the
principal telecommunications interests of the Peralta Group,
which primarily comprises securities and entities controlled by
Mr. Carlos Peralta. Iusacell Celular's subsidiaries
are primarily engaged in the wireless telecommunications
business and hold concessions to operate cellular telephone
systems in five contiguous market regions in central and
southern Mexico. Mexico is divided into nine geographic regions
for the provision of mobile wireless service. Iusacell Celular
was granted an authorization to provide cellular service in
Region 9 (which includes Mexico City) in 1989 and, in a
series of transactions from 1990 to 2002, purchased the
companies holding concessions to provide cellular service in
Region 5 (which includes the city of Guadalajara),
Region 6 (which includes the city of León),
Region 7 (which includes the city of Puebla) and
Region 8 (which includes the cities of Cancún and
Mérida). In October 1995, a Iusacell Celular subsidiary
received a concession to provide long distance service and began
providing such service in August 1996. Also in August 1996, we
began to provide paging services through a joint venture between
Iusacell Celular and a third party concessionaire.
In May 1998, a separate subsidiary of Iusacell
acquired in an auction concessions for frequencies to provide
PCS services in Region 1 (which includes the city of
Tijuana) and Region 4 (which includes the city of
Monterrey) in northern Mexico for approximately
Ps.493.2 million (in nominal terms)
(U.S.$49.8 million, using the applicable exchange rate as
of the date of the purchase). Iusacell started to offer
commercial services in those two cities in December 2001.
In November 1993 and August 1994, Bell Atlantic
acquired a 42.0% equity interest in Iusacell Celular for
U.S.$1.04 billion. In June 1994, Iusacell Celular completed
an initial public offering of two of its four series of ordinary
shares and of American depositary shares representing two series
of its shares.
In February 1997, Bell Atlantic assumed
management control of Iusacell Celular. This change of control
was implemented when Bell Atlantic and the Peralta Group
effected certain conversions of shares from one series into
another that gave Bell Atlantic a majority of the Iusacell
Celular series A shares and control over the Iusacell Celular
Board of Directors. All these conversions were effected on a
one-for-one basis. In August 1997, Bell Atlantic acquired NYNEX
Corporation in a merger of equals to form the new Bell Atlantic.
In September 1997, in order to focus exclusively
on its core Mexican market, Iusacell Celular sold its direct and
indirect interests in Ecuadorian cellular and paging companies
for approximately U.S.$31.4 million, net of taxes.
In December 1997, Iusacell Celular entered into
an agreement with subsidiaries of Lucent Technologies, Inc.
pursuant to which Iusacell Celular agreed (i) to replace
its existing analog wireless cellular network with a new Lucent
Technologies digital and analog network for a minimum
consideration of U.S.$188.0 million which was completed in
August 1999 and (ii) to continue acquiring network
equipment and services under the agreement in order to improve
its digital and analog network. Through December 31, 2001,
Iusacell Celular has purchased approximately
U.S.$409.9 million of network equipment and services under
this agreement.
On July 6, 1999, Iusacell launched an offer
to exchange two classes of Iusacell voting ordinary shares for
the four classes of Iusacell Celular ordinary shares then
outstanding on a one-for-one basis. We completed this offer on
August 10, 1999 and, as a result, Iusacell acquired 99.5%
of the outstanding Iusacell Celular shares.
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On January 31, 2000, Iusacell launched a
second exchange offer for the purpose of exchanging American
depositary shares representing Iusacell's series V
shares for the balance of American depositary shares
representing Iusacell Celular's series D and series L
shares on a one-for-one basis. We completed this offer on
February 29, 2000 and, as a result, Iusacell held 99.9% of
the outstanding Iusacell Celular shares. In May 2001, Iusacell
Celular effected a reverse stock split of 1 new Iusacell Celular
share for every 30,000 old Iusacell Celular shares. As a result
of this reverse split, Iusacell now holds 100% of the capital
stock of Iusacell Celular.
In December 1999, as a first step toward
minimizing its involvement in real estate management and tower
maintenance, Iusacell Celular entered into an agreement with
MATC Celular S. de R.L. de C.V., the Mexican subsidiary of
American Tower Corporation, which we refer to as MATC Celular,
pursuant to which MATC Celular could acquire the majority of
towers owned and/or operated by Iusacell Celular. In return,
Iusacell Arrendadora S.A. de C.V., a subsidiary of Iusacell,
would lease space on those towers and sublease it to the
operating subsidiaries of Iusacell Celular. Iusacell Celular
sold approximately 244 towers to MATC Celular in 2001, and an
additional 25 towers in May 2002. We expect to sell up to 61
additional towers to MATC Celular in 2002.
On June 30, 2000, Bell Atlantic acquired GTE
Corporation, one of the world's largest telecommunications
companies, in a merger of equals, renaming itself as Verizon
Communications Inc. The subsidiaries which directly hold
Iusacell capital stock remained unchanged. In April 2001,
Vodafone acquired the Peralta Group's 34.5% equity interest
in Iusacell for U.S.$973.4 million.
Over our last three full fiscal years, excluding
the effects of inflation accounting, capitalized interest and
certain non-cash trade-in credits, we have invested
approximately U.S.$575.4 million in capital expenditures,
primarily for our cellular communications network, long distance
network and billing, customer care and administrative systems.
See Item 5, "Operating and Financial Review and
Prospects — Liquidity and Capital
Resources — Capital Expenditures."
On October 19, 2001, we completed the
acquisition of a 78.3% ownership interest in Portatel for
Ps. 522.5 million (U.S.$57.1 million). We reached
an agreement to acquire the remaining 21.7% ownership in
Portatel for Ps. 148.1 million (U.S.$16.2 million) and
closed the acquisition of this remaining ownership interest on
February 8, 2002. Portatel is engaged in the wireless
communications business and holds the concession to provide
cellular services in Region 8, which covers the states of
Yucatan, Campeche, Quintana Roo, Chiapas and Tabasco in southern
Mexico.
In 2002, we plan to invest at least
U.S.$150.0 million in capital expenditures, not including
capitalized interest, to increase the coverage and improve the
quality of and enhance the features available through our
cellular and long distance networks, and to improve our billing
and customer care systems. In addition, subject to obtaining
financing, we plan to spend approximately U.S.$79.0 million
in 2002 to complete the build-out of our PCS networks and
continue the deployment of non-network PCS infrastructure in
Regions 1 and 4 in northern Mexico. Additionally, we plan
to spend approximately U.S.$21.0 million in 2002 to expand
the coverage and increase the quality of our cellular network in
Region 8 in southern Mexico. All of this capital equipment will
be deployed in Mexico. We expect to finance our 2002 capital
expenditure plan through funds from our operations, vendor and
project financing, the capital markets and the net proceeds from
the sale of our cellular towers to MATC Celular. See
Item 5, "Operating and Financial Review and
Prospects — Liquidity and Capital
Resources — Capital Expenditures."
Our principal executive offices are located at
Prolongación Paseo de la Reforma 1236, Colonia Santa Fe,
Delegación Cuajimalpa, 05348, Mexico, D.F. Our telephone
number is (5255) 5109-4400. Our agent in the United States
is Puglisi & Associates, 850 Library Avenue,
Suite 204, P.O. Box 885, Newark, Delaware 19715. Our
internet website address is http://www.iusacell.com.mx. The
information on our website is not incorporated into this
document.
B.     Business
Overview
We are a leading wireless telecommunications
services provider in Mexico with nearly 1.9 million mobile
wireless customers at December 31, 2001. We hold and
operate concessions in the 800 megahertz (MHz) band to provide
cellular wireless services in five contiguous geographic regions
comprising all of central and
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southern Mexico, and in the 1900 MHz band to
provide PCS wireless services in two of the four regions in
northern Mexico. Our service regions include Mexico City, one of
the world's most populous cities, and the cities of
Monterrey, Tijuana, Guadalajara, León, Puebla, Cancún
and Mérida, and combined represent approximately
90 million points of presence (POPs) comprising 90% of
Mexico's total population.
Since February 1997, Iusacell has been under the
management control of subsidiaries of Bell Atlantic (now
Verizon). From late 1993 through February 1997, Bell Atlantic
participated substantially in the financial and technological
operations of Iusacell. Since Bell Atlantic assumed control of
our Board of Directors and management, Bell Atlantic (now
Verizon) personnel seconded to Iusacell and Bell Atlantic (now
Verizon) consultants have been integrally involved in managing
our day-to-day operations and defining and implementing our
long-term strategy. Through December 31, 2001, Bell
Atlantic has invested approximately U.S.$1.3 billion for
its current 39.4% economic and voting interest in Iusacell.
Since Bell Atlantic took control of
Iusacell's management, our subscriber base has grown from
approximately 245,000 subscribers in February 1997 to 1,855,166
subscribers as of December 31, 2001. Of these subscribers,
as of December 31, 2001, 404,075 were postpaid customers
who purchase cellular services pursuant to fixed-term contracts,
and the remaining 1,451,091 were customers who pay for their
cellular services in advance primarily through the purchase of
prepay calling cards. As of December 31, 2001,
approximately 768,000 of these prepay customers were
"incoming calls only" customers who are only able to
receive incoming calls and not to make outgoing calls. These
customers generate little or no revenue. Iusacell's
postpaid and prepay subscribers who can both make outgoing calls
and receive incoming calls had an average monthly cellular
revenue per subscriber (ARPU) during 2001 of Ps. 370.0
(approximately U.S.$40.0), with prepay subscribers in this group
having an ARPU of Ps. 146.0 (approximately U.S.$16.0)
during 2001.
In May 1998, we launched digital service using
Code Division Multiple Access (CDMA) technology, the
highest-capacity commercial digital technology available, in the
800 MHz frequency band in the Mexico City area. Since August
1999, we have offered digital coverage and services in almost
all areas where we provide mobile wireless services. In addition
to our core mobile wireless services, we also provide a wide
range of other telecommunications services, including long
distance, paging, wireless local telephony and data transmission
services.
The management team at Iusacell is able to draw
extensively upon Verizon's expertise in the development and
implementation of our operating strategy. Fares F. Salloum,
Iusacell's Chairman of the Board, has 29 years of
global telecommunications experience. In addition,
Mr. Salloum is currently responsible for Verizon's
international wireline and wireless operations in the western
hemisphere, including Telus Corporation (Telus) in Canada,
Codetel, C. por A. (Codetel) in the Dominican Republic,
Compañía Anónima Nacional Teléfonos de
Venezuela (CANTV) in Venezuela, Telecomunicaciones de
Puerto Rico Inc. (TELPRI) in Puerto Rico and CTI Holdings,
S.A. (CTI) in Argentina. Iusacell's President and
Director General, Peter H. Burrowes, has nine years of
telecommunications experience, having served as President and
Chief Executive Officer of Comunicación Celular, S.A.
(Comcel), a cellular service provider in Colombia, for nearly
eight years prior to joining Iusacell in April 2001.
The management team is supported by an
experienced group of Mexican executives and other personnel from
Verizon and Vodafone.
Verizon
Verizon is one of the largest telecommunications
companies in the world, with extensive participation in and
knowledge of the wireless telecommunications business. In August
1997, Bell Atlantic and NYNEX Corporation, two of the original
seven regional Bell operating companies formed as a result of
the break-up of AT&T in 1984, and completed their merger of
equals to form the new Bell Atlantic. On June 30, 2000, the
new Bell Atlantic and GTE Corporation consummated a merger of
equals, in which GTE shareholders received 1.22 shares of Bell
Atlantic common stock for each GTE share they owned, and Bell
Atlantic renamed itself Verizon. Verizon had operating revenues
and net income of approximately U.S.$67.2 billion and
U.S.$389 million, respectively, for the fiscal year ended
December 31, 2001, and total assets of approximately
U.S.$170.8 billion at such date.
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In the United States, Verizon provides local
exchange telephone service in 31 states and the District of
Columbia, reaching 33 million households, utilizing nearly
132 million access lines and employing more than 261,000
people. Verizon Wireless, a partnership between Verizon (which
owns 55%) and Vodafone (which owns 45%) established in April
2000, is the largest wireless operator in the United States,
with more than 29 million subscribers. Verizon Wireless has
a presence in 49 states and the District of Columbia, and it
covers 232 million POPs, nearly 90% of the United States
population, including 49 of the top 50 U.S. markets.
Outside the United States, Verizon has wireline
and/or wireless operations in 23 countries and territories in
the Americas, Europe, Asia and the Pacific, with
3.2 million attributable access lines and 9.6 million
attributable wireless customers as of December 31, 2001.
Through its interest in FLAG, the world's longest undersea
fiber optic cable, Verizon's global presence extends to 45
countries. Verizon is also the world's largest provider of
print and on-line directory information.
Verizon is a reporting company under the Exchange
Act. Bell Atlantic and GTE were reporting companies under the
Exchange Act. Reports and information filed by Verizon, Bell
Atlantic and GTE with the Commission may be inspected and copied
at the public reference facility maintained by the Commission at
Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material may be
obtained by mail at prescribed rates by calling the SEC at
1-800-SEC-0330.
Vodafone
On April 4, 2001, Vodafone acquired a 34.5%
equity interest in Iusacell from the Peralta Group for
U.S.$973.4 million.
Vodafone is the largest wireless operator in the
world, with more than 101 million proportionate subscribers
(subscribers proportionate to Vodafone's stake in the
relevant wireless companies) and a presence in 28 countries.
Vodafone also owns stakes in wireless carriers in Europe, the
United States, the Asia/ Pacific region, the Middle East and
Africa. Vodafone companies are the leading mobile phone
operators in the United States (with a 45% ownership interest in
Verizon Wireless), Germany (Vodafone D2) and the United Kingdom
(Vodafone), among others. Vodafone has grown substantially with
its recent acquisition of Mannesmann AG and is expanding its
wireless data services.
Competitive
Strengths
Leading Digital
Technology Platform in All Our Markets
We believe that we are the Mexican market leader
in technology. In August 1999, upon completion of our deployment
of a CDMA digital network in nearly all areas where we provide
cellular service, we became the first company in Mexico to make
digital voice service broadly available to all of our customers.
Our PCS network is also deploying CDMA technology. Our digital
network currently provides service to areas with approximately
60 million inhabitants, representing approximately 59% of
Mexico's total population.
Compared with analog cellular technology, our
digital technology increases system capacity by approximately
six to 10 times, offers better call quality and clarity, enables
significantly longer telephone battery life, ensures greater
call confidentiality and fraud protection and provides a wider
variety of advanced features and applications, such as short
messaging service. Our network technology provides superior
switching and transmission capabilities. These features allow
for lower capital expenditures per subscriber and reduced
network operating costs.
From January 1, 1997 through
December 31, 2001, we made approximately
U.S.$908.4 million in capital expenditures, most of which
was spent on our cellular, PCS and fiber optic
telecommunications network. For additional information regarding
capital expenditures, see Item 5, "Operating and
Financial Review and Prospects — Liquidity and Capital
Resources — Capital Expenditures."
In order to take advantage of the benefits of our
new digital network, we have stopped purchasing and providing
analog-only handsets to customers and have accelerated our
efforts to migrate existing higher-usage customers to digital
service. At December 31, 2000 and December 31, 2001,
Iusacell had 519,639 and 849,046 digital customers,
respectively. In December 2001, our digital customers in the
aggregate generated approximately 65% of our total mobile
wireless traffic.
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We believe that our analog service will continue
to operate in the near future because a significant number of
our prepay subscribers have analog-only telephones.
In 2001, the Mexican telecommunications
regulator, the
Comisión Federal de Telecomunicaciones
(Mexican Federal Telecommunications Commission or COFETEL),
performed technical audits in the country's largest cities
in order to determine whether wireless carriers are offering
acceptable network quality. In these audits, we significantly
bettered COFETEL minimum standards for lost calls and
ineffective attempts of 6% and 5%, respectively, in all audited
cities in our core cellular regions, including Mexico City.
Verizon and
Vodafone Wireless Expertise and Support
Our management team draws extensively upon
Verizon's and Vodafone's expertise to develop and
implement our operating strategy. Verizon and Vodafone are the
managing partners in Verizon Wireless, the largest wireless
carrier in the United States. Verizon also has substantial
investments in other wireless telecommunications companies in
the Americas, Europe, Asia and the Pacific. Vodafone is the
largest wireless operator in the world. We believe that
Verizon's and Vodafone's extensive experience in the
development and implementation of marketing programs designed to
promote substantial subscriber growth provide us with a
competitive advantage in the Mexican mobile wireless market.
Experienced
Management Team
The senior management team of Iusacell has an
aggregate of almost 100 years of experience in the
telecommunications industry. Individually, Iusacell's
operating managers have established track records of producing
subscriber growth, penetrating new markets and developing new
telecommunications product offerings. Iusacell's management
team is complemented by experienced Verizon and Vodafone
telecommunications executives and consultants.
Well-Recognized
Brand Name
All of the services that we offer use the well
recognized
Iusacell Digital
brand name to increase
consumer awareness and customer loyalty. We believe that the
high "top of mind" and "share of voice" held
by the
Iusacell Digital
brand name has allowed us to make
more cost-efficient marketing investments compared with those of
our competitors.
The
IUSACELL Digital
brand name is well
recognized not only in the regions where we currently provide
service, but also in the regions where we do not yet provide
service. We believe that this recognition has facilitated our
entry into Regions 1 and 4 in northern Mexico, where we hold PCS
concessions, and Region 8 in southern Mexico, and will
facilitate our entry into other markets if and when we are able
to do so.
Large Mobile
Wireless Subscriber Base
At December 31, 2001, we had 1,855,166
mobile wireless subscribers, including both postpaid and prepay
subscribers. Of our mobile wireless subscriber base, 21.8%
consisted of customers that purchase cellular services pursuant
to fixed-term contracts and the remaining 78.2% of our cellular
customers purchase their services in advance, primarily through
prepay calling cards. Prepay customers include both those who
can receive and make calls and those who are only able to
receive incoming calls. We believe that our postpaid customers
seek the convenience of uninterrupted mobile wireless service
and access to high quality customer service and are willing to
pay a monthly fee for the choice of value-added services such as
wireless Internet, call waiting, emergency service (*911), short
messaging, voice-mail, three-way calling and caller
identification. On the other hand, prepay subscribers are also
attractive to us because of their higher average per-minute
airtime charges, lower acquisition costs and the absence of
billing costs, credit concerns and collection risk related to
their business.
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Business
Strategy
Iusacell's strategic and operating plan is
based on the wireless operating model that Verizon has
successfully deployed in the Americas, Europe, Asia and the
Pacific. This model focuses on:
•
state-of-the-art network technology and
    performance;
•
delivery of products and services which customers
    consider valuable;
•
strong distribution; and
•
superior customer service.
We believe that our strategic and operating plan
will enable us to increase our subscriber base, subscriber
usage, revenues and profitability in our core mobile wireless
businesses. This strategic plan incorporates the following key
elements:
Nationwide
Wireless Coverage
We believe that it is important to provide
reliable and high quality wireless service to our customers
throughout Mexico. We intend to continue doing so by holding
concessions in each region of Mexico or, in those areas where we
are unable to secure concessions, by enabling seamless roaming
services and offering our customers telephones that can access
nationwide services on different frequencies. As part of this
strategy, we acquired concessions to provide PCS services in two
regions in northern Mexico in May 1998 and acquired Portatel,
which provides cellular services in southern Mexico, in a
two-part transaction on October 19, 2001 and
February 8, 2002 for Ps. 670.6 million
(U.S.$73.3 million). Iusacell now holds concessions
covering approximately 90 million inhabitants, or 90% of
Mexico's total population.
We also believe that it is important for our
customers to be able to access wireless services throughout
North, Central and South America. Currently, Iusacell's
customers are able to roam in over 2,000 municipalities in the
United States, Canada and Europe, as well as in 85 other
countries in the Americas, Europe, Asia, Africa and the Pacific.
Significantly
Strengthen our Distribution Channels
We continue to strengthen our product
distribution system to emphasize consistent, standardized
merchandising through a well-balanced mix of company-owned
stores and independent distributors conveniently located
throughout all of our operating regions. We continue to develop
additional long-term relationships with our distributors to
encourage them to sell our products and services, and seek to
make these relationships exclusive. We intend to continue to
increase our distribution system primarily by expanding the
number of locations where customers can purchase prepay cards.
To further this strategy, we or our distributors have entered
into agreements to allow our prepay cards to be marketed by or
at distributors of Mexico's national lottery tickets, PEMEX
franchise gas stations, NADRO pharmacies, one of the largest
drugstore chains in Mexico, OXXO and Seven Eleven franchise
convenience stores, BBVA Bancomer, Bital and Bancrecer automatic
teller machines, nationwide newsstands, CIFRA (Walmart) and
Comercial Mexicana stores, two of the largest retail chains in
Mexico, and Mexico City subway stations. In the past year, we
also launched a distribution program called "Los
Rojos," implemented in Mexico City, Guadalajara, Toluca,
Cuernavaca, Puebla and Veracruz. The program, implemented
through a distributor, recruits existing street vendors and
provides them with an opportunity to directly sell our
VIVA
TM
cards and pre-activated prepaid handsets to
drivers and pedestrians. In its initial stage the program
employed approximately 1,200 people. Since Verizon took control
of our management, we have increased our points of distribution
from approximately 230 in February 1997 to more than 46,100 at
December 31, 2001.
We also opened or remodeled 22 customer sales and
service centers in 1998, 17 in 1999, 8 in 2000 and 29 in 2001,
bringing the total number of customer sales and service centers
owned and operated by us at December 31, 2001 to 135. All
of these centers present Iusacell's new store image, an
environment which emphasizes retail merchandising rather than
transaction processing. In the second half of 2002, we intend to
open 10 new customer sales and service centers.
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Superior Network
and Customer Service
We believe that superior network technology and
proactive and timely customer service help us to attract and
retain customers. To build a superior network, we swapped out
our previous analog network for an analog and CDMA digital
network supplied by Lucent Technologies and, upon completion of
the swap-out in August 1999, became the first company in Mexico
to make digital voice services broadly available to all of our
customers. For our customers, our digital technology offers
better call quality and clarity, ensures greater call
confidentiality and fraud protection, enables significantly
longer telephone battery life, and provides a wider variety of
advanced features and applications as compared with analog
cellular technology. Over the last three years, Iusacell has
experienced rapid growth in digital subscribers. As a result,
and in anticipation of further growth in digital subscribers and
digital usage, we decided to accelerate our capital expenditure
program in 1999 and 2000 to expand digital capacity and improve
digital service quality.
To provide proactive and timely customer service,
we operate two call centers that provide automated and efficient
service to our customers. Our call center service quality and
response speed has further improved with the implementation of
state-of-the-art customer service software in Region 9 in 2000
and in our other service regions in 2001. We also use welcome
packages, customer satisfaction calls, special programs for
corporate customers and customized billing to communicate our
commitment to our customers. Our customer service centers offer
"one-stop shopping" for cellular, long distance,
paging and data transmission services as a convenience to our
customers. Our customer service representatives undergo ongoing
rigorous training and are continually monitored and evaluated.
In March 1999, Iusacell completed the
installation of a new prepay operating system in its then four
cellular regions. The prepay operating system improved customer
satisfaction through automated card activation and account
information and by providing voice mail and other value-added
services. It has also lowered both the cost of support for
prepay services and prepay turnover and facilitated increased
per subscriber usage.
Committed to offering world class customer
service, in 2001 we began the implementation of a special
program called Customer Relationship Management, which we refer
as CRM. The program aimed to gather information from our various
systems to allow us to better tailor our services and strategies
to each of our customers. Following implementation of the CRM
strategy, we deployed the following applications to fulfill
customer needs: customer autoservice channels such as invoice
presentment, payments and airtime sales through the Internet, MQ
Series from IBM, a software tool that integrates new postpaid
customer information between our point of sale system and
billing system and some other administrative systems to enhance
the functionality of our call centers.
In 2001, we also implemented a preferred customer
retention program targeting high-value postpaid customers in
order to improve customer loyalty and thereby reduce churn by
offering dedicated phone lines and customer care
representatives. We also implemented a high-value customer
campaign which consists of proactively contacting customers, to
assure that the provided service meet their needs and find out
how it can be improved. To strengthen the antichurn program for
all postpaid customers, we introduced a proactive contract
renewal program. A permanent outbound program was introduced to
contact those customers who have reported their phone stolen or
lost in order to arrange for a replacement. We are designing
similar programs for our higher-usage prepay customers and
expect to implement these programs during 2002.
Customer
Segmentation
We design our products and services for each
customer segment. For postpaid customers, we offer six pricing
packages tailored to meet the needs of high and mid-usage
customers and two additional pricing packages with a prepay
component tailored to lower-usage customers. We believe that our
postpaid customers seek the convenience of uninterrupted mobile
service and access to high quality customer service and wish to
purchase their long distance, paging, and other
telecommunications services bundled together as a single product.
We also sell prepay cards to penetrate the
segment of lower-usage customers. We believe our prepay
customers seek service without a fixed financial commitment and
monthly billing.
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In September 1999, we introduced "one-single
rate" plans for postpaid customers who seek the convenience
of paying a single per-minute rate for local, national long
distance and long distance service to the United States. In
October 1999, we introduced a "one-single rate" plan
for prepay customers and extended coverage of all
"one-single rate" plans to include international long
distance service to Canada. In November 2000, we extended our
"one-single rate" plans to include most of western
Europe and Israel. At December 31, 2001, we had 858,800
"one-single rate customers," 72,323 of whom were
postpaid customers, representing 17.9% of our total postpaid
customer base, and 786,477 of whom were VIVA
TM
prepay
customers, representing 54.2% of the total prepay customer base.
Value-Added
Services
Our network permits us to provide our digital and
analog customers with a wide range of value-added services,
including caller identification, voice mail, and three-way
calling. To encourage our customers to migrate to digital
service, we offer short messaging service, Internet access,
mobile banking, and mobile e-mail accounts only to our digital
postpaid customers through wireless application protocol
(WAP) enabled handsets, Lap Top computers and Pocket PCs
(PDAs).
In December 2001, Iusacell and Banco Santander
launched the first joint brand credit card in the wireless
service industry. This credit card will help Iusacell's
customers finance the acquisition of a handset, facilitate the
credit and collection process and build customer loyalty.
Sales Force
Incentives
With the objective of increasing the size and
quality of our subscriber base, we have a sales force
compensation plan which is largely performance-based. Our
compensation plan is based on sales volume and product mix and
rewards our sales force for upgrading analog postpaid customers
to digital service and qualified prepay customers to postpaid
plans. The compensation plan is also designed to encourage
salespersons to sell bundled products and value-added services.
During 2001, we implemented an incentive program for our
customer care representatives to promote customer retention. In
2002, the sales force compensation plan was restructured to
better reward individual performance.
The
Telecommunications Industry in Mexico
Market
Liberalization
Cellular
Services
The Mexican government initiated its efforts to
liberalize the telecommunications industry in 1989, dividing
Mexico into nine geographic regions for the provision of
cellular service. In order to provide an alternative for
cellular customers, two concessions were granted in each region,
one to Telcel, the cellular subsidiary of Telmex, and the other
to an independent operator. In addition, Telmex was required to
interconnect all cellular operators to its network in an effort
to facilitate competition. The nine geographic Regions are
described in the table below.
Region
Number
Geographical Coverage
Major Cities in the Region
1
The states of Baja California and Baja California
    Sur and the municipality of San Luis Rio Colorado in
    northwestern Sonora state.
Tijuana, Mexicali, Ensenada, Tecate and
    La Paz.
2
The states of Sonora and Sinaloa (except for the
    municipality of San Luis Rio Colorado in northwestern Sonora).
Hermosillo, Ciudad Obregón, Culiacán
    and Mazatlán.
3
The states of Chihuahua and Durango and the
    municipalities of Torreón, Francisco I. Madero,
    Matamoros, San Pedro and Viesca in the state of Coahuila.
Ciudad Juárez, Chihuahua, Durango,
    Gómez Palacio and Torreón.
4
The states of Tamaulipas, Nuevo León and
    Coahuila. (except for the municipalities of Torreón,
    Francisco I. Madero, Matamoros, San Pedro and Viesca).
Monterrey, Saltillo, Tampico, Ciudad Victoria,
    Nuevo Laredo, Reynosa and Matamoros.
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Region
Number
Geographical Coverage
Major Cities in the Region
5
The states of Colima, Jalisco (except for
    12 municipalities in northeastern Jalisco), Michoacan and
    Nayarit.
Guadalajara (Mexico's second largest city),
    Morelia, Tepic, Colima and Manzanillo.
6
The states of Aguascalientes, Guanajuato,
    Querétaro, San Luis Potosí and Zacatecas and
    12 municipalities in northeastern Jalisco.
León, Querétaro, Aguascalientes, San
    Luis Potosí and Zacatecas.
7
The states of Guerrero, Oaxaca, Puebla, Tlaxcala
    and Veracruz.
Puebla, Acapulco, Veracruz and Oaxaca.
8
The states of Yucatán, Quintana Roo,
    Campeche, Chiapas and Tabasco.
Mérida, Cancún, Villahermosa, Campeche,
    Tuxtla Gutiérrez and San Cristobal de las Casas.
9
The states of Mexico, Hidalgo and Morelos and the
    Federal District.
Mexico City, Toluca, Cuernavaca and Pachuca.
In December 1990, the Mexican government
initiated the privatization of Telmex, then the sole provider of
landline local, long distance and Cellular B-Band cellular
services, when it sold 20.4% of the equity and 50.1% of the
voting power in Telmex to a private consortium for
U.S.$1.76 billion. The winning consortium consisted of
Grupo Carso, S.A. de C.V., a Mexican conglomerate which owns or
otherwise controls a majority of the consortium's voting
interest, SBC Communications Inc. and France Telecom S.A.
Subsequent to the original privatization, the Mexican government
further reduced its holdings in Telmex through additional
transactions and completed the privatization process in June
1994. In 2001, Telcel and other wireless international
subsidiaries of Telmex were spun-off from Telmex to form a new
company named América Móvil, S.A. de C.V., known as
América Móvil.
Telcel holds the Cellular B-Band concession in
each of the nine cellular regions and is Mexico's largest
cellular operator. Our subsidiaries hold the Cellular A-Band
concession in each of Regions 5, 6, 7, 8 and 9, and
entities in which Telefónica is a controlling shareholder
hold the Cellular A-Band concession in Regions 1, 2, 3
and 4.
Wireless
Local Loop and PCS Services
In May 1998, COFETEL completed auctions for
concessions for a range of spectrum frequencies in the
1.9 gigahertz (GHz) band to provide PCS wireless services
and the 3.4-3.7 GHz Wireless Local Loop band to provide
local wireless services in substantially the same nine
geographic Regions established for the provision of cellular
service. Four companies won nationwide concessions in the
Wireless Local Loop frequencies:
•
Telmex;
•
Axtel;
•
Midicel, S.A. de C.V. (Midicel); and
•
Unefón.
Three companies won nationwide concessions to
provide PCS services in the 1.9 GHz frequencies.
Unefón won the 30 MHz PCS A-Band auction on a
nationwide level. Pegaso won a mix of 30 MHz PCS B-Band and
10 MHz PCS E-Band concessions across all nine regions.
Telcel won the 10 MHz PCS D-Band auction on a nationwide
level. Grupo Hermes, S.A. de C.V. and Midicel won auctions for
seven of the remaining nine PCS B-Band and PCS E-Band
properties. Each of these concessions has a 20-year term and
authorizes the provision of mobile and fixed wireless service
and other value-added services.
Formal concessions for Wireless Local Loop and
PCS frequencies were issued in late 1998 to all auction winners,
except Unefón and Midicel, which received extensions to
May 15, 1999 to pay accrued interest and to June 15,
1999 to pay the balance of their concession fees. Midicel did
not meet its interest payment requirements in May 1999 and
forfeited its Wireless Local Loop and PCS concessions and
approximately U.S.$50 million in deposits, letters of
credit and surety bonds. Midicel later offered full payment and
petitioned for a review (
recurso de revisión
) of the
forfeiture order. After additional legal proceedings, the
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Secretaría de Comunicaciones y
Transportes
(Mexican
Telecommunications and Transport Ministry or SCT), affirmed the
forfeiture order and is also assessing whether Midicel has
complied with its commitments under its long distance and public
telephony concessions in order to determine whether these
concessions should also be revoked. Unefón did meet its May
1999 and June 1999 payment requirements and received its
Wireless Local Loop and PCS concessions. Pegaso initiated
wireless PCS services in Tijuana, Monterrey, Guadalajara and
Mexico City in 1999, and now has coverage in 12 cities.
Unefón commercially launched mobile prepay wireless
services in Acapulco, Toluca, Mexico City and Aguascalientes in
early 2000, and now has coverage in 15 cities throughout
Mexico.
We also face wireless competition from companies
providing mobile wireless telecommunications services utilizing
alternative existing technologies. Nextel de México, S.A.
de C.V., known as Nextel, began marketing its enhanced
specialized mobile radio services in 1998. We believe that
Nextel provides three types of services: trunking, access to the
telephone network and short messaging. It currently covers 17
cities principally in central Mexico.
Long
Distance Services
In connection with the privatization of Telmex in
1990, the Mexican government granted Telmex a concession to
provide public domestic and international long distance
telephone service with an exclusivity period of six years. In
August 1996, the exclusivity period expired, and competition
with proprietary infrastructure commenced in January 1997. A
presubscription balloting process was conducted in Mexico's
150 largest cities, covering 85% of Mexico's total POPs, to
enable customers to choose a long distance provider.
The SCT has granted a total of 22 long distance
concessions, including the one held by us. Long distance
concessionaires include, among others:
•
Telmex;
•
Alestra S. de R.L., in which AT&T Corporation
    is a shareholder;
•
Avantel, S.A. de C.V., in which MCI WorldCom Inc.
    and Citigroup Inc. are shareholders;
•
Telinor, S.A. de C.V. (Axtel), in which The Bell
    Telephone Company of Canada, commonly known as Bell Canada, is a
    shareholder; and
•
Iusatel, S.A. de C.V., a subsidiary of Iusacell
    Celular which we refer to as Iusatel.
Each concession has a nationwide scope and a
30-year term. Concession holders are authorized to offer
domestic, international and value-added services, including
voice and data transmission services.
Local
Telephone Services
The Mexican government has also initiated the
liberalization process for competition in local telephony
service. Accordingly, the SCT has already granted
13 concessions for wireline local telephone service. Maxcom
Telecomunicaciones, S.A. de C.V., MetroRed, S.A. de C.V. and
Megacable MCM, S.A. de C.V. have initiated service in the Mexico
City area.
Underserved
Telephony Market
Despite the significant increase in wireline and
wireless penetration in Mexico over the last three years, we
believe that there still is a substantial unmet demand for
telephone services in Mexico. According to the International
Telecommunication Union, an agency of the United Nations, as of
December 31, 2001, there were approximately 13.5 wireline
telephone lines per 100 inhabitants in Mexico, which is lower
than the teledensity rates of some other Latin American
countries and substantially lower than those of developed
countries such as the United States. Due to the relatively low
wireline penetration in developing countries such as Mexico,
increases in the level of wireless penetration in these
countries may be partly attributable to users who purchase
wireless services as a principal means of telecommunications.
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The following table presents, for selected Latin
American countries and the United States, wireline telephone
lines in service per 100 inhabitants as of December 31,
2000 and December 31, 2001:
Selected Wireline Telephony
Penetration
Lines in service
per 100
inhabitants(1)
Country
2000
2001
United States
67.3
66.5
Uruguay
27.8
28.3
Chile
22.1
23.9
Brazil
14.8
21.7
Argentina
21.3
21.6
Colombia
16.9
17.1
Mexico
12.4
13.5
Venezuela
10.9
11.2
Peru
6.3
7.8
(1)
Source:
International
    Telecommunication Union 2002 Website
The following table presents, for selected Latin
American countries and the United States, the number of
subscribers of wireless telephone services per 100 inhabitants
as of December 31, 2000 and December 31, 2001:
Selected Wireless Telephony
Penetration
Wireless
subscribers
per 100
inhabitants(1)
Country
2000
2001
United States
40.0
44.4
Chile
22.3
34.0
Venezuela
21.7
26.4
Mexico
14.2
20.1
Argentina
16.3
18.6
Brazil
13.6
16.7
Uruguay
13.1
15.5
Colombia
5.3
7.4
Peru
4.0
5.9
(1)
Source:
International
    Telecommunication Union 2002 Website
Calling
Party Pays
On May 1, 1999, Mexico implemented the
"calling party pays" modality, or CPP, which had
already been implemented in some other Latin American and
European countries. Calling party pays is a wireless telephony
payment structure in which the party that places a call to a
wireless telephone is billed for interconnection access, and the
recipient is not billed for the airtime charges corresponding to
that call. The introduction of CPP triggered growth in wireless
penetration, particularly in the prepay segment and wireless
traffic.
Mobile
Wireless Services
History
and Overview
We became the first Mexican provider of cellular
telecommunications services in 1989, when we commenced operation
of our Cellular A-Band network in Region 9. Through a
series of transactions from
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1990 to 2002, we acquired 100% beneficial
ownership interests in the entities which hold the Cellular
A-Band concessions in Regions 5, 6, 7, and 8. In December
2001, we initiated the commercial launch of our PCS services in
the cities of Tijuana and Monterrey in Regions 1 and 4 in
northern Mexico. The regions we serve cover a contiguous
geographic area comprising all of the regions in central and
southern Mexico, and two of the four regions in northern Mexico,
which allows Iusacell to achieve economies of scale.
Iusacell's service regions are home to a
variety of industries. Region 9 includes Mexico City, which has
the greatest concentration of service and manufacturing
industries in Mexico and is also the center of Mexico's
public and financial services sectors. Region 5 includes
Guadalajara, Mexico's second largest city and the
commercial and service center of western Mexico, which has
recently begun to develop as a center for the maquiladora
industry. Region 6 includes León, Querétaro,
Aguascalientes and San Luis Potosí and has historically
been dominated by the agricultural sector, although it has
recently begun to develop as an automobile manufacturing and
high technology center. Region 7 includes Puebla, Acapulco,
Veracruz and Oaxaca and contains major operations of the Mexican
petrochemical and automotive industries and significant tourist
resorts and attractions. Region 8 includes Mérida,
Villahermosa, Cancún, Campeche and Tuxtla Gutiérrez
and contains major operations of the Mexican petroleum industry
and significant tourist resorts and attractions. Regions 1
and 4, which include Tijuana and Monterrey, are centers for the
maquiladora industry and manufacturing, as well as high
technology.
Subscribers
and System Usage
According to customer profiles, professionals
comprise a large portion of our Region 9 postpaid cellular
subscriber base. Iusacell offers a number of value-added
services designed specifically to fulfill the demands of this
important group of postpaid subscribers. For example, we offer
secretarial services and provide English-speaking operators to
serve the large English-speaking market in Region 9.
Iusacell also provides financial news reporting, emergency
services, entertainment information, reservations services and
sports reports. Moreover, CDMA digital postpaid customers in
Region 9 have available caller identification, short messaging
service and data transmission services. We believe that these
value-added services help increase postpaid subscriber usage and
also enhance our market image as a full service cellular
provider.
Postpaid
Customers
We believe that our postpaid subscriber base in
the remaining regions consists of subscribers engaged in a
variety of occupations. Due to the lower wireline penetration
outside of Region 9, the subscriber base in Regions 1,
4, 5, 6, 7 and 8 includes a number of users who purchase
cellular services as a principal means of telecommunications.
We believe that a strong distribution network is
necessary in order to develop and sustain a significant presence
in these markets.
Prepay
Customers
In contrast to postpaid subscribers, prepay
customers typically generate low levels of cellular usage, have
access to a limited number of value-added services, generally
already own a handset and often are unwilling to make a fixed
financial commitment or do not have the credit profile to
purchase postpaid plan cellular services. Other prepay customers
include vacationers and traveling business people who require
cellular service for short periods of time. In addition to
helping customers control costs, our prepay programs have no
monthly bill and allow customers to prepay for cellular services
in cash.
The prepay program markets prepay cards which
credit a specific peso amount worth of air-time usage to an
account to be utilized for outgoing and incoming calls over a
specified period of time.
A prepay customer ceases to be considered a
customer of Iusacell when a specified period of time has elapsed
since the customer purchased and activated, or last added credit
to, his or her last prepay card. The customer's telephone
number is then deactivated, and the customer is considered to
have turned over.
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Iusacell's current prepay customers who want
to continue to have wireless service after this time must choose
to:
•
continue to be prepay customers of Iusacell by
    purchasing another card or otherwise recharge the airtime in
    their accounts;
•
become postpaid customers of Iusacell; or
•
become either postpaid or prepay customers of
    another wireless service provider.
VIVA prepay customers normally have 60 days
to use up an activated prepay card and activate a new card or
otherwise recharge the airtime in their account. If the customer
has not activated a new card or recharged the airtime in its
account at the end of 60 days, the balance of the VIVA
customer's account becomes zero, and the customer loses the
ability to make outgoing calls for an additional period of
305 days. During this 305-day period, a VIVA customer will
be able to receive local incoming calls, but not to make
outgoing calls, thereby becoming an "incoming calls
only" customer. If the customer activates a new card or
recharges the airtime in its account within the 305-day period,
the customer's account automatically returns to normal
status, and a new 60-day period begins. Otherwise, once the
305-day period elapses, the customer's telephone number is
deactivated. See Item 5, "Operating and Financial
Review and Prospects — Operating Results —
Increase in Subscriber Base."
We evaluate alternative methods of determining
prepay customer turnover on an ongoing basis, as the current
method is dependent upon, among other things, the number of days
of use Iusacell permits before deactivating a telephone number.
In October 1999, in order to evaluate whether we
could generate additional revenues from "incoming calls
only" customers for previously purchased cards, we extended
the period of time to use up an activated card and activate a
new card from 185 days to April 30, 2000 for
"incoming calls only" customers who otherwise would
have lost service before that date. Beginning May 1, 2000,
we decided to return to our prior policy of maintaining
"incoming calls only" customers for only 185 days
and began to turn over "incoming calls only" prepay
customers who had reached the 185-day limit without activating a
new prepay card. In July 2001 we reduced the initial period for
using up an activated prepay card and activating a new card from
185 days to the current 60 days. As a result, at the
time, approximately 345,000 incremental subscribers were
transferred to the "incoming calls only" prepaid
customer status.
At December 31, 2001, Iusacell had
approximately 768,000 "incoming calls only" customers.
The substantial majority of "incoming calls only"
customers generate little or no traffic. Iusacell's prepay
subscribers who can both make outgoing calls and receive
incoming calls had an average monthly revenue per subscriber
during 2001 of Ps.146 (approximately U.S.$15.9).
In March 1999, we substantially completed the
installation of the VIVA prepay operating system. The VIVA
platform better tracks customer turnover than its predecessor
system. This operating system, together with initiatives to
increase the number of distribution points for prepay cards,
adjust commissions to encourage distributors to sell prepay
cards of higher denominations, improve customer care and
otherwise improve the convenience of the prepay program, has
enhanced our ability to add and retain prepay customers and has
increased usage. In 2000, we implemented two important tools for
the sale of prepay airtime: sales through automated teller
machines at banks and sales over the phone by dialing *AIRE. In
early 2002, we introduced a tool to sell prepay airtime through
our website.
In 2000, we invested approximately
U.S.$8.0 million in our VIVA platform in order to expand
its capacity to meet demand. In 2002, we will be evaluating
different payment platforms with intelligent network capability
that will enable us to launch new services and support third
generation wireless technology.
Given the higher turnover among our prepay
customers, we pursue plans to migrate our qualified prepay
customers to postpaid plans, where customer loyalty and
retention have been historically higher.
In order to better focus on active prepay
customers and reduce the potential turnover from prepay sales
through retail distribution channels, in 2001 we implemented a
new policy under which a pre-activated prepay sale will be
reported only when the end-user places the first outgoing call.
Accordingly, commissions related to this type of prepay sale are
now paid only after the end-user places the first outgoing call.
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Postpaid
Churn
Postpaid churn measures both voluntarily and
involuntarily disconnected subscribers. Through
December 31, 1997, we calculated postpaid churn for a given
period by dividing, for each month in that period, the total
number of postpaid subscribers disconnected in such month by the
number of postpaid subscribers at the beginning of such month
and dividing the sum of the resulting quotients for all months
in such period by the number of months in such period. Effective
January 1, 1998, we changed the methodology by which we
determine average monthly postpaid churn for a given period.
Average monthly postpaid churn for a given period is now
calculated by dividing the sum of all postpaid subscribers
disconnected during such period by the sum of the
beginning-of-month postpaid subscribers for each of the months
in such period, expressed as a percentage.
Voluntarily disconnected subscribers encompass
subscribers who choose to:
•
no longer subscribe to wireless service;
•
become a prepay customer of Iusacell; or
•
obtain wireless service on a postpaid or a prepay
    basis from another wireless service provider.
Involuntarily disconnected subscribers encompass
customers whose service is terminated after failing to meet
Iusacell's payment requirements.
Roaming
Through our roaming agreements with other
operators, we offer nationwide roaming service to our prepay and
postpaid cellular subscribers, and international service only to
our postpaid subscribers. Through these agreements, subscribers
can place calls from any location in Mexico served by a Cellular
A-Band operator, and can receive a call made to the
subscriber's number (automatic call delivery) regardless of
the region in Mexico in which the subscriber is located. We also
provide cellular services to all subscribers of other
non-wireline cellular operators in Mexico while such subscribers
are temporarily located in a region served by Iusacell.
An operator (a host operator) providing service
to a subscriber of another operator (the home operator)
temporarily located in the host operator's service region
(an in-roamer) earns usage revenue. We bill the home operator of
an in-roamer for the in-roamer's usage in our service
region. In the case of roaming by a Iusacell subscriber in the
region of a host operator (an out-roamer), Iusacell is billed by
the host operator for the subscriber's usage. We remit the
billed amount to the host operator and bill our own customer,
the out-roamer, without any mark-up. As a result, we retain the
collection risk for roaming charges incurred by our own
subscribers. Conversely, roaming charges billed by Iusacell for
in-roaming usage by subscribers of other non-wireline operators
are the responsibility of those operators. Roaming charges
between wireless operators are settled monthly.
Interconnection charges owed to Telmex and
long-distance charges owed to long distance carriers as a result
of roaming are the responsibility of the host operator. In
addition to higher per minute charges for airtime (as compared
to home region rates), the host operator is entitled to receive
a fee for each day roaming service is initiated. In-roaming fees
and usage revenue represented 1.6%, 1.3% and 1.7% of our total
revenues during 1999, 2000 and 2001, respectively. Out-roaming
charges represented 4.2%, 6.2% and 4.9% of Iusacell's total
revenues during 1999, 2000 and 2001, respectively.
We have more than 60 agreements with U.S.,
Canadian and other foreign operators to provide our subscribers
with international roaming capabilities. These operators include
Verizon International affiliates such as Verizon Wireless,
Movilnet in Venezuela, CTI in Argentina, Codetel in the
Dominican Republic, Telus in Canada, Puerto Rico Telephone
Company, AT&T Wireless and Cingular Wireless. In addition,
we provide, through the National Automatic Cellular Network,
automatic call delivery throughout most of the United States,
including Puerto Rico, whereby our subscribers may receive
telephone calls from Mexico without the caller having to dial
access codes. Currently, our customers are able to roam in over
2,000 municipalities in the United States and Canada as well as
in 85 other countries in the Americas, Europe, Asia, Africa and
the Pacific.
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Personal
Communications Services
As part of our strategy to develop a nationwide
wireless footprint, in 1998 we won auction concessions giving us
the right to provide PCS wireless services in Regions 1 and
4 in northern Mexico. We paid approximately
Ps.493.2 million (in nominal terms)
(U.S.$49.8 million, using the applicable exchange rate as
of the date of the purchase) for these concessions in June and
September 1998. These two regions include several
industrial cities, including Tijuana in Region 1 and
Monterrey in Region 4, and cover approximately 11.0% of
Mexico's total population. In the second quarter of 2000,
we initiated PCS network operations in Tijuana and Monterrey. In
2001, we spent approximately Ps.188.4 million
(U.S.$20.6 million) in the commercial deployment of PCS
services in Tijuana and Monterrey, which we launched in
December 2001. In 2002, subject to obtaining financing, we
expect to spend approximately U.S.$79.0 million to continue
the build-out of our PCS networks and deploy non-network
infrastructure in Regions 1 and 4 with the goal of
completing the majority of our strategic plan to provide PCS
services in those regions by the end of 2002. See Item 5,
"Operating and Financial Review and Prospects —
Liquidity and Capital Resources — Capital
Expenditures."
We market PCS using the same fundamental
strategies successfully employed by our existing cellular
operations. The PCS network that we are in the process of
deploying uses digital CDMA technology purchased mostly from
Lucent Technologies.
Long Distance
Services
In August 1996, we became one of
Telmex's first competitors in long distance service when we
began to provide long distance services to our cellular
subscribers in Mexico pursuant to the 30-year concession which
was awarded to Iusatel in October 1995 and was modified in
December 1997. Our competitors in long distance include 14
other companies operating under concessions, including Telmex,
the former long distance monopoly. We believe that competition
in the Mexican long distance market has stimulated growth in
demand for long distance service. During 1998, there were no
significant price changes in our long distance rates, and our
long distance traffic increased approximately 11% compared with
1997. During 1999, our prices increased approximately 14%, and
our long distance traffic increased approximately 25% compared
with 1998. During 2000, our prices decreased approximately 13%,
and our long distance traffic increased approximately 22%
compared with 1999. During 2001, we implemented an average 8%
price increase for our long distance customers, including
cellular long distance, while the rate of inflation in Mexico
that year was 4.4%, and long distance traffic increased
approximately 5% compared with 2000.
We currently provide long distance service using
our own switches and transmission equipment and a combination of
fiber optic lines, microwave links and lines leased from Telmex
and Alestra. At December 31, 2001, we provided long
distance service in 52 cities to 1,872,967 customers, 1,864,045
of which were existing customers for our other services. We
chose not to commit significant marketing resources to the
presubscription balloting process in which telephone customers
were asked to elect their long distance carrier, which was
conducted in cities across Mexico in 1997, 1998 and 1999, and as
a result we fared poorly in the initial balloting results. Under
the Cofetel rules we were exempted from the presubscription
obligation for our cellular customers. This authorization
expired on April 7, 2002. We requested an extension and
Cofetel granted us a temporary six-month extension, while it
decides on the final term of the extension, that will expire on
October 7, 2002. Revenues related to long distance services
represented 9.3% and 10.4% of our total revenues for 2000 and
2001, respectively, not including dark fiber optic cable sales.
Our long distance concession provides for
coverage and technological investment requirements. If we do not
satisfy such requirements, we may have to pay fines and
penalties and potentially lose our long distance concession.
After evaluating the commercial feasibility of complying with
our initial concession, we requested that the SCT and COFETEL
modify the terms of the concession to reflect a more rational
business plan. In December 1997, the government granted the
modification request, authorizing a change in the coverage
requirements and increasing flexibility in the choice of
transmission technology, significantly reducing our investment
requirements.
We further reduced the capital investment for our
long distance business by entering into fiber optic cable swap
agreements with two other long distance companies, Marcatel and
Bestel, in March 1998 and
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December 1998, respectively. These
agreements will allow us to acquire fibers in the long distance
fiber optic networks built by Marcatel and Bestel in central and
northern Mexico in exchange for fibers in the long distance
fiber optic network we recently completed in central Mexico. As
a result, we will be able to obtain redundancy in central Mexico
and access to the United States border at minimal cost. We
expect to complete the implementation of these fiber exchanges
in 2003.
In December 1999, Iusatel agreed to swap
dark fiber optic cable in the amount of U.S.$17.3 million
and sell approximately U.S.$7.4 million of additional dark
fiber optic cable to Telereunion, S.A. de C.V., an affiliate of
Telscape International, Inc. Upon the signing of this swap
agreement, Telereunion issued promissory notes to Iusatel for
the purchase price but defaulted on the payment of each of these
notes. In April 2001, Telereunion's U.S. parent,
Telscape International, Inc, filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. As part of a
settlement arrangement, on September 17, 2001, Telereunion
and Iusatel executed an agreement by means of which the former
transferred dark fiber optic assets in the amount of
U.S.$7.4 million to the latter in exchange for full
settlement of the past notes receivable in the same amount. In
addition, in 2001, we entered into a fiber optic cable swap
agreement worth Ps.142.7 million (U.S.$15.6 million)
to exchange certain long-distance fiber optic cables.
In 1996, Iusatel executed an agreement with
Teleglobe USA, Inc. for the exchange of international long
distance traffic. On May 28, 2002, Teleglobe USA, Inc.
filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code. In 2000, Iusatel entered into a
second agreement for the exchange of international long distance
traffic with AT&T, giving Iusatel two alternative routes to
deliver international long distance traffic, thereby reducing
costs and enhancing its proportional return traffic.
Other
Services
Paging
On December 14, 1995, Iusacell Celular and
Infomin formed Infotelecom as a joint venture to market national
and international paging services. Iusacell Celular owns 49% of
Infotelecom, Infomin owns 49%, and the remaining 2% is owned by
Mr. José Ramón Elizondo, a former director of
Iusacell Celular. Infomin has a concession, which expires on
July 20, 2009, to provide nationwide paging services in
Mexico. Under the Infotelecom joint venture agreement, Infomin
is obligated to contribute this concession to Infotelecom.
Infomin obtained the Infotelecom's Board of Directors
authorization to transfer its shares in Infotelecom to Banco
Mercantil del Norte, S.A. Institución de Banca Multiple, a
Mexican bank, in settlement of certain indebtedness. The
completion of such transaction has not been notified to Iusacell
Celular.
Pursuant to a marketing agreement between
Iusacell Celular and Infomin, Infotelecom has the right to
market national paging services on behalf of Infomin, and
Infotelecom is required to make monthly payments to Infomin
equal to 5% of all gross revenues for the preceding month. This
payment represents the amount which Infomin, as the concession
holder, must pay the SCT for the right to provide paging
services.
Infotelecom began marketing paging services in
August 1996 and, at December 31, 2001, provided
service in 34 cities including Mexico City, Guadalajara,
Monterrey, Puebla, Cuernavaca, Toluca, Querétaro,
León, and Ciudad Juárez.
As of December 31, 2001, Infotelecom had
17,054 paging customers. Our revenues related to paging services
represented 0.8% and 0.5% of total revenues for 2000 and 2001,
respectively.
Under their joint venture agreement, Iusacell
Celular and Infomin valued the Infomin paging concession at
U.S.$10.5 million, and we agreed to fund the first
U.S.$10.5 million of Infotelecom's cash requirements
before Infomin would be required to make pro rata cash
contributions. In December 1998, Iusacell Celular and
Infomin determined the appropriate manner in which to capitalize
Infotelecom. Up to that time, we had been funding the joint
venture by means of loans. On December 31, 1998, Iusacell
Celular capitalized Ps.141.9 million
(U.S.$15.5 million) in advances to Infotelecom, including
Ps.52.6 million (U.S.$5.7 million) in interest which
was not credited against the U.S.$10.5 million required to
be funded by us. However, U.S.$9.0 million of such
capitalization was applied against the U.S.$10.5 million to
be funded by us. In 1999, Iusacell capitalized approximately an
additional U.S.$1.0 million against the
U.S.$10.5 million funding requirement. In 2000 and 2001, no
amounts were capitalized and applied against the funding
requirement.
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Public and Rural
Telephony and Local Fixed Wireless
We operate public and rural telephony programs,
utilizing available cellular capacity. These programs provide
telecommunications services through cellular telephones in phone
booths, intercity buses and rural areas. The provision of
services in this way fulfills the terms of our concessions for
the provision of cellular telephone service and utilizes our
cellular network to provide telecommunications coverage in areas
with little or no basic service. As of December 31, 2001,
we had 37,972 cellular telephones in service under our public
and rural telephony programs, representing a 91% increase
compared to 19,917 cellular phones in service as of
December 31, 2000.
As of December 31, 2001, we were providing,
on a trial basis pending approval from SCT, local wireless
service in the 450 MHz frequency band to 9,869 customers in
selected markets in Region 9. We do not charge our local
wireless customers fees for incoming calls. We believe that
there is substantial unmet demand for telephone service in
Mexico as demonstrated by the relatively low level of
residential wireline, business wireline and cellular penetration.
We experienced substantial delays in obtaining
the SCT's approval of our technical and economic plans for
local wireless service in the 450 MHz frequency band.
However, on June 10, 1997, the SCT and Iusacell Celular
agreed on a process by which we could obtain a concession issued
and recognized by the SCT to provide local wireless service in
the 450 MHz frequency band. This agreement allows us to
convert and consolidate our existing concessioned radiotelephony
frequencies into 450 MHz spectrum in Regions 4, 5, 6,
7 and 9 and grants us a right of first refusal to acquire
concessions to provide local wireless service in these regions
over such frequencies at prices derived from the prices of the
winning bids in the auctions for 450 MHz and 1.9 GHz
(PCS) frequency bands concluded in May 1998. These auctions
yielded a right of first refusal exercise price estimated at
U.S.$2.25 million for each of the five regions. However,
neither the SCT nor COFETEL has formally notified us of the
exact right of first refusal exercise price, the payment terms
or the coverage and build-out requirements relating to the
concessions, all of which are necessary for us to decide whether
to exercise our right of first refusal.
As a result of these delays and the uncertainty
relating to our ability, at a commercially acceptable cost, to
implement full scale local wireless service in the 450 MHz
frequency band, we are exploring alternatives for providing
local telephony services, such as limited zone wireless services
in the 800 MHz (cellular) or 1.9 GHz (PCS) frequency
bands deploying digital technology that permits mobility or
fixed wireless services over such bands. If we were to determine
that it would be preferable to pursue such an alternative rather
than to continue to pursue local wireless service in the
450 MHz frequency band, that alternative could require the
acquisition of concessions, other regulatory approvals and the
payment of substantial fees. Our management is currently
evaluating our overall strategy with respect to local telephony
services.
In September 1998, we determined that
because of many factors, including the impact of changing
technology since the initiation of the 450 MHz fixed local
wireless project in 1994, an impairment of our investment in
450 MHz TDMA technology had occurred. As a result, we
recorded a substantial non-cash write-down of our investment in
the 450 MHz fixed local wireless project. Given the
obsolescence of our existing 450 MHz network
infrastructure, we may record a non-cash write-down of
substantially all of the remaining book value of the
450 MHz project fixed assets by the end of 2002.
In expanding our local telephone services, we
plan to capitalize on synergies between our mobile wireless and
local wireless services, utilizing our existing cellular network
and anticipated 1.9 GHz (PCS) network for connections with
the local subscribers' premises. Furthermore, we believe
that local wireless service requires a lower investment cost per
line than landline service.
In January 1996, our long distance
subsidiary applied to modify its concession to allow it to
provide local wireline service, including dedicated circuits,
local switching and data service. This request was reasserted in
Iusacell Celular's October 1997 application to modify our
long distance concession. This request was rejected for
procedural reasons in July 1998. In January 1997,
Iusatelecomunicaciones, S.A. de C.V., Iusacell Celular's
450 MHz local wireless subsidiary, also filed for a local
wireline concession. The SCT has not yet issued this concession.
While we currently do not anticipate that the provision of local
wireline service will become a
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significant part of our services, we may provide,
on a case-by-case basis, local wireline telephone service as
part of our overall provision of telecommunications services.
Data
Transmission
We began providing data transmission services in
1993. We provide both public and private data transmission
primarily using excess capacity in our microwave and fiber optic
backbone in our existing cellular network in Region 9 and,
until March 2001, we provided satellite transmission
through Satelitrón, S.A. de C.V., which we refer as
"Satelitrón," a joint venture among Iusacell,
Hughes Network Systems and another partner which provided a
shared hub for private networks. On March 22, 2001 we sold
our 65.9% equity interest in Satelitrón and our ownership
of the Satelitrón transmission hub, receiving approximately
U.S.$1.3 million in proceeds.
Since the latter part of 2001 we started
providing data transmission services, our primarily targeted
customers are Mexican based carriers. As of the end of
May 2002, we had 8 customers, all Mexican based carriers.
In June 2002, we installed and activated a
Genuity Internet POP in Mexico which allows Iusatel to deliver
Internet Access Services in conjunction to our leased line
service. The addition of this infrastructure will better
position Iusatel to deliver future Internet protocol (IP)
services.
Microwave
Transmission
In December 1998, the SCT issued three
20-year concessions to Punto-a-Punto Iusacell, S.A. de C.V., a
joint venture between Iusacell Celular and Mr. José
Ramón Elizondo, a former director of Iusacell Celular, for
short-haul microwave frequencies in the 15 GHz and
23 GHz frequency bands won at auction. Punto-a-Punto
Iusacell paid approximately Ps.42.6 million
(U.S.$4.7 million) for these concessions. These frequencies
are being used to interconnect our cell sites, business
customers and other networks. Additionally, we have an
obligation to provide the right to use excess capacity in these
frequencies to other users to enable them to install their own
microwave links. Accordingly, during 2000, Punto-a-Punto
Iusacell, S.A. de C.V. started to provide services to other
carriers allowing them to use our excess capacity for
installation of links. In 2001, we continued providing these
services, including services to other carriers.
Punto-a-Punto Iusacell participated in the
auctions for long-haul microwave frequencies in the 7 GHz
frequency band that began in March 1999 and concluded in
July 1999. However, Punto-a-Punto Iusacell did not win any
concessions in these auctions.
In September 1999, Punto-a-Punto Iusacell
entered into an agreement with an affiliate of the service
provider in the four Cellular A-Band regions in northern Mexico
to swap the right to use long-haul microwave frequency links
held by the affiliate for short-haul microwave frequency links
held by Punto-a-Punto Iusacell plus U.S.$2.45 million in
cash. Punto-a-Punto Iusacell closed this transaction in
January 2000 and is currently operating and installing
additional links in those frequencies.
Sales and
Marketing
With the assumption of control of our management
by Verizon in 1997, we redefined our marketing strategy for
achieving profitable growth, particularly in our mobile wireless
business. More recently, we have focused our sales and marketing
strategy on the CDMA digital cellular business, where there is
greater per-subscriber usage and revenues than there is with
analog subscribers. We seek to increase our average monthly
revenue per subscriber, aggressively grow our mobile wireless
subscriber base, decrease the cost of acquiring additional
subscribers and reduce postpaid churn and prepay turnover.
Our mobile wireless subscribers consist of
postpaid and prepay customers who can be classified as high,
moderate or low-usage customers. We are implementing
distribution, advertising, customer service support and pricing
plans targeted to each specific customer segment and to increase
airtime usage.
Distribution
We currently target the various segments of our
subscriber base through five sales and distribution channels:
Iusacell owned and operated customer sales and service centers,
independent distributors, a direct
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sales force, commission sales agents and
telemarketing. We are aggressively increasing the number of our
points of distribution in order to acquire additional
subscribers. At December 31, 2001, Iusacell had
46,106 points of distribution, as compared to 20,762, 6,522
and 2,280 at December 31, 2000, 1999 and 1998,
respectively. As of December 31, 2001 these points of sale
comprised 135 customer sales and service centers owned and
operated by Iusacell, 1,619 points of sale operated by
independent distributors who offer all of our products and
44,352 points of sale for distribution only of VIVA prepay
cards, also operated by independent distributors.
Our redesigned sales force compensation plan is
structured to motivate the sales force within each distribution
channel through monetary incentives. This plan provides training
and monetary incentives so that the sales force is encouraged to
activate profitable and loyal accounts, cross-sell the full line
of our service offerings and maintain our standards in
advertising, promotions and customer service.
Customer
Sales and Service Centers
We have reconfigured each of our customer sales
and service centers to offer one-stop-shopping for a variety of
cellular, long distance and paging services, as well as
accessories. Walk-in customers can subscribe to cellular service
postpaid plans, purchase prepay cards, sign up for long distance
service and purchase equipment such as handsets, pagers and
accessories. In an effort to maximize customer loyalty, reduce
postpaid churn and prepay turnover and increase average monthly
revenue per subscriber through cross-selling, we continue to
emphasize the customer sales and service centers that we own and
operate ourselves as a key distribution channel.
During 1998, we opened 22 new customer sales and
service centers. In 1999, although we did not open any new
customer sales and service centers, we replaced one existing
customer sales and service center and remodeled 16 other
existing customer sales and service centers. In 2000, we opened
14 new customer sales and service centers and remodeled 6 other
existing customer sales and service centers. In 2001, we opened
29 new customer sales and service centers. As of
December 31, 2001, Iusacell owned and operated
135 customer sales and service centers throughout our
cellular and PCS regions.
Direct
Sales Force
To service the needs of our customers, we have
created a dedicated direct sales force, which, at
December 31, 2001, included 700 full-time sales
representatives, an increase from 117 full-time sales
representatives at December 31, 2000. The increase in the
number of our direct sales representatives was the result of our
recent acquisition of Portatel which provides cellular service
in Region 8 and the integration of new personnel dedicated to
Regions 1 and 4 in northern Mexico, where we have begun to
provide commercial PCS services on a limited basis. This group
of trained representatives seeks to increase sales by:
•
aggressively pursuing the sales opportunities in
    the different niches of the market;
•
"bundling" combinations of services
    into customized packages designed to meet customers'
    requirements;
•
developing and marketing new services to satisfy
    the demands of such customers; and
•
educating corporate purchasing managers about
    alternative pricing plans and services.
These direct sales representatives are
distributed along our service regions to deliver personalized
service.
In 2001, face-to-face customer service personnel
were integrated to 31 stores which we own and operate in an
effort to further personalize the service. In 2002, we expect to
include a customer service representative in all of the stores
we own.
Independent
Distributors
In order to broaden our market, we maintain
relationships with a broad network of over 80 exclusive
distributors that, at December 31, 2001, sold all of our
products at 1,619 points of sale in our core regions in central
Mexico. In addition, VIVA prepay cards were distributed at an
additional 44,352 points of sale. In order to ensure that our
standards are maintained at all distribution points, we provide
assistance to our
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distributors in training, promotions and
advertising. We also provide them with information on our
customer base to allow the distributors to service our customers
effectively.
In 2001, we launched a program called "los
Rojos" which was implemented in Mexico City, Guadalajara,
Toluca, Cuernavaca, Puebla and Veracruz. The program,
implemented through a distributor, recruits existing street
vendors and provides them with an opportunity to increase their
income by directly selling our prepay VIVA cards and
preactivated prepaid handsets to car drivers and pedestrians.
Commission
Sales Agents
We retain commission agents as a flexible sales
force in all of our mobile wireless regions. The agents function
as cellular service brokers for us, working out of their own
premises to better target their customers. These agents provide
additional distribution outlets with minimal support from
Iusacell. We used to retain commission agents as a flexible
sales force throughout our regions. As of December 31,
2001, we had no agreements with commission sale agents since we
decided to incorporate these into our direct sales force.
Telemarketing
From time to time, Iusacell engages telemarketing
service providers as a direct marketing mechanism or to follow
up on targeted mailings.
Electronic
Means
In 2000, we implemented two important electronic
tools for the sale of prepay airtime: sales through automated
teller machines at banks and sales over the phone by dialing
*AIRE. Sales at ATM machines are charged against our
customer's bank account. Sales using *AIRE are charged to
our customer's credit card. We have implemented ATM sales
at BBVA Bancomer, Bital and Bancrecer. We intend to negotiate
additional ATM distribution agreements in 2002. The charges are
credited to our customer's account by using a personal
identification number.
Advertising
Iusacell has launched an integrated media plan
emphasizing the benefits of our products and supported by the
Iusacell brand image, the logo for which was redesigned in 1997
and modernized in 2001. Since 1997, all product offerings have
been marketed under the single, well-recognized IUSACELL brand
name which was reinaugurated as
IUSACELL Digital
in
February 1998, in anticipation of the digitalization of our
network and product offerings.
The purpose of the media plan is to inform and
convince potential users and subscribers about the benefits of
the products and services offered by Iusacell and to target
potential subscribers through a coordinated print, radio,
television and fixed and moving outdoor advertising campaign. A
key element of this integrated media plan is a periodic agency
review, where the sales results of a given campaign are
evaluated. The integrated media plan enables us to negotiate
more favorable advertising rates. Television and print
advertisements prominently feature an ad-response telephone
number to solicit new customer inquiries.
Customer
Service
We view superior customer service as essential in
order to distinguish ourselves in the competitive Mexican
wireless telecommunications market. We have trained customer
service representatives who are equipped to answer
customers' questions regarding services and products and
are available from 8:00 a.m. to 10:00 p.m. daily. We train
our customer service representatives to ensure that each
customer receives prompt attention, informed answers to any
inquiries and satisfactory resolution of any concerns. We
believe that enhanced customer service, especially after-sales
support, is essential to developing brand loyalty and supports
the efforts of our sales force to cross-sell our services and
products. For prepay customers, the VIVA prepay operating system
better tracks the usage patterns and identities of these
subscribers. The system has improved customer satisfaction
through automated activation, automated self service menus
through the Integrated Voice Response (IVR) system, voice
messaging and other services and has lowered the cost of support
services.
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To further enhance customer service, we have
installed dedicated personal computer terminals linked to our
billing system so that each customer service representative,
either at a Iusacell customer sales and service center or at a
Iusacell call center, can handle customer inquiries, billing
questions and account payments with real-time data and a full
customer profile in hand. These dedicated personal computer
terminals have been provided with a new application, Computer
Telephony Integration (CTI) which allows us to give a
proactive solution to our customers' requests, minimizing
the time of response. Customer data gathered from such sources
as the activation process, the billing system and exit
interviews with customers who terminate service allows us to
better tailor our marketing strategy to each customer. Along
with providing information as to how we can improve our customer
service, this data is expected to enable representatives from
each of the distribution channels to better target their sales
approach to each customer when cross-selling Iusacell's
services and products. We are currently in the process of
upgrading our Automatic Call Distribution (ACD), monitoring and
workforce management systems and we believe we will have these
upgraded systems in place by the second half of 2002.
In early 1998, we opened two call centers that
provide more automated and efficient service to customers.
Iusacell's call center service quality and response speed
in Region 9 further improved in 2000 with the implementation of
state-of-the-art customer service software. We implemented this
software in Regions 5, 6 and 7 in 2001. In 1998, we also began
implementing the Customer Attention Support Team
(CAST) program in our busiest customer service centers in
order to accelerate the problem resolution process. This program
has also been expanded to include the majority of our customer
service centers in all five of our cellular operating regions.
Currently we have extended this program to all our corporate,
medium and small business accounts as well as government
accounts. Each of these customers has an assigned CAST, sales
and collections executive.
In December 2000, the certifying company
Societé Generale de Surveillance de México
(SGS) granted ISO 9002 Certification under the
Entidad Mexicana de Acreditación (EMA)
to
Iusacell's customer care process in the following areas:
•
*611;
•
explanations and complaints, including certain
    CAST sale centers;
•
activations;
•
retention; and
•
service assurance.
Since we received the ISO 9002 Certification, we
have had four quality audits by the certifying company and we
have maintained the certification.
Pricing
General.
Iusacell
offers a variety of flexible pricing options for our mobile
wireless service. The primary components of the postpaid pricing
plans include monthly fees, per-minute usage charges and a
number of free minutes per month. The prepay program markets
cards which credit a specified number of pesos to a
customer's account. The cards can be utilized for outgoing
and incoming calls over a period of up to 60 days and for
incoming local calls only for an additional period of
305 days. See Item 4, "Information on the
Company — Business Overview — Mobile
Wireless Services — Prepay Customers." Most of
the postpaid plans include a selection of free cellular
handsets. The prepay plans do not provide free cellular handsets.
Postpaid Plans.
The
digital and analog postpaid pricing plans are designed to target
primarily high and moderate usage postpaid subscribers.
High-usage customers are typically willing to pay higher monthly
fees in exchange for larger blocks of free minutes, value-added
services, a free high-end handset and lower per minute airtime
charges under a single contract. Moderate and lower-usage
subscribers typically prefer pricing options which have a lower
monthly charge, fewer free minutes, a less expensive handset and
higher per minute airtime charges than those options chosen by
high-usage customers.
In April 1999, in an effort to differentiate our
digital product, we drastically simplified our digital postpaid
plan offerings. We reduced the number of our postpaid plans from
11 to 6 and substantially increased the number of minutes
included with the monthly fee when compared with previous
comparable digital and
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analog postpaid plans. However, to satisfy the
more limited needs of low-usage postpaid subscribers, we
maintained one additional postpaid plan which provides a
moderately priced, fixed monthly charge coupled with a high
per-minute airtime charge and relatively few free minutes.
Prepay Plans.
In
contrast to postpaid subscribers, prepay customers typically
generate low levels of cellular usage, have access to a limited
number of value-added services, generally already own a handset
and often are unwilling to make a fixed financial commitment or
do not have the credit profile to purchase postpaid plan
cellular services. Other prepay customers include vacationers
and traveling business people who require cellular service for
short periods of time. In addition to helping customers control
costs, our prepay programs have no monthly bill and allow
customers to prepay for cellular services in cash.
In September 1997, we introduced our
next-generation VIVA prepay service. VIVA provides for automated
reactivation and value-added services such as voice-messaging.
As of December 31, 2001, VIVA prepay cards were available
in denominations of Ps. 100, Ps. 150, Ps. 200 and
Ps. 500. Since January 1, 2002, after the
implementation of a new tax to certain telecommunication
services in Mexico, our VIVA prepay cards are only available in
denominations of Ps. 100 and Ps. 150. See Item 3,
"Key Information — Risk Factors — Risk
Factors Relating to Doing Business in Mexico."
Hybrid Plans.
In
2000, we launched the ID Pack, a hybrid plan with elements of
postpaid and prepay plans targeted at high school and
university-aged youths who want the status of a cellular phone
but want to control their usage. The plan had a low monthly fee
of Ps. 99 and provided certain value-added services, with
airtime purchased through the activation of a VIVA prepay card.
In 2001, we launched the Lady Pack, a hybrid plan targeted at
women in their 20s. Both of these plans were discontinued in
January 2002. In February 2002, we launched the IDEAL plan, a
new hybrid plan targeted at individuals who want the status of a
cellular phone but want to control their usage. This plan also
has a low monthly fee of Ps. 165 and provides certain
value-added services and 30 minutes worth of airtime per
month. Additional airtime is purchased through the activation of
a VIVA prepay card.
Discounts on Incoming
Calls.
In response to competitive and
market conditions, we offer discounts on the airtime charges of
up to 50% for incoming calls for our customers who are in their
home region and who have opted out of the CPP system. Beginning
in May 1999, with the advent of the CPP modality, cellular
customers who do not opt out of CPP do not pay airtime charges
for incoming local calls (other than incoming local calls while
roaming outside their home region).
Off-peak Pricing.
Evidencing our commitment to innovation and our focus on
differentiation, we launched an off-peak pricing rate plan for
postpaid and prepaid subscribers in November 2001. For the first
time in Mexico, this plan offered wireless customers a
discounted per-minute tariff during nights and weekends. Our
competitors soon followed our initiative.
Strategy.
We intend
to continually review market pricing and will attempt to
increase prices, if economic and competitive conditions permit,
to keep pace with inflation. Constant adjustments to meet market
and competitive conditions may require that we increase or
decrease prices over short periods of time. See Item 5,
"Operating and Financial Review and Prospects —
Trend Information — Price Increases and
Rollbacks."
Activation,
Billing and Collection Procedures
We can activate a phone within 15 minutes or less
for any prepay and postpaid customers. For postpaid customers
who intend to pay their monthly charges with a credit card,
there is a credit approval process prior to the delivery and
activation of a cellular telephone. For postpaid customers who
intend to pay their monthly charges in cash, there is a credit
review process and a requirement of a security deposit,
depending on the postpaid plan, in a minimum amount equal to 1.5
times the corresponding monthly rental fee. In 2000, we started
to offer direct online activation to reduce the time of response
to our customers.
We have also implemented a system to monitor MOU
levels and the number of calls to certain geographic areas in
order to identify abnormal usage by postpaid subscribers. When
abnormal usage is detected, we contact the subscriber to
determine whether such usage has been authorized. We believe that
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these procedures are effective in reducing the
number of billing disputes with subscribers and losses due to
cellular fraud.
Billing is currently administered using five
different billing systems, including a cellular customer care
and billing system provided by LHS Communications Systems, Inc.
(LHS) in Regions 5, 6, 7, 8 and 9 which we also use for our
450 MHz fixed local wireless business, one point of sale system
that provides billing, administration and control features, a
proprietary residential long distance system, a proprietary
system for high-volume business long distance customers and a
purchased system for paging customers. We compile billing
information from our switches by electronic transfer on an
hourly basis for processing by our billing systems. We take
protective and disaster recovery measures in connection with all
billing information.
From 1998 through 2001, we invested a total of
U.S.$32.6 million in the cellular portion of our LHS
cellular customer care and billing system.
We mitigate our credit exposure in five ways:
•
for all customers by obtaining a credit report
    from the
Buró Nacional de Crédito
(National
    Credit Bureau), a Mexican affiliate of TransUnion Corporation;
•
by requiring payment to be made by credit card
    or, for those customers who do not pay by credit card, by
    requiring security deposits;
•
by requiring that postpaid customers purchase a
    bond, which provides for payment in the event of customer
    defaults;
•
by establishing credit limits, and portfolio
    segmentation, according to customers' credit quality; and
•
by utilizing prepay services, which eliminate all
    credit risk.
For 1999 and 2000, we reserved approximately 2.7%
and 1.6% of our cellular revenues in each year for doubtful
receivables. For 2001, we reserved approximately 1.7% of our
cellular revenues for doubtful receivables.
In addition, we also record a revenue provision
for those postpaid customers who had fallen behind in their
payments and whose service had been suspended. Toward the end of
the third quarter of 1999, we changed our billing practice for
these postpaid customers. Rather than continue our policy of not
charging monthly fees upon suspension, in the hope of receiving
additional revenues from CPP tariffs for incoming local calls
and from suspended customers who ultimately pay overdue amounts
and reinitiate service, we began to permit incoming call service
and continue to charge monthly fees to suspended customers for
an additional two months, but reserved a substantial portion of
the monthly fees as a revenue provision. This period was reduced
to two months in the second quarter of 2000. This change in
policy resulted in additional marginal revenue and in the
increase in 1999 and 2000 reserves discussed above.
Network and
Equipment
Mobile Wireless
Services
As of December 31, 2001, our integrated
mobile wireless network comprised 7 cellular switches,
583 cellular and PCS cell sites, 135 repeaters and
26 microwave repeaters, and covered approximately 66% of
all mobile wireless regional POPs, representing 60 million
inhabitants or 59% of Mexico's total population. In 2000,
we added 63 cellular cell sites and 38 repeaters
throughout our cellular regions. During 2001, we added
83 new cellular cell sites, 42 PCS cell sites,
43 repeaters and 1 switch. As a result of the
integration of Portatel into our business, in 2001 we added 26
cell sites in Region 8 to our cellular network.
In December 1997, we signed an agreement with
subsidiaries of Lucent Technologies for the replacement of
Iusacell's existing analog network equipment with Lucent
Technologies analog and CDMA digital network equipment. This
replacement began in February 1998. All regions that we owned at
the time were completely swapped out as of August 1999.
We are also deploying Lucent Technologies CDMA
technology as we build out our PCS networks in Regions 1
and 4 in northern Mexico pursuant to an agreement signed with
subsidiaries of Lucent Technologies on February 11, 2002.
As of December 31, 2001, our PCS network comprised 46 PCS
cell sites that used
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virtual switching through one of our cellular
switches and 2 PCS microwave transmission sites. In the first
quarter of 2002, one new PCS switch was acquired and deployed to
service our PCS regions, replacing the use of virtual switching
through the cellular switch. We elected to deploy CDMA digital
technology instead of TDMA technology based on our and
Verizon's evaluation of the two technologies. Verizon is
successfully using CDMA technology in most of its U.S. markets
with favorable customer response. CDMA offers significantly
greater call-carrying capacity, superior voice quality, longer
telephone battery life and greater fraud protection and is
easier to upgrade than TDMA. We will maintain transmitting
equipment to serve both analog and digital formats, and we are
marketing tri-mode cellular and PCS telephones capable of
sending and receiving both analog and digital transmissions in
order to support roaming service between our cellular and PCS
regions.
Digital microwave links between cell sites and
the landline system are supplied by various equipment
manufacturers. Taking advantage of the ability of our various
switching systems to run customized software, in 2000 we
developed a proprietary software package which is able to track
and report, in real-time, all aspects of network performance,
including traffic analysis, call quality and alarms. In 2001 we
began introducing the new Dense Wavelength Division Multiplexing
(DWDM) technology in some high-traffic areas of our fiber
optic network to increase capacity.
We have a network operations and control center
(NOCC) in Mexico City which oversees, administers and
provides technical support to all our cellular regions. In 1999,
we upgraded our NOCC by installing a new network management
system that provides more complete and automated surveillance
capabilities and fault and performance management for all
network equipment. During 2000, we implemented a new network
administration system that provides better surveillance and
administration of network performance. We are installing another
center for network operations in Toluca that will provide an
alternative monitoring capability for the network in case of a
contingency in the center for network operations located in
Mexico City. We expect to start operations at the center to be
located in Toluca during the second half of 2002.
In March 2002 we started providing two-way Short
Message Service (SMS) and we are evaluating the feasibility
of installing a Packet Switched Data (PSD) platform to provide
data services over the new 3G-1XRTT technology. Nevertheless,
the network is being currently enhanced to support 3G-1XRTT
handsets only for voice service in order to increase the network
capacity.
Other
Services
We provide paging services primarily using our
own cellular network facilities as well as 69 owned and one
leased paging antennas. For long distance, we use fiber optics
and state-of-the-art digital systems. In particular, we use our
three long distance switches and our own fiber optic network and
transmission equipment, as well as other redundant facilities
leased from Telmex and other competitors.
We provide private data transmission services,
primarily using excess capacity in our microwave backbone in our
existing cellular network in Region 9.
We expect that our local wireless network, if
implemented in the 450 MHz frequency band, will be based on
the most advanced digital switching, transmission and subscriber
connection equipment that is readily available and commercially
feasible. We would utilize our existing infrastructure,
including one switch and fourteen 450 MHz cell sites, to
the extent possible. If we opt to provide local wireless service
through our 800 MHz cellular or 1.9 GHz (PCS)
frequency bands, the digital technology that would be employed
would offer additional features such as out-of-zone mobility.
Competition
The offering of cellular services in Mexico is
currently a regulated duopoly in each region. Iusacell's
cellular competitor in all regions in which it provides service
is Telcel, the holder of the Cellular B-Band concession for
service throughout Mexico and the country's largest
cellular provider. Cellular systems compete principally on the
basis of quality of telecommunications services, customer
service, price, breadth of coverage area, roaming capabilities
and value-added services. Operators are largely free to set
their own rates, provided they are set on the basis of cost.
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We are facing increasing competition from
companies providing mobile wireless telecommunications services
utilizing alternative existing technologies. Nextel de
México, S.A. de C.V. began marketing its enhanced
specialized mobile radio services in 1998. In 1999, we began to
face competition from the winners of 1.9 GHz
(PCS) spectrum in the auctions concluded in May 1998.
Pegaso commercially launched its mobile wireless PCS services in
Tijuana in February 1999, initiated PCS services in Monterrey,
Guadalajara and Mexico City later in 1999 and at the end of 2001
provided PCS service in 12 cities in Mexico. In May 2002,
Telefónica Móviles announced that it signed an
agreement to buy 65% of the share capital of Pegaso from Leap
Wireless and Sprint PCS and intends to merge this entity into
its existing operating company in Mexico. Unefón launched
mobile wireless services in Acapulco and Toluca in February
2000, and now provides fixed and mobile wireless services in
those two cities as well as in Mexico City, Guadalajara,
Monterrey and 12 more cities in Mexico.
In paging services, we compete with established
companies such as Comunicaciones Mtel, S.A. de C.V. (Skytel),
Operadora Biper, S.A. de C.V., Enlaces Radiofónicos, S.A.
de C.V. (Digitel), Comunicación Dinámica
Metropolitana, S.A. de C.V. (Coditel), Grupo Radio Beep, S.A. de
C.V. and Buscatel, S.A. de C.V., a Telmex subsidiary. Some of
our paging competitors have already established nationwide
paging networks, giving them a significant operational and
marketing advantage over us. In 1999, COFETEL concluded auctions
for a series of nationwide and regional concessions for
frequencies to be used to provide two-way paging services in
which we did not participate. Moreover, we and other digital
wireless providers, including Telcel and Pegaso, have begun to
provide one-way and two-way short message services, which are
paging services, over wireless frequencies.
In providing long distance telephone service, we
face or will face competition from 14 other concession holders,
including Telmex and joint venture companies in which AT&T
and MCI WorldCom have beneficial ownership interests.
Presubscription balloting in which telephone customers were
asked to elect their long distance carrier was conducted in 150
cities across Mexico in 1997, 1998 and 1999. We chose not to
commit significant marketing resources to the balloting process
and fared poorly in the initial balloting results.
In the local telephony market, we expect to face
significant competition from Telmex, the existing monopoly, and
new competitors providing service over the 1.9 GHz (PCS)
frequency bands, and 3.4-3.7 GHz (Wireless Local Loop)
frequency bands, such as Axtel and Unefón.
In providing data transmission services, we
compete for customers with Telmex, state-owned
Telecomunicaciones de México, which we refer to as Telecom,
and the operational long distance companies. In addition, we
believe that the current Mexican data transmission industry
includes over 1,000 private networks that provide data
transmission services.
Government
Regulation
Telecommunications systems in Mexico are
regulated by the SCT and by COFETEL, a decentralized regulatory
body within the SCT, pursuant to the 1995 Telecommunications Law
(Ley Federal de Telecomunicaciones)
, which became
effective on June 8, 1995. Regulations governing
international long distance, domestic long distance and local
telephony have been promulgated under the 1995
Telecommunications Law. However, some rules from the prior Law
of General Means of Communication
(Ley de Vías Generales
de Comunicación)
and the rules promulgated under such
law, including, without limitation, the Telecommunications Rules
(Reglamento de Telecomunicaciones)
which we collectively
refer to as the Original Communications Laws, generally remain
effective if they are not inconsistent with the 1995
Telecommunications Law and the rules promulgated under that law.
These laws and regulations define the regulatory
structure applicable to the nationwide telecommunications
infrastructure and the provision of telecommunications services.
They govern, among other things:
•
applications to obtain concessions to install,
    maintain and operate telecommunications systems;
•
the establishment of technical standards for the
    provision of telecommunications services;
•
the grant, revocation and modification of
    concessions and permits; and
•
the auction of spectrum.
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During the first half of 2001, the SCT announced
that the 1995 Telecommunications Law would be amended to include
new provisions related to competition, customer protection,
spectrum auctions, permits for commercialization of
telecommunication services and universal service. Reportedly,
the amendments will focus more on networks than on services. The
SCT and the telecommunications industry have been recently
involved in discussions to define the content of the new law. We
believe that the initiative could be presented to Congress for
approval in 2002.
In particular, the terms and conditions of
concessions and permits granted under the Original
Communications Laws, which is the case for the cellular
concessions and permits granted to Iusacell and our
subsidiaries, should be governed by the Original Communications
Laws and respected under the new regulatory regime until their
expiration. The 1995 Telecommunications Law may grant rights
enhancing those set forth in the Original Communications Laws.
For instance, rates charged by holders of concessions and
permits granted under the Original Communications Laws no longer
require prior approval from the SCT, but only require
registration with COFETEL.
Concessions
and Permits
To provide public telecommunications services in
Mexico through a public network, the service provider must first
obtain a concession from the SCT. Pursuant to the 1995
Telecommunications Law, concessions for public networks may not
exceed a term of 30 years, and concessions for
radioelectric spectrum may not exceed a term of 20 years.
Concessions may be extended for a term equivalent to the term
for which the concession was originally granted, but not to
exceed such 20- or 30-year limit, as the case may be.
Concessions specify, among other things:
•
the type of network, system or service;
•
the allocated spectrum, if applicable;
•
the geographical region in which the holder of
    the concession may provide the service;
•
the required capital expenditure program;
•
the term during which such service may be
    provided;
•
the payment, where applicable, required to be
    made to acquire the concession, including, where applicable, the
    participation of the Mexican government in the revenues of the
    holder of the concession; and
•
any other rights and obligations affecting the
    concession holder.
In addition to concessions, the SCT may also
grant permits for (i) establishing, operating or exploiting
telecommunications services not constituting a public network
(i.e., reselling) and (ii) installing, operating or
exploiting transmission-ground stations. There is no specified
maximum term for permits. Under the 1995 Telecommunications Law,
only registration with the SCT is required to provide
value-added telecommunications services.
Under the 1995 Telecommunications Law and the
Foreign Investment Law
(Ley de Inversión
Extranjera)
, concessions may only be granted to Mexican
individuals and to Mexican corporations in which non-Mexicans
hold no more than 49% of their voting shares or which are not
otherwise controlled by non-Mexicans, except that, in the case
of concessions for cellular communications services, foreign
investment participation may exceed 49% with the prior approval
of the Mexican Foreign Investment Commission of the Mexican
Ministry of Economy (formerly the Ministry of Commerce and
Industrial Development). The Mexican Foreign Investment
Commission has recently ruled, upon application of Unefón,
that concessions for PCS services should be treated identically
to concessions for cellular services for foreign investment
purposes. There are no foreign investment participation
restrictions in respect of operations conducted under permits.
A concession or a permit may be terminated
pursuant to the 1995 Telecommunications Law upon:
•
expiration of its term;
•
resignation by the concession holder or the
    permit holder;
•
revocation;
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•
expropriation; or
•
dissolution or bankruptcy of the concession
    holder or the permit holder.
A concession or a permit may be revoked prior to
the end of its term under certain circumstances, such as:
•
unauthorized or unjustified interruption of
    service;
•
the taking of any action that impairs the rights
    of other concessionaires or permit holders;
•
failure to comply with the obligations or
    conditions specified in the concession or permit;
•
failure to provide interconnection services with
    other holders of telecommunications concessions and permits;
•
loss of the concession or permit holder's
    Mexican nationality in instances in which Mexican nationality is
    legally required;
•
unauthorized assignment, transfer or encumbrance
    of the concession or permit, of any rights under the concession
    or permit or of assets used for the exploitation of the
    concession or permit;
•
failure to pay to the Mexican government its fee
    for the concession or permit or, where applicable, its
    participation in the revenues of the holder of the concession or
    permit; or
•
participation of any foreign government in the
    capital stock of the holder of the concession or permit.
•
In addition, the SCT may establish for any
    concession further events which could result in revocation of
    that concession.
The Mexican government, through the SCT, may also
temporarily seize all assets related to a concession or permit
in the event of a natural disaster, war, significant public
disturbance or threats to internal peace and for other reasons
related to preserving public order or for economic reasons. In
addition, the government has the statutory right to expropriate
a concession and assets related to its exploitation for public
interest reasons. Under Mexican law, the Mexican government is
obligated to compensate the owner of the assets in the case of a
statutory expropriation or temporary seizure, except in the
event of war. If the Mexican government temporarily seizes such
assets, it must indemnify the concession or permit holder for
all losses and damages, including lost revenues.
In the case of an expropriation, the amount of
the compensation is to be determined by appraisers. If the party
affected by the expropriation disagrees with the amount
appraised, it may initiate judicial action against the
government. Should no agreement be reached on the amount of the
indemnity in the case of a seizure or expropriation, the
determination will be made by an independent appraiser. Iusacell
is not aware of any instance in which the SCT has exercised any
of these powers in connection with a cellular company.
The
Original Concession
Our right to provide radiotelephony, local
wireless and data transmission services nationwide, as well as
cellular service in Region 9, is based upon the concession
granted on April 1, 1957, as amended, which we refer to as
the Original Concession, to Servicio Organizado Secretarial,
S.A., merged into SOS Telecomunicaciones, S.A. de C.V., which we
refer to as SOS. The term of the Original Concession is
50 years, and it expires on April 1, 2007. The
Original Concession may, however, be revoked prior to such date
in the event that SOS fails to comply with its terms or
applicable law. The Original Concession is renewable upon timely
application to the SCT, provided that SOS has complied with all
of the requirements of the Original Concession and agrees to any
new terms and conditions established by the SCT at the time of
renewal.
In consideration for the Original Concession, SOS
must make payments to the Mexican government equal to 5% of all
gross revenues derived from services provided through its Region
9 cellular network and payments in an amount which is the
greater of (i) 4% of all gross revenues and (ii) 10%
of net income, in either case, derived from services provided
through its nationwide radiocommunications network.
Under the terms of the Original Concession, SOS
must continually modernize its services. In updating its
services, SOS must submit technical and economic plans for
approval by the SCT. In determining whether to approve these
plans, the SCT is authorized to consider whether the plans
sufficiently address factors such as
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the public interest (including, without
limitation, teledensity) and efficiency and uniformity in
telecommunications throughout Mexico.
Initially, the Original Concession authorized
only the installation and commercial operation of nationwide
mobile (vehicle-installed) radiotelephone public service in the
132-144 MHz frequency range. Since then, however, the
Original Concession has been amended numerous times, allowing us
to expand the types of telecommunications services which we may
offer. In 1978, the Original Concession was amended to grant SOS
an additional allocation in the 440-450 MHz and
485-495 MHz frequency ranges in return for yielding a
portion of its 132-144 MHz frequency range allocation. SOS
retained the frequencies between 138 and 144 MHz.
Between 1986 and 1989, the Original Concession
was further amended to enable SOS to provide fixed rural
radiotelephony service, to offer telex and data transmission
with the obligation to link its subscribers to the network owned
by Telecom, and to interconnect its radiocommunications ground
stations through satellite.
In 1989, SOS was authorized to install, operate
and maintain a mobile public radiocommunications network with
cellular technology in the 825-835 MHz and 870-880 MHz
frequency bands in Region 9. In 1990, SOS was authorized to
carry intra-regional cellular-to-cellular communications
throughout Region 9 without being required to interconnect
with the long distance carrier. In 1992, SOS was authorized to
provide public data transmission service nationwide through its
radio communications networks without the obligation to link its
subscribers to the Telecom network.
In 1993, SOS was granted an additional 5 MHz
band in the 800 MHz frequency range for the provision of
cellular service, due to the high volume of cellular traffic
experienced in Region 9. In the same year, SOS was
authorized to improve its radiocommunications public service in
the 440-450 MHz and 485-495 MHz frequency ranges by
utilizing digital technology and to interconnect its
telecommunications systems through fiber optic, satellite and
microwave technologies. The SCT also clarified the ability, and
indeed the obligation, of SOS to interconnect customers of its
nationwide radio communications network regardless of whether
such customers use fixed, mobile or portable telephones.
In accordance with the 1995 Telecommunications
Law, SOS applied to renew the Original Concession in March 1997.
Moreover, in December 1996, we applied to divide the Original
Concession into two concessions, one relating to the provision
of cellular services over the 800 MHz frequency band in
Region 9, which would not be subject to restrictions on
foreign investment, and a second relating to the 450 MHz
frequencies, which would be subject to restrictions on foreign
investment. We are currently negotiating the terms and
conditions for such extension and division with COFETEL.
Cellular
Concessions
Mexico is divided into nine cellular regions. The
SCT has allocated cellular telephone system frequencies in each
region in the Cellular A-Band and the Cellular B-Band.
In each region, Telcel holds the Cellular B-Band concession
and its cellular competitor in each region holds the
Cellular A-Band concession.
In Region 9, we hold the right to provide
cellular service pursuant to an authorization granted to SOS by
the SCT in 1989 under the Original Concession. In
Regions 5, 6, 7 and 8, we hold the right to provide
cellular service through our subsidiaries Comunicaciones
Celulares de Occidente, S.A. de C.V., known as Comcel, Sistemas
Telefónicos Portátiles Celulares, S.A. de C.V., known
as Portacel, Telecomunicaciones del Golfo, S.A. de C.V., known
as Telgolfo, and Portatel del Sureste, S.A. de C.V. known as
Portatel, respectively. Comcel, Portacel, Telgolfo and Portatel
each holds a 20-year concession expiring in 2010 which
authorizes these subsidiaries to install, operate, maintain and
exploit mobile public radiotelephone networks with cellular
technology for commercial use in the Cellular A-Band. In
consideration for these authorizations and
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concessions, the subsidiaries made initial
payments to the Mexican government and, in addition, must make
payments as follows:
Percent of Gross Revenues Payable To
Subsidiary
Mexican Government
Comcel
8
%
Portacel
7
%
Telgolfo
8
%
Portatel
6
%
By the terms of their concessions, Comcel,
Portacel, Telgolfo and Portatel must continually modernize their
services after receiving approval of their technical and
economic plans from the SCT. In determining whether to approve
these plans, the SCT is authorized to consider whether the plans
sufficiently address factors such as the public interest
(including, without limitation, teledensity) and efficiency and
uniformity in telecommunications throughout Mexico. These
concessions may be revoked or terminated prior to their
expiration dates in the event the concession holder fails to
comply with the conditions established in the concessions or
applicable law. The concessions may, however, be renewed for a
term equal to the original term upon timely application to the
SCT, provided that the concession holder had complied with all
of the requirements of its concession and agrees to any new
terms and conditions established by the SCT at the time of such
renewal.
PCS
Concessions
In October 1998, the SCT granted to Iusacell PCS,
S.A. de C.V., which we refer to as Iusacell PCS, a joint venture
between Iusacell and José Ramón Elizondo Anaya, a
former director of Iusacell Celular, in which Iusacell holds a
94.9% equity interest and a 49% voting interest, a concession
for the installation and exploitation of a public network to
provide fixed and local mobile access and a concession of
1.9 MHz frequencies in Region 1 (which includes the
city of Tijuana) and Region 4 (which includes the city of
Monterrey), for a renewable 20-year term. Under the terms of its
concession title, Iusacell PCS is committed to cover at least
20% of the total population in those regions by the end of the
third year of the concession and 50% of the total population in
those regions by the end of the fifth year of the concession. We
started PCS network operations during the second quarter of 2000
and commercial operations in the fourth quarter of 2001, and we
are currently in compliance with the coverage commitments under
our concession. Upon our application, in November 2000, the SCT
granted Iusacell PCS an exemption for five years from the
obligation to take part in the long distance carrier selection
by a pre-subscription process.
Paging
On December 14, 1995, Iusacell Celular and
Infomin formed Infotelecom as a joint venture to market national
and international paging services. Infomin has a concession,
which expires on July 20, 2009, to provide nationwide
paging services in Mexico. Although the joint venture agreement
between Iusacell Celular and Infomin contemplates that Infomin
will ultimately transfer its paging concession to Infotelecom,
Infomin's paging concession prohibits foreign ownership of
more than 49% of the voting shares of the entity holding the
concession. Infomin, therefore, would be unable to contribute
its paging license to the joint venture so long as Verizon
continued to control the management of Iusacell and Iusacell
Celular continued to hold more than 49% of the voting shares of
Infotelecom.
In order to eliminate this obstacle to the
transfer of the paging concession to Infotelecom, in December
1998 we sold a 2% interest in Infotelecom to Mr. José
Ramón Elizondo, a former director of Iusacell Celular. As a
result, we currently hold a 49% interest in Infotelecom.
Infotelecom is required to make monthly payments to Infomin
equal to 5% of all gross revenues for the preceding month. This
payment represents the amount which Infomin as concession holder
must pay to the SCT for the right to provide paging service. In
2000, Infomin received governmental approval to transfer its
paging concession to Infotelecom. We nevertheless expect the
transfer of the concession to be implemented in 2002. The
financial statements of Infotelecom are consolidated with the
financial statements of Iusacell. See Note 2 to the Consolidated
Financial Statements.
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Long
Distance
Our right to provide international long distance
services is based upon a long distance concession granted by the
SCT to Iusatel, on October 16, 1995. The term of the long
distance concession is 30 years and may be renewed upon
timely application to the SCT, for an equal period of time,
provided that Iusatel complies with certain requirements. Upon
our application, the SCT and COFETEL modified this concession on
December 17, 1997, authorizing a change in the coverage
requirements and increasing flexibility in the choice of
transmission technology.
Pursuant to the modified concession, Iusatel is
required to comply with technical specifications and had to
serve with its own infrastructure a minimum of 11 specified
cities by July 31, 1998, 26 additional specified cities by
December 31, 1999 and another 13 additional specified
cities by December 31, 2000. Iusatel complied with its
coverage commitments in all cities except for Saltillo in
Region 4. Therefore, in 2001 the SCT substituted Tlaxcala
for Saltillo in our coverage commitment, and we are currently in
compliance with all our coverage commitments.
In February 1997, the Mexican Foreign Investment
Commission conditioned its approval of Bell Atlantic assuming
management control over Iusacell Celular upon the requirement,
among others, that we transfer at least 51% of the voting shares
of Iusatel to Mexican investors on terms acceptable to the
Mexican Foreign Investment Commission. In November 1998, we
complied with this requirement by having Mr. Elizondo agree
to subscribe to 5.1% of the capital stock of Iusatel, comprising
51% of the voting shares thereof. We retained a 94.9% equity
interest in Iusatel, including a 90% equity interest through the
ownership of neutral limited voting stock (
inversión
neutra
) and a 49% voting interest representing a 4.9% equity
interest. The financial statements of Iusatel are consolidated
with the financial statements of Iusacell. See Note 2 to
the Consolidated Financial Statements.
Local
Telephony
We believe our right to provide local telephony
service is derived from the Original Concession. The Original
Concession, as originally granted, permitted SOS to provide
radiocommunications service to vehicle-mounted terminal
equipment nationwide.
In 1986, the SCT amended the Original Concession
to authorize SOS to provide fixed public radiotelephony service
in rural areas nationwide in accordance with plans to be
approved by the SCT. In 1990, the Telecommunications Rules were
promulgated by the Mexican government which further modified the
Original Concession.
These regulations classified radiocommunications
services on the basis of the networks used to provide such
services rather than upon the basis of subscriber terminal
equipment. Radiocommunications networks are generally classified
as either "fixed" or "mobile." Our
radiocommunications network is a mobile network. In 1993, the
SCT clarified the ability, and indeed the obligation, of SOS to
interconnect customers of its nationwide radiocommunications
network regardless of whether such customers use fixed, mobile
or portable telephones.
Pursuant to the Original Concession, the
commencement of construction and marketing of local wireless
service in the 450 MHz frequency band on a commercial basis
requires the prior approval of the SCT. We have never received
the SCT's approval of our technical and economic plans for
local wireless service in the 450 MHz frequency band.
However, Iusacell Celular has reached an
agreement with the SCT on a technical process by which we can
provide local wireless service in the 450 MHz frequency
band in some of its existing service regions and has received a
right of first refusal to acquire the concessions to provide
local wireless service in such regions.
Our management is currently evaluating whether to
exercise our right of first refusal. See Item 4,
"Information on the Company — Business
Overview — Other Services — Public and Rural
Telephony and Local Fixed Wireless."
In September 1998, we determined that, because of
many factors, including the impact of changing technology since
the initiation of the 450 MHz fixed local wireless project
in 1994, an impairment of our
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investment in 450 MHz TDMA technology
had occurred. As a result, we recorded a substantial non-cash
write-down of our investment in the 450 MHz fixed local
wireless project.
In November 1998, Mr. Elizondo agreed to
subscribe 5.1% of the capital stock of Iusatelecomunicaciones,
S.A. de C.V., the Iusacell Celular subsidiary which
provides local wireless service in the 450 MHz frequency
band on a trial basis, comprising 51% of our total voting
shares. We retained a 94.9% equity interest in
Iusatelecomunicaciones, including a 90% equity interest through
the ownership of neutral limited voting stock (
inversión
neutra
) and a 49% voting interest representing a 4.9% equity
interest. The financial statements of Iusatelecomunicaciones are
consolidated with the financial statements of Iusacell. See
Note 2 to the Consolidated Financial Statements.
Data
Transmission
Our right to offer telex and provide public data
transmission service throughout Mexico is derived from the
Original Concession. We use our allocations in the
138-144 MHz, 440-450 MHz and 485-495 MHz
frequency bands and excess capacity in our cellular microwave
backbone in Region 9 to provide data transmission services.
Satellite
Transmission Permit
On December 15, 1991, Satelitrón, a
joint venture among Hughes Network Systems, Iusacell Celular and
one other investor, was granted a 15-year permit to provide
dedicated circuit services and private networks through Mexican
satellites or any other satellites designated by the Mexican
government. The Satelitrón permit is renewable for 15
additional years upon timely application to the SCT, provided
Satelitrón has complied with all of the requirements of the
permit and agrees to any new terms and conditions established by
the SCT at the time of such renewal. Under this permit,
Satelitrón is required to make monthly payments to the SCT
equal to 2.5% of all gross revenues derived from its provision
of access to its satellite bandwidth, and 2.5% of all such gross
revenues to Telecom for supervision and supporting services. On
March 22, 2001, we sold our 65.9% equity interest in
Satelitrón and our ownership in the transmission hub to
Telepuertos Satelitales, S.A. de C.V. for
U.S.$1.3 million.
Dedicated
Microwave Circuit Services Permit
On December 8, 1993, the SCT authorized SOS
to use its microwave network's excess capacity to provide
dedicated circuit services. In accordance with the terms of this
permit, these dedicated microwave circuits cannot be
interconnected to public exchange networks, and the service must
only be provided through the links of the microwave network
authorized by the SCT. On February 1, 1994, the SCT
authorized SOS to carry voice, data and video conferencing
through these dedicated circuit services.
Value-Added
Services Permit
On June 17, 1993, SOS was granted a permit
to provide through its public network the following value-added
telecommunications services to its cellular subscribers:
•
secretarial service;
•
voice mail; and
•
data transmission.
The term of this permit is the same as that of
the authorization for using the Region 9 cellular network
through which the value-added services are to be provided. Under
this permit SOS is required to make annual payments to the
Mexican government equal to 5% of all gross revenues derived
directly from the provision of these services. In October 1994,
Comcel, Telgolfo and Portacel were each granted a permit to
provide secretarial services under the same terms granted to
SOS, including the making of the annual payments to the Mexican
government.
Foreign
Ownership Restrictions
Pursuant to the 1995 Telecommunications Law and
the 1993 Foreign Investment Law, holders of concessions to
provide telecommunications services in Mexico, excluding
providers of cellular service, cannot
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have a majority of their voting shares owned by,
and cannot be otherwise controlled by, foreign persons. In
February 1997, the Mexican Foreign Investment Commission
conditioned its approval of Verizon assuming management control
over Iusacell upon the requirement that, within a renewable
period of 180 days, Iusacell would transfer at least 51% of
the voting shares of Iusatelecomunicaciones and Iusatel to
Mexican investors on terms acceptable to the Mexican Foreign
Investment Commission. The Mexican Foreign Investment Bureau
twice extended the transfer deadline.
In November 1998, we complied with this
requirement by transferring 51% of the voting shares of these
two subsidiaries to Mr. Elizondo by means of a subscription
to capital. We retained 49% of the voting shares of these
subsidiaries, representing 4.9% of their capital. We also hold
an additional 90% of the capital of these subsidiaries through
the ownership of neutral limited voting stock (
inversión
neutra
) that does not constitute voting shares for purposes
of the Mexican foreign investment laws. Consequently, we hold a
94.9% equity interest in these two subsidiaries, whose financial
results we consolidate.
To participate in the auctions for concessions
for microwave frequencies concluded in September 1997, we formed
Punto-a-Punto Iusacell, S.A. de C.V., a joint venture
with Mr. Elizondo. The Mexican Foreign Investment Bureau
approved a capital structure substantially similar to that
authorized for Iusatel and Iusatelecomunicaciones for the
microwave joint venture. The financial statements of
Punto-a-Punto Iusacell are consolidated with the financial
statements of Iusacell. See Note 2 to the Consolidated
Financial Statements.
In order to participate in the auctions for
concessions for 1.9 GHz PCS frequencies concluded in
May 1998, we formed Iusacell PCS, another joint venture
with Mr. Elizondo. The Mexican Foreign Investment Bureau
approved a capital structure substantially similar to that
authorized for Iusatel, Iusatelecomunicaciones and Punto-a-Punto
Iusacell, and we retained a right to acquire
Mr. Elizondo's interest in the event we are allowed to
do so by the Mexican Foreign Investment Commission.
In 2000, the Mexican Foreign Investment
Commission ruled, upon application of Unefón, that
concessions for PCS frequencies, like concessions for cellular
frequencies, may be held by entities in which foreign persons
have a majority of the voting shares. Iusacell has applied for
similar treatment for Iusacell PCS and subsidiaries. If
Iusacell's application is granted, we expect to exercise
our right to acquire Mr. Elizondo's interest in
Iusacell PCS.
Moreover, in December 1998 Mr. Elizondo
acquired a 2% interest in Infotelecom, from Iusacell Celular. As
a result, we currently hold only 49% of this entity, complying
with the condition precedent necessary to allow our other
partner, Infomin, a Mexican controlled company, to transfer its
paging concession to Infotelecom, as previously agreed with us.
Rates
for Telecommunications Services
Under the Original Communications Laws, SCT
approval was required for rates charged for all basic and
certain value-added cellular services and for data transmission
services. Historically, the SCT permitted rate increases based
on the cost of service, the level of competition, the financial
situation of the carrier and macroeconomic factors. Carriers
were not allowed to discount the rates authorized by the SCT,
although operators occasionally waived activation fees on a
promotional basis. Interconnection rates were also authorized by
the SCT. All terms of interconnection (such as point of
interconnection) other than interconnection rates were
negotiated between the regional non-wireline cellular carriers
and Telmex under the SCT's supervision. Rates for dedicated
circuit services through microwave networks, and dedicated
circuits and private networks through satellites, were not
regulated under the Original Communications Laws.
Under the 1995 Telecommunications Law, rates for
telecommunications services, including cellular and long
distance services, are now freely determined by the providers of
such services. Providers are prohibited from adopting
discriminatory practices in the application of rates. In
addition, the SCT is authorized to impose specific rate
requirements on those companies determined by the Federal
Competition Commission to have substantial market power. All
tariffs for telecommunications services, other than value-added
services, must be registered with COFETEL prior to becoming
effective.
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In January 2001, we negotiated a rate reduction
with Telmex that decreases both long distance and local cellular
interconnection charges from U.S.$0.0330 to U.S.$0.0125 per
minute. Additionally, we negotiated with Telmex the terms
regarding payment for the projects Telmex undertook to prepare
its long distance network for competition. We paid Telmex a
fixed payment of approximately U.S.$13.0 million and agreed
to pay a U.S.$0.0053 per minute, usage based, surcharge to the
local wireline interconnection rate for the next four years for
long distance calls terminated in Telmex's local networks.
In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
United
States Regulation
In 1982, Bell Atlantic, like all other regional
Bell operating companies, was subject to a consent decree which
we refer to as (the "Decree"); resulting from
anti-trust litigation between the United States Department of
Justice against AT&T. The Decree required AT&T to divest
itself of its local telephone companies. Under the Decree, Bell
Atlantic was prohibited, with certain limited exceptions, from
providing interLATA (long distance) telecommunications, engaging
in the manufacture of customer premises equipment(CPE), or
engaging in the manufacture or sale of telecommunications
equipment.
The Telecommunications Act of 1996 (the
"1996 Act", which became effective on February 8,
1996, includes provisions that open local telephony markets to
competition and would permit regional Bell operating companies,
such as the local operating telephone companies of the former
Bell Atlantic, to provide interLATA services (long distance),
video programming and to engage in manufacturing. Under the 1996
Act, the former Bell Atlantic was allowed to provide certain
interLATA (long distance) services immediately upon enactment,
including interLATA (long distance) services permitted under the
Decree, interLATA (long distance) services originating outside
the states where its subsidiaries provide local exchange
telephone services and interLATA (long distance) services that
are "incidental" to other permitted business such as
wireless services.
However, the ability of Verizon and its
affiliates to engage in businesses previously prohibited by the
Decree, including providing interLATA (long distance) services
originating in the states where the former Bell Atlantic
subsidiaries provide local exchange telephone service, and
manufacturing CPE or telecommunications equipment, is largely
dependent on satisfying certain conditions contained in the 1996
Act and related regulations.
Since Iusacell is a Verizon affiliate, its
operations must comply with the terms of the Decree. In 1986 and
1993, Bell Atlantic obtained waivers under the Decree that
allowed it to conduct business outside the United States,
subject to certain exceptions and restrictions. Under such
exceptions and restrictions, a foreign telecommunications entity
(FTE) affiliated with Verizon, , such as Iusacell, could
not provide interexchange (long distance) telecommunications
services between points in the United States or own any
international telecommunications facilities in the United States.
As to telecommunications traffic between the
United States and a foreign country, an FTE could provide only
the foreign "half" of such traffic. An FTE was
prohibited from discriminating in handling traffic to and from
the United States and was limited as to interests it could own
in international cables and satellite facilities to and from the
United States. Finally, an FTE was prohibited from exporting to
the United States any telecommunications equipment or CPE
manufactured outside the United States.
The 1996 Act eliminated certain restrictions
under the Decree including:
•
restrictions that precluded an FTE from providing
    the U.S. "half" of traffic originating in a
    foreign country;
•
restrictions on exporting to the United States
    telecommunications equipment or CPE manufactured outside the
    United States; and
•
restrictions on providing interLATA (long
    distance) telecommunications services between points in the
    United States or international long distance service originating
    in the United States, and from
48
Table of Contents
owning international telecommunications
    facilities in the United States subject to the same conditions
    that Verizon must satisfy under the 1996 Act and any regulations
    promulgated thereunder with respect to interLATA (long distance)
    telecommunications services originating in the states in which
    the pre-Verizon Bell Atlantic local exchange subsidiaries
    provide service.
Under the 1996 Act, we may now provide both the
foreign "half" and the United States "half"
of telecommunications traffic originating in Mexico (or any
other foreign country) and may now carry international
telecommunications traffic which, although routed through the
United States, neither originates nor terminates in the United
States. In addition, we may carry United States originated
traffic bound for Mexico (or other foreign countries) so long as
the traffic originates outside the states where the former Bell
Atlantic subsidiaries provide local exchange telephone service
except from those states where Verizon has obtained
Section 271 approval and subject to having appropriate
authority under Section 214 of the United States
Communications Act of 1934.
In 1996, Iusatel applied for and received
authorization under Section 214 of the Communications Act
to become a facilities-based provider of international long
distance services from the United States. This Section 214
authorization was transferred to a Peralta Group entity in
January 1997 in order not to delay the proposed change of
control from the Peralta Group to Bell Atlantic. In 2002,
Iusatel USA, Inc., a subsidiary of Iusatel, applied for and
received authorization under Section 214 of the
Communications Act to become a facilities-based provider of
international long distance services from the United States. We
have not yet determined whether we will engage in activities
permitted by the 1996 Act or any Section 214 authorization
we may receive. If we choose to engage in such activities, we
cannot predict the specific impact of such activities on our
business, financial condition or results of operations.
Other laws of the United States may restrict
activities of Iusacell by virtue of Verizon's ownership
interest, including laws and regulations that restrict trade
with, and investments in, specific countries, as well as the
United States Foreign Corrupt Practices Act. The Foreign Corrupt
Practices Act is also applicable to Iusacell because its
securities are listed on the New York Stock Exchange.
The Iusacell Shareholders' Agreement
contains provisions designed to require us to refrain from
taking any actions that would cause Verizon to be in violation
of applicable law.
C.     Organizational
Structure
Grupo Iusacell, S.A. de C.V. is a
holding company for the shares of Grupo Iusacell Celular,
S.A. de C.V. and several other subsidiaries. The
following table shows our principal direct (unless otherwise
noted) subsidiaries, all of which are organized under the laws
of Mexico, their principal line of business and the percentage
of our ownership interest and voting power as of
December 31, 2001.
%
% Voting
Name
Line of Business
Ownership
Power
Grupo Iusacell Celular, S.A. de C.V.
Operating cellular
100
100
Iusacell Infraestructura, S.A. de C.V.
Microwave financing
100
100
Iusacell Infraestructura de México, S.A. de
    C.V.
Microwave financing
100
100
Iusacell PCS, S.A. de C.V.
Operating PCS
94.9
49
Iusacell Arrendadora, S.A. de C.V.
Leasing
100
100
Iusacell PCS de México, S.A. de C.V.(1)
Regions 1 and 4  PCS
100
100
(1)
Held indirectly through Iusacell PCS,
    S.A. de C.V.
49
Table of Contents
The following table shows our principal indirect
subsidiaries, all of which are held through Grupo Iusacell
Celular, S.A. de C.V. (unless otherwise noted), their
principal line of business and the percentage of our ownership
interest and voting power.
%
% Voting
Name
Line of Business
Ownership
Power
SOS Telecomunicaciones, S.A. de C.V.
Region 9 cellular
100
100
Comunicaciones Celulares de Occidente, S.A. de
    C.V.
Region 5 cellular
100
100
Sistemas Telefónicos Portátiles
    Celulares, S.A. de C.V.
Region 6 cellular
100
100
Telecomunicaciones del Golfo, S.A. de C.V.
Region 7 cellular
100
100
Grupo Portatel, S.A. de C.V. and subsidiaries
Region 8 cellular
78.3
78.3
Iusacell, S.A. de C.V.
Sales and marketing
100
100
Sistecel, S.A. de C.V.
Administrative services
100
100
Iusatel, S.A. de C.V.
Long distance
94.9
49
Iusatelecomunicaciones, S.A. de C.V.
Local wireless
94.9
49
Punto-a-Punto Iusacell, S.A. de C.V.
Microwave transmission
94.9
49
Infotelecom, S.A. de C.V.
Paging
49
49
Iusatel USA, Inc.(2)
Not currently operating
100
100
(2)
Held through Iusatel, S.A. de C.V.
All of the above companies, including those in
which we own directly or indirectly a minority voting interest,
are consolidated with the financial statements of Iusacell. See
Note 2 to the Consolidated Financial Statements.
D.     Property,
Plant and Equipment
As of December 31, 2001, we operated in our
service regions a total of 135 customer sales and service
centers, 537 cellular cell sites, 135 repeaters, 24 cellular
microwave transmission repeaters, 46 PCS cell sites, 2 PCS
microwave transmission repeaters, 14 fixed local wireless 450
MHz cell sites, 69 paging antennas, 7 switches for cellular and
PCS service, 1 switch for local wireless service and 3 switches
for long distance service.
We generally lease the land and cellular tower
space where our customer sales and service centers, cell sites,
antennas, microwave transmission equipment and switching centers
are located. We own and lease administrative offices in Mexico
City as well as in Guadalajara, León, Guanajuato, Puebla,
Monterrey, Mérida, Tijuana and Ciudad Juárez. We
generally own our cellular network equipment, subject to liens.
As of December 31, 2001, the book value of
our property and equipment, before accumulated depreciation of
Ps. 5,625.6 million (U.S.$614.4 million) for
2001, consisted of the following:
Value
(in thousands of
constant pesos
as of December 31, 2001
and millions of U.S.
dollars)
Property and Equipment
Buildings and facilities
Ps.1,623.4
U.S.$ 177.3
Communications equipment
10,193.1
1,113.3
Furniture and fixtures
195.0
21.3
Transportation equipment
79.7
8.7
Computer equipment
1,446.5
158.0
Cellular rental telephones
9.1
1.0
Land
66.0
7.2
Construction in progress
1,481.0
161.7
See Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital
Resources — Capital Expenditures" for a
discussion of planned capital expenditures and existing
encumbrances on our property and equipment. See also
notes 4 and 8 to the Consolidated Financial Statements.
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ITEM 5.     OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and
analysis in conjunction with the Consolidated Financial
Statements included elsewhere in this Annual Report. Unless
otherwise indicated, all financial information in this Annual
Report is presented in constant pesos with purchasing power as
of December 31, 2001. The U.S. dollar translations provided
in this Annual Report are, unless otherwise indicated,
calculated at the Noon Buying Rate at December 31, 2001,
which was Ps. 9.156 per U.S.$1.00. Sums may not add due to
rounding.
A.     Operating
Results
General
The following discussion and analysis is intended
to help you understand and assess the significant changes and
trends in the historical results of operations and financial
condition of Iusacell and subsidiaries and factors affecting our
financial resources.
The Consolidated Financial Statements have been
prepared in accordance with Mexican GAAP, which differs in
certain significant respects from U.S. GAAP. Note 23
to the Consolidated Financial Statements provides a description
of the principal differences between Mexican GAAP and
U.S. GAAP as they relate to Iusacell. Note 23 to the
Consolidated Financial Statements also provides a reconciliation
to U.S. GAAP of Iusacell's net income (loss) for the
years ended December 31, 1999, 2000 and 2001 and of
stockholders' equity as of December 31, 2000 and 2001.
As a Mexican company, we maintain our financial
records in pesos. Pursuant to Bulletin B-10,
"Recognition of the Effects of Inflation on Financial
Information," and Bulletin B-12, "Statement of
Changes in Financial Position," issued by MIPA,
Iusacell's financial statements are reported in period-end
pesos to adjust for the inter-period effects of inflation. The
presentation of financial information in period-end, or
constant, currency units is intended to eliminate the distorting
effect of inflation on the financial statements and to permit
comparisons across comparable periods in comparable monetary
units. Bulletin B-10 requires us to restate non-monetary
assets, non-monetary liabilities and the components of
stockholders' equity using the
Indice Nacional de
Precios al Consumidor
("INPC"). We have not
eliminated the effects of these inflation accounting principles
in the reconciliation to U.S. GAAP. See Note 23 to the
Consolidated Financial Statements.
Except where otherwise indicated, financial data
for all periods in the Consolidated Financial Statements and
throughout this Annual Report have been restated in constant
pesos as of December 31, 2001, in accordance with the fifth
amendment to Bulletin B-10. References in this Annual
Report to "real" amounts are to inflation-adjusted
pesos and references to "nominal" amounts are to
unadjusted historical pesos. In calendar years 1999, 2000 and
2001, the rates of inflation in Mexico, as measured by changes
in the INPC, were 12.3%, 9.0% and 4.4%, respectively. The
inflation indices used are 1.1376 for 1999 figures and 1.0440
for December 2000 figures.
In reporting under Mexican GAAP and in accordance
with Bulletin B-10, we are required to quantify all
financial effects of operating and financing the business under
inflationary conditions. For presentation purposes,
"integral financing cost (gain)" refers to the
combined financial effects of:
•
net interest expense or interest income;
•
net foreign exchange gains or losses; and
•
net gains or losses on monetary position.
Net foreign exchange gains or losses reflect the
impact of changes in foreign exchange rates on monetary assets
and liabilities denominated in currencies other than pesos. A
foreign exchange loss arises if a liability is denominated in a
foreign currency which appreciates relative to the peso between
the time the liability is incurred and the date it is repaid, as
the appreciation of the foreign currency results in an increase
in the amount of pesos which must be exchanged to repay the
specified amount of the foreign currency liability. We incurred
a foreign exchange loss in 2000 on our U.S. dollar denominated
debt as the peso depreciated against the U.S. dollar. A foreign
exchange gain arises if a liability is denominated in a foreign
currency which depreciates relative to the peso between the time
the liability is incurred and the date it is repaid, as the
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Table of Contents
depreciation of the foreign currency results in a
decrease in the amount of pesos which must be exchanged to repay
the specified amount of the foreign currency liability. In 1999
and 2001, we incurred a foreign exchange gain on our U.S. dollar
denominated debt as the peso appreciated against the U.S. dollar.
The gain or loss on monetary position refers to
the gains and losses realized from holding net monetary
liabilities or assets and reflects the impact of inflation on
monetary liabilities and assets. For example, a gain on monetary
position results from holding net monetary liabilities during
periods of inflation, such as in 1998, 1999, 2000 and 2001, as
the purchasing power of the peso declines over time.
Devaluation
and Inflation
Mexico experienced a severe economic crisis
following the devaluation of the peso in December 1994, when the
Mexican government first allowed the peso to fluctuate freely
against the U.S. dollar. The value of the peso generally
continued to decline during subsequent years, depreciating by
54.8% relative to the U.S. dollar in 1995 and by 22.7% in 1998.
The peso has generally recovered and strengthened in recent
years, depreciating by only 1.5% against the U.S. dollar in 2000
and appreciating by 4.8% in 2001.
Depreciation of the value of the peso has
contributed to sharp increases in inflation. Inflation, which
had been 7.1% in 1994 as measured by changes in the INPC,
increased to 52.0% and 27.7% in 1995 and 1996, respectively.
After a reduction to 15.7% in 1997, inflation was 18.6% for the
year 1998. Since then inflation has declined to 12.3% in 1999,
9.0% in 2000 and reached its lowest level in more than
30 years in 2001 to 4.4%.
In the past, devaluation and depreciation of the
peso as well as inflation have negatively affected our results
of operations and financial condition and may do so in the
future.
Impact of
Devaluation and Inflation on our Results of
Operations
The general economic conditions in Mexico
resulting from the devaluation of the peso and the resulting
inflation have had, and may have, an overall negative impact on
our results of operations primarily as a result of the following
factors:
•
Peso devaluations result in a decrease in the
    purchasing power of Mexican consumers, resulting in a decrease
    in the demand for all goods and services, including cellular
    telephony;
•
Due to competitive market conditions and the
    overall state of the Mexican economy, we have not been able to
    increase our prices in line with the inflation rate;
•
Significant inflation leads to an upward
    restatement of our assets, resulting in a substantial increase
    in depreciation and amortization expense.
•
Given our net U.S. dollar liability position,
    devaluation of the peso as compared to the U.S. dollar results
    in the recording of net foreign exchange losses, and
    appreciation of the peso as compared to the U.S. dollar results
    in the recording of net foreign exchange gains.
Impact
of Devaluation and Inflation on our Financial
Condition
The general economic conditions in Mexico
resulting from the devaluation of the peso and the resulting
inflation have had, and may have, an overall negative impact on
our financial condition as result of the following factors:
•
Substantially all of our indebtedness is
    denominated in U.S. dollars. As a result, in a period of peso
    devaluation, the peso-carrying amount of such debt increases to
    reflect the additional pesos required to meet such foreign
    currency liabilities; and
•
Whenever the inflation rate exceeds the
    devaluation rate, as was the case in 1996, 1999, 2000 and 2001,
    the peso-carrying value of our assets purchased in foreign
    currencies is reduced. This is because, assuming that the
    foreign currency value of a given asset remains unchanged
    between periods, the value of such asset for the prior period is
    restated upwards using the inflation rate, while the valuation
    of such asset for the current period is restated using a foreign
    exchange rate which increased at a lower rate.
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See Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital
Resources — Hedging" for a description of
contracts we use to hedge.
Increase in
Subscriber Base
We use our automated VIVA prepay program in all
of our cellular markets. In October 1999, we introduced a
"one-single rate" plan for prepay customers.
One-single rate prepay customers pay a single per minute rate
for local, national long distance and international long
distance service to the United States and Canada.
The VIVA program has been popular with prepay
customers increasing from an insignificant percentage of our
subscriber base at its introduction to 73.4% at
December 31, 1999 (970,509 subscribers), 73.7% at
December 31, 2000 (1,238,625 subscribers) and 78.2% at
December 31, 2001 (1,451,091). Prepay customers comprised
86.7%, 74.8% and more than 100% of our net subscriber additions
in 1999, 2000 and 2001, respectively. We expect that prepay
customers will continue to comprise the substantial majority of
new subscriber additions.
The percentage of total service revenues derived
from prepay customers was 11.9% in 1999, 13.0% in 2000 and 23.4%
in 2001.
In 1999 and 2000, we experienced a 27.2% and
25.6% increase in the aggregate number of postpaid customers,
respectively, compared to the beginning period number, with
limited migration by postpaid customers to prepay programs. In
2001 we experienced an 8.7% reduction in the number of postpaid
customers. Many of these postpaid customers migrated to our
prepay program or disconnected as a result of a higher postpaid
churn rate derived from the stricter activation policies and
retention programs implemented to increase the quality of
additions. Moreover, as part of a review of postpaid customers
implemented in the second quarter of 2001, including a targeted
retention program, the Company decided to delete 11,600 postpaid
customers from their subscriber base in that period.
Prepay customers, on average, have substantially
lower minutes of use than postpaid customers and do not pay
monthly fees and, as a result, generate substantially lower
average monthly revenues per subscriber, even though prepay
plans involve higher outgoing call per minute airtime charges
than the average postpaid plan. Consequently, as the proportion
of prepay customers to our total subscribers continues to
increase, we expect that average minutes of use per customer and
average monthly revenues per customer will continue to decrease.
The implementation of the CPP modality and the digitalization of
the postpaid subscriber base have moderated this decline.
In November 1998, we extended the life of our
VIVA prepay cards from a maximum of 135 days to a maximum
of 180 days to allow greater flexibility in their use. In
April 1999, in anticipation of the advent of the CPP modality
and for competitive reasons, we extended the life of our VIVA
prepay cards to a maximum of 365 days. After the balance of
a prepay card becomes zero (which occurs automatically after
180 days), the VIVA customer had 185 days to activate
a new card before losing his phone number. During this 185-day
period, the VIVA customer was considered an "incoming calls
only" customer, able to receive incoming local calls, but
not able to make outgoing calls.
In October 1999, in order to evaluate whether we
could generate additional revenues from "incoming calls
only" customers, we extended the period of time to activate
a new card from 185 days until April 30, 2000 for
those "incoming calls only" customers who otherwise
would have lost service before that date. Beginning May 1,
2000, we determined to return to our prior policy of maintaining
"incoming calls only" customers for only 185 days
and began to turn over "incoming calls only" prepay
customers who had reached the 185-day limit without activating a
new prepay card.
Extending the life of VIVA prepay cards defers
the deactivation of prepay customers who may in fact not be
using the service. The November 1998 extension, by deferring
prepay turnover for 45 additional days, contributed to the
strong growth in subscriber net additions, particularly prepay
net additions, during the fourth quarter of 1998. Likewise, the
April 1999 and October 1999 extensions, by deferring prepay
turnover, increased overall subscriber net additions in the
second, third and fourth quarters of 1999 and the first quarter
of 2000. The May 2000 decision to no longer defer the
deactivation of prepay customers led to a decrease in
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overall subscriber net additions in the second,
third and fourth quarters of 2000. Overall subscriber net
additions in the second quarter of 2000 were also negatively
affected by our decision to turn over approximately 25,000
prepay customers who had purchased but never activated a prepay
card. Overall subscribers declined by approximately 14,000 in
the third quarter of 2000 as a result of our decision to examine
our entire prepay subscriber base and eliminate approximately
59,000 additional prepaid customers who had not made or received
any calls for an extended period of time. In the second quarter
of 2001 net prepay additions were affected by our decision to
change the policy for reporting preactivated prepay sales in
order to better focus on active customers and reduce the
potential future churn. Under the new policy a preactivated
prepay sale is now reported when the end-user places the first
outgoing call. Accordingly, commissions related to this type of
prepay sale are now paid only after the end-user places the
first outgoing call. This policy change resulted in 88,300
disconnects of previously pre-activated but never used prepay
phones from our customer base. As part of a restructuring of
distribution processes, we conducted a comprehensive review of
the prepay base in the second quarter of 2001. This review
identified an additional 88,100 inactive prepay customers who
were churned in that period.
Additionally, we reduced the initial period for
using up an activated prepay card and activating a new card from
185 days to 60 days effective July 1, 2001. This
measure is intended as an incentive for customers to recharge
their airtime on a more regular basis. As a result,
approximately 345,000 incremental customers were transferred to
the "incoming calls only" status in that quarter. The
reduction in the initial period is in line with Mexican market
practices. Any decision to further reduce or extend the VIVA
card life for "incoming calls only" customers will
also reduce or increase overall subscriber net additions for the
period of the reduction or extension.
At December 31, 2001, we had approximately
768,000 "incoming calls only" customers. The
substantial majority of "incoming calls only"
customers generate very low traffic.
In late March 1999, we implemented marketing
initiatives focused on increasing usage by and revenues derived
from prepay customers. These initiatives included an approximate
6% price increase, the implementation of a Ps. 59 or
Ps. 79 activation fee for a customer activating a telephone
number with a Ps. 250 or Ps. 150 prepay card, an
increase in the minimum denomination of the prepay card with
which a customer can activate prepay service from Ps. 100
to Ps. 150, an adjustment of commissions to encourage
distributors to activate customers with prepay cards of higher
denominations and the sending of electronic reminders to
customers to replenish their cards. During the second half of
2000, we began to migrate high-usage prepay customers to digital
service and to sell digital handsets to new prepay customers. At
the end of 2000 and 2001, 11% and 35% of the prepay subscriber
base, respectively, were able to access digital service. These
initiatives, together with the continuing efforts to increase
the number of distribution points for prepay cards in order to
facilitate and encourage their replenishment, appear to have had
their intended results. Our new and existing prepay customers
are generating higher revenues.
Digitalization
Digital and dual-mode (i.e., digital-analog)
handsets are substantially more expensive than analog handsets,
although the prices for all types of handsets have declined over
time. As a result, the subsidies we provide for handsets are
higher than they would have been had we remained an exclusively
analog service provider. The sale of digital handsets to new
subscribers and the migration of analog postpaid subscribers to
digital service began in 1998, with our introduction of digital
service. During the second half of 2000, we began to migrate
high-usage prepay customers to digital service and to sell
dual-mode handsets to new prepay customers. In May 2001, we
decided to no longer purchase any analog-only handsets. Upon the
exhaustion of our existing inventory of analog-only handsets, we
will only sell digital, dual mode and tri-mode handsets to our
customers.
We believe that digitalization will increase
subscriber usage. Our experience has been that the average new
digital customer uses his or her cellular telephone more than
the average analog customer and that analog customers that
migrate to digital service tend to increase their usage upon
migration.
Digital postpaid subscribers increased from
27,410 at December 31, 1998 to 337,428 at December 31,
2001. At December 31, 2001, only 66,647 postpaid
subscribers were analog customers, the vast majority of
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which were rural postpaid terminals. At
December 31, 2001, we had 511,618 digital prepay
subscribers, representing approximately 35% of the total prepay
customer base. We expect that the percentage of our prepay
customers who use digital service will increase with our
existing handset purchase and sale policy and our continued
migration of prepay customers to digital service.
Derived from our December 2001 commercial launch
of PCS services in Monterrey and Tijuana, we began to provide
tri-mode handsets (which combine digital PCS, digital cellular
and analog cellular modes) and single-mode digital PCS handsets
to all our new customers in Regions 1 and 4. Tri-mode
handsets are substantially more expensive than dual-mode
handsets, although the prices for all types of handsets have
declined over time. As a result, we expect that the subsidies we
provide for handsets will be higher than they otherwise would be
if we were only to provide dual-mode handsets in our cellular
regions and single-mode digital PCS handsets in our PCS regions.
Tower
Monetization
In December 1999, we entered into a series of
agreements with a Mexican affiliate of American Tower
Corporation, which we refer to as MATC Celular. These
agreements, among other things, give MATC Celular the right to
acquire approximately 330 of our existing non-strategic towers.
In 2001, we closed the sale of approximately 244 of these
non-strategic towers to MATC Celular, receiving in excess of
U.S.$34 million in net gains. On May 2002, we closed the
sale of 25 additional non-strategic towers receiving
approximately U.S.$4.2 million in net gains. We expect to
sell up to an additional 61 non-strategic towers to MATC Celular
during the remaining 2002. Iusacell is leasing back these towers
from MATC Celular and subleasing them to its operating
subsidiaries.
The difference between the sale price and book
value of the towers sold is being recorded as a reduction in
operating expense. In 2001, we recorded an expense reduction
under Mexican GAAP of Ps.215.9 million in connection with
our sale of 244 towers to MATC Celular. However, the leasing of
the towers from MATC Celular results in an increase in our
operating expenses, which we experienced in 2001. However, this
effect was partially offset by the reduction in interconnection
rate expenses registered in January 2001. Under U.S. GAAP,
the majority of the gain was deferred. See Note 23 to the
Consolidated Financial Statements for a further discussion.
Results of
Operations
The following table presents results of
operations data for the years ended December 31, 1999, 2000
and 2001.
Year Ended December 31,
1999
2000
2001
Ps.
Ps.
% Change
Ps.
% Change
(In millions of constant
December 31, 2001 pesos except percentages)
Total revenues
4,783.0
5,729.7
19.79
6,241.4
8.93
Cost of sales
1,528.5
1,820.1
19.08
1,910.4
4.97
Operating expenses
1,643.5
1,923.9
17.06
2,076.7
7.94
Depreciation and amortization
1,621.0
2,409.0
48.61
2,619.2
8.73
Operating loss
(10.0
)
(423.3
)
(4,133.00
)
(57.1
)
(86.51
)
Integral financing gain (loss)
(602.4
)
548.5
191.05
317.3
(42.15
)
Net (loss) profit
379.7
(1,122.5
)
(395.63
)
(500.0
)
(55.46
)
Year Ended December 31, 2001 Compared to
Year Ended December 31, 2000
Revenues
Total revenues consist of service revenues and
telephone equipment and other revenues. Our cellular service
revenues are principally derived from the provision of mobile
wireless telephone service (cellular and PCS) in Mexico and also
include revenues attributable to in-roaming and long distance
service revenue generated by our mobile wireless subscribers as
well as revenues from the provision of telecommunication
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services in Mexico other than wireless, including
long distance service revenue from non-mobile subscribers and
revenues from the provision of data transmission, fixed local
wireless and paging services. Our service revenues also include
all Bulletin B-10 inflation adjustments on all service revenue
line items, whether mobile wireless service revenues or other
service revenues. Telephone equipment and other revenues consist
primarily of revenues from sales of mobile telephone equipment
and accessories, as well as revenues attributable to out-roaming
and revenues from the sale of dark fiber optic cable. Revenues
attributable to out-roaming are passed through to the applicable
host operator.
The following table presents the source of our
revenues for the years ended December 31, 2000 and 2001:
Year Ended December 31,
2000
2001
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of
December 31, 2001, except percentages)
Service revenues
5,201.0
90.8
5,634.3
90.3
8.3
Telephone equipment and other revenues
528.7
9.2
607.1
9.7
14.8
Total revenues
5,729.7
100.0
6,241.4
100.0
8.9
The table below presents service revenues by
source for the years ended December 31, 2001 and 2000:
Year Ended December 31,
2000(1)
2001(1)
Ps.
%
Ps.
%
(In millions of constant pesos as of
December 31, 2001, except percentages)
Airtime(2)
2,533.4
48.7
2,840.8
50.4
Monthly fees
1,710.7
32.9
1,743.0
31.0
Long distance
532.2
10.2
649.4
11.5
Value-added services and in-roaming(3)
424.7
8.2
401.1
7.1
Total service revenues
5,201.0
100.0
5,634.3
100.0
(1)
Figures include intercompany eliminations.
(2)
Airtime includes amounts billed to other carriers
    for incoming minutes under CPP, additional outgoing postpaid
    minutes to those included in the package contracted and prepaid
    outgoing minutes net of unsuitable minutes. Incoming and
    outgoing airtime is charged on a per-minute basis for both peak
    (Monday to Friday, 8:00 a.m. to 10:00 p.m.) and
    non-peak airtime.
(3)
Includes fees for value-added services, such as
    call waiting, call transfer, emergency service, secretarial
    service and three-way calling, and revenues from premiums for
    surety bonds, insurance-related charges payable by subscribers,
    rural and public telephony and Iusacell's cellular
    magazines as well as in-roaming service revenue. Does not
    include charges for related airtime. Customers using value-added
    services such as news, weather, sports and entertainment reports
    are charged only for airtime. These revenues are therefore
    included in airtime.
We had 1,855,166 and 1,681,219 mobile wireless
subscribers at December 31, 2001 and 2000, respectively.
Prepay subscribers increased 17.2% from 1,238,625
subscribers or 73.7% of total subscribers, at December 31,
2000 to 1,451,091 or 78.2% of total subscribers, at
December 31, 2001. This figure includes 98,470 prepay
subscribers in Region 8 in southern Mexico as a result of
our acquisition of Portatel which represent 6.8% of the total
prepay subscriber base at December 2001. "Incoming calls
only" prepay customers, the substantially majority of whom
generate little traffic, grew by 179.3% from 275,001 at
December 31, 2000 to 768,076 at December 31, 2001.
Revenues from these customers do not have certain costs
associated with them which we incur in connection with postpaid
customers, such as commissions on sales, advertising or bad debt
expenses. Digital prepay customers grew by 270.9% from 137,943
at December 31, 2000 to 511,618 at
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December 31, 2001. Long distance included
(LDI) prepay customers grew by 88.9% from 416,442 at
December 31, 2000 to 786,477 at December 31, 2001. A
prepay customer is included as a customer if the customer's
telephone number remains activated at the end of the reporting
period. In the third quarter 2001, we reduced the initial period
for using up an activated prepay card from 185 days to
60 days effective July 1, 2001 and began to turn over
"incoming calls only" prepay customers who had reached
the 305-day limit without activating a new card or otherwise
recharging the airtime in their accounts.
Postpaid subscribers decreased 8.7% from 442,594
subscribers or 26.3% of total subscribers at December 31,
2000 to 404,075 or 21.8% of total subscribers at
December 31, 2001. This figure includes 15,112 postpaid
subscribers in Region 8 in southern Mexico. Without including
the Region 8 postpaid subscribers as of December 2001, the
decline would have been 12.1% from period to period. Digital
postpaid subscribers decreased by 11.6% from 381,696 at
December 31, 2000 to 337,428 at December 31, 2001. LDI
postpaid customers decreased by 19.1% from 89,363 at
December 31, 2000 to 72,323 at December 31, 2001. The
December 31, 2001 postpaid subscriber data includes
approximately 37,972 public telephony numbers who are considered
as postpaid customers since January 1, 2000.
Total service revenues increased by 8.3% to
Ps.5,634.3 million (U.S.$615.4 million) in 2001 from
Ps.5,201.0 million (U.S.$568.0 million) in 2000 and
represented 90.3% and 90.8% of total revenues in 2001 and 2000
respectively. Revenues increased primarily as a result of total
subscriber growth, greater usage as a result of the
digitalization of the postpaid subscriber base and traffic
growth.
Monthly fees from postpaid subscribers grew by
1.9% from Ps.1,710.7 million (U.S.$186.8 million) in
2000 to Ps.1,743.0 million (U.S.$190.4 million) in
2001. Monthly fees increased notwithstanding an increase in the
number of lower-end subscribers in 2001. Airtime revenues
increased 12.1% from Ps.2,533.4 million
(U.S.$276.7 million) in 2000 to Ps.2,840.8 million
(U.S.$310.3 million) in 2001, primarily as a result of
traffic growth related to calling party pays and greater usage
by postpaid subscribers. Long distance cellular revenue
increased by 22.0% to Ps.649.4 million
(U.S.$70.9 million) in 2001 from Ps.532.2 million
(U.S.$58.1 million) in 2000. This growth is the result of
higher usage by the subscriber base.
Average monthly MOU's for all subscribers
for 2001 (excluding "incoming calls only" prepay
customers) were 117, an increase of 24.5% as compared to the
average monthly MOU's of 94 in 2000. MOU's among
postpaid customers increased by 1.6% from 246 in 2000 to 250 in
2001. MOU's among prepay customers also increased by 40.6%
from 32 in 2000 to 45 in 2001. This increase in MOU's was
driven by traffic growth and greater usage by the total prepay
subscriber base and the reduction of the period to utilize the
prepay card from 180 days to 60 days.
Nominal average monthly cellular revenue per
subscriber for all subscribers (excluding "incoming calls
only" prepay customers) increased 14.9% to Ps.370
(U.S.$40.4) in 2001 from Ps.322 (U.S.$35.2) in 2000. The
increase was driven mainly by higher usage by the subscriber
base, traffic growth and the reduction of the period to utilize
the prepay card from 180 days to 60 days.
Postpaid subscriber churn increased to an average
monthly level of 3.8% in 2001 from 3.5% in 2000. We have taken
strict collection procedures to reduce the bad debt expense and
have implemented new activation policies and retention programs.
Telephone
Equipment and Other.
Telephone
equipment and other revenues increased 14.8% to
Ps.607.1 million (U.S.$66.3 million) in 2001 from
Ps.528.7 million (U.S.$57.7 million) in 2000. The
14.8% increase in revenues comes mainly from out roaming fees.
Cost
of sales
Our cost of sales includes cost of services, cost
of telephone equipment and other costs. Total cost of sales
increased 5.0% to Ps.1,910.4 million
(U.S.$208.7 million) in 2001 from Ps.1,820.1 million
(U.S.$198.8 million) in 2000. As a percentage of total
revenues, cost of sales decreased to 30.6% in 2001 from 31.8% in
2000.
Cost of Services.
Cost of services includes taxes and
fees on revenues payable to the Mexican government,
interconnection costs, technical costs such as maintenance,
repair costs, lease expenses, salaries of technical personnel
and utilities on a pro-rata basis. As a percentage of total
revenues, cost of services
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decreased to 24.6% in 2001 from 25.6% in 2000.
Cost of services increased 4.7% to Ps.1,532.4 million
(U.S.$167.4 million) in 2001 from Ps.1,464.1 million
(U.S.$159.9 million) in 2000. The increase was primarily
driven by the higher access costs paid to other carriers due to
increased mobile-to-mobile CPP traffic as well as lease costs
following the sale of certain transmission towers in 2001. See
Item 5 "Operating and Financial Review and
Prospects — Operating Results — Tower
Sales". Partially offsetting those items were the reduction
of interconnection rates in January 2001, the more efficient use
of our fiber network and the one-time adjustment in provisions
of gross cellular airtime revenues payable to the Mexican
government.
Cost of Telephone Equipment and Other.
Cost of telephone equipment and other
includes that portion of handset and accessory costs that are
not capitalized, handset and accessory inventory obsolescence
charges and the cost of dark fiber optic cable sold. Cost and
telephone equipment and other increased 6.2% to
Ps.378.1 million (U.S.$41.3 million) in 2001 from
Ps.356.0 million (U.S.$38.9 million) in 2000 primarily
due to the three-month consolidation of Portatel, partial
subsidization of telephones sold to prepay customers and an
increase in accessory obsolescence charges. As a percentage of
the telephone equipment and other revenues, the cost of
telephone equipment and other decreased to 62.3% in 2001 from
67.3% in 2000. The cost of a cellular handset given to a
postpaid customer is amortized over 12 months, the average
length of our cellular contract, instead of being immediately
expensed in the period in which the customer received the
telephone.
Operating
expenses
Operating expenses increased 7.9% to
Ps.2,076.7 million (U.S.$226.8 million) in 2001 from
Ps.1,923.9 million (U.S.$210.1 million) in 2000. As a
percentage of total revenues, operating expenses slightly
decreased from 33.6% in 2000 to 33.3% in 2001. As a percentage
of total revenues, sales and advertising expenses decreased to
24.0% in 2001 from 24.6% in 2000. In peso terms, sales and
advertising expenses increased 6.2%, to Ps.1,497.2 million
(U.S.$163.5 million) from Ps.1,410.0 million
(U.S.$154.0 million) in 2000, primarily because of higher
television advertising rates as well as expenses incurred in
association with the consolidation of Region 8 cellular
service into our business. General and administrative expenses
increased 12.8% to Ps.579.5 million
(U.S.$63.3 million) in 2001, from Ps.514.0 million
(U.S.$56.1 million) in 2000, due to lower capitalization of
engineering expenses, higher consulting and vendor fees as well
as charges associated with the consolidation of Portatel, the
provider of cellular service in Region 8 which we acquired.
As a percentage of total revenues, general and administrative
expenses increased slightly to 9.3% in 2001 from 9.0% in 2000.
Other
income
We had other income of Ps.307.9 million
(U.S.$33.6 million) in 2001 mainly as a result of the sale
of 244 towers to MATC Celular. The same towers were immediately
leased back from MATC Celular by our subsidiary Iusacell
Arrendadora, S.A de C.V. See Item 5, "Operating
and Financial Review and Prospects — Operating
Results — Tower Monetization".
Depreciation
and amortization
In 2001, management completed a review of its
depreciation and amortization policies related to certain analog
and digital network equipment and postpaid handsets. The aim of
the study was to align the estimated remaining useful lives of
those assets with current international benchmarks. As a result
of the review, a change in the weighted estimated useful life of
the network assets was made. The weighted average useful life
for the network equipment was extended to 10 years,
compared to the 8.7 years previously used. With regard to
the amortization of postpaid handset costs, we shortened the
average amortization period from 18 months to
12 months. Depreciation and amortization expenses increased
8.7% to Ps.2,619.2 million (U.S.$286.1 million) in
2001, from Ps.2,409.0 million (U.S.$263.1 million) in
2000 due primarily to the higher postpaid handset amortization
expense in 2001.
Operating
loss
We reported an operating loss of
Ps.57.1 million (U.S.$6.2 million) in our Consolidated
Financial Statements in 2001, compared to an operating loss of
Ps.423.3 million (U.S.$46.2 million) in 2000. The lower
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operating loss was attributable to the benefit
resulting from the sale of our towers. Without considering this
benefit, our operating loss for 2001 would be
Ps.364.9 million (U.S.$39.8 million).
Integral
financing results
We recorded an integral financing cost of
Ps.317.3 million (U.S.$34.7 million) in 2001 compared
to an integral financing cost of Ps.548.5 million
(U.S.$59.9 million) in 2000. The lower cost was
attributable to several factors. Net interest expense decreased
by 17.7% from Ps.982.5 million (U.S.$107.3 million) in
2000 to Ps.808.7 million (U.S.$88.3 million) in 2001
as a result of lower interest rates and a stronger peso which
appreciated by 4.8% against the U.S. dollar from December 2000
to December 2001. Also due to this appreciation of the peso, we
recorded a foreign exchange gain of Ps.224.8 million
(U.S.$24.6 million) in 2001 compared to a foreign exchange
loss of Ps.16.8 million (U.S.$1.8 million) in 2000. We
also posted a lower gain in monetary position of
Ps.266.6 million (U.S.$29.1 million) in 2001 compared
to a gain of Ps.450.7 million (U.S.$49.2 million) in
2000 due to the effect of our net peso liability position of the
lower period-over-period inflation rate of 4.4% in 2001 compared
to 8.9% in 2000.
Net
loss
As a result of the factors described above, our
net loss was Ps.500.0 million (U.S.$54.6 million) in
2001 compared to a net loss of Ps.1,122.5 million
(U.S.$122.6 million) in 2000.
Year Ended
December 31, 2000 Compared to Year Ended December 31,
1999
Revenues
The following table presents the source of our
revenues for the years ended December 31, 1999 and 2000.
Year Ended December 31,
1999
2000
Change
Ps.
%
Ps.
%
%
(In millions of constant pesos as of
December 31, 2001, except percentages)
Service revenues
4,285.9
89.6
5,201.0
90.8
21.4
Telephone equipment and other revenues
497.1
10.4
528.7
9.2
6.4
Total revenues
4,783.0
100.0
5,729.7
100.0
19.8
The table below presents service revenues by
source for the years ended December 31, 1999 and 2000.
1999
(1)
2000
(1)
Ps.
%
Ps.
%
(In millions of constant pesos as of
December 31, 2001, except percentages)
Airtime
(2)
1,720.9
40.2
2,533.4
48.7
Monthly fees
1,606.8
37.5
1,710.7
32.9
Long distance
554.3
12.9
532.2
10.2
Value-added services and in-roaming
(3)
403.9
9.4
424.7
8.2
Total service revenues
4,285.9
100.0
5,201.0
100.0
(1)
Figures reflect intercompany eliminations.
(2)
Airtime includes amounts billed to other carriers
    for incoming minutes under CPP starting May 1, 1999.
    Incoming and outgoing airtime is charged on a per-minute basis
    for both peak (Monday to Friday, 8:00 a.m. to
    10:00 p.m.) and non-peak airtime.
(3)
Includes fees for value-added services, such as
    call waiting, call transfer, emergency service, secretarial
    service and three-way calling, and revenues from premiums for
    surety bonds, insurance-related charges payable by subscribers,
    rural and public telephony and Iusacell's cellular
    magazine. Does not include charges for related airtime.
    Customers using value-added services such as news, weather,
    sports and entertainment reports are charged only for airtime.
    These revenues are therefore included in airtime.
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Postpaid subscribers increased by 25.6% from
352,289 subscribers, or 26.6% of total subscribers, at
December 31, 1999, to 442,594 subscribers, or 26.3% of
total subscribers, at December 31, 2000. Digital postpaid
customers grew by 73.6% from 219,829 at December 31, 1999
to 381,696 at December 31, 2000. LDI postpaid customers
grew by 402.7% from 17,776 at December 31, 1999 to 89,364
at December 31, 2000. The December 31, 2000 postpaid
subscriber data includes approximately 12,000 public telephony
customers who in the second quarter of 2001 were reclassified,
retroactively to January 1, 2000, as postpaid customers
rather than prepay customers.
Service revenues increased by 21.4% to
Ps.5,201.0 million (U.S.$568.0 million) in 2000 from
Ps.4,285.9 million (U.S.$468.1 million) in 1999 and
represented 90.8% and 89.6% of total revenues in 2000 and 1999,
respectively. Revenues increased primarily as a result of
subscriber growth, greater usage as a result of the
digitalization of the postpaid subscriber base and traffic
growth related to calling party pays (which resulted in a
significant increase in incoming calls and contributed to the
growth in prepay subscribers). This increase was offset in part
by the decline in nominal average monthly cellular revenue per
subscriber and long distance cellular revenues described below.
Monthly fees from postpaid customers increased
6.5% during 2000, Ps.1,710.7 million
(U.S.$186.8 million) as compared to Ps.1,606.8 million
(U.S.$175.5 million) in 1999. This was primarily a result
of a migration of postpaid customers from higher to lower
monthly fixed charge products, offset by the increase in the
postpaid subscriber base. Airtime revenues increased 47.2% from
Ps.1,720.9 million (U.S.$188.0 million) in 1999 to
Ps.2,533.4 million (U.S.$276.7 million) in 2000, primarily
as a result of subscriber growth, traffic growth related to
calling party pays and greater usage generated by the
digitalization of the postpaid subscriber base. Long distance
service revenues decreased 4.0% from Ps.554.3 million
(U.S.$60.5 million) in 1999 to Ps.532.2 million
(U.S.$58.1 million) in 2000. We believe this decline was
due to the increase in the postpaid and prepay LDI customer
base, which replaces per-minute long distance charges that are
allocated to long distance service revenues with higher
per-minute airtime charges that are not allocated to long
distance service revenues.
In the second quarter of 2000, in order to
conform to standards applied by other Verizon International
affiliates, we changed our methodology in calculating average
monthly MOUs and nominal ARPU to (i) include minutes of use
from incoming calls to postpaid customers, and (ii) exclude
revenues generated from the sale of handsets and accessories to
postpaid customers. The MOU and ARPU data presented below for
2000 and 1999 have been calculated using this new methodology.
Average monthly MOUs for all subscribers for 2000
(excluding "incoming calls only" prepay customers)
were 94, an increase of 3.2% as compared to the average monthly
MOUs of 91 in 1999. MOUs among postpaid customers increased
17.7% from 209 MOUs in 1999 to 246 MOUs in 2000. MOUs among
prepay customers increased 18.5% to 32 in 2000 from 27 in 1999.
This increase in MOUs was driven by the traffic growth related
to CPP and by the continuing digitalization of the customer base.
Nominal average monthly revenue per subscriber
for all subscribers (excluding "incoming calls only"
prepay customers) decreased 3.9% from Ps.335 (U.S.$36.6) in 1999
to Ps.322 (U.S.$35.2) in 2000. This blended decline, primarily
due to the increase in the percentage of prepay customers
(excluding "incoming calls only" customers), masks a
5.0% increase in postpaid customer nominal ARPU and a 7.5%
increase in prepay customer nominal ARPU.
Postpaid subscriber churn increased to an average
monthly level of 3.51% in 2000 from 2.96% in 1999. We believe
that this increase in churn was related to inadequate credit and
collection procedures at the time of activation. We have taken
steps to correct this situation.
Telephone Equipment and
Other.
Telephone equipment and other
revenues increased by 6.4% from Ps.497.1 million
(U.S$54.3 million) in 1999 to Ps.528.7 million
(U.S.$57.7 million) in 2000. The 71.1% increase in revenues
attributable to out-roaming fees, from Ps.199.7 million
(U.S.$21.8 million) in 1999 to Ps.341.7 million
(U.S.$37.3 million) in 2000, more than offset (i) the 12.6%
decline in handset revenues, from Ps.125.6 million
(U.S.$13.7 million) in 1999 to Ps.109.8 million
(U.S.$12.0 million) in 2000 and (ii) the absence of
revenues from the sale of dark fiber optic cable in 2000, which
in 1999 represented Ps.68.7 million (U.S.$7.5 million)
in revenues.
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Cost
of Sales
Total cost of sales increased 19.1% to
Ps.1,820.1 million (U.S.$198.8 million) in 2000 from
Ps.1,528.5 million (U.S.$166.9 million) in 1999. As a
percentage of total revenues, cost of sales decreased to 31.8%
in 2000 from 32.0% in 1999.
Cost of services.
Cost of services increased 19.8% to
Ps.1,464.1 million (U.S.$159.9 million) in 2000 from
Ps.1,221.9 million (U.S.$133.5 million) in 1999. This
increase was mainly due to the 21.4% increase in service
revenues, which resulted in higher overall (i) taxes and
fees payable to the Mexican government and (ii) Telmex
interconnection fees. As a percentage of service revenues, cost
of services decreased slightly from 28.5% in 1999 to 28.2% in
2000.
Cost of telephone equipment.
Cost of telephone equipment and other
increased by 16.1% to Ps.356.0 million
(U.S.$38.9 million) in 2000 from Ps.306.6 million
(U.S.$33.5 million) in 1999 primarily due to the expensed
partial subsidization of telephones sold to prepay customers and
an increase in handset inventory obsolescence charges. As a
percentage of telephone equipment and other revenues, the cost
of telephone equipment and other increased to 67.3% in 2000 from
61.7% in 1999. The cost of a cellular handset given to a
postpaid customer was amortized over 18 months, the average
maturity of our cellular contract in these periods.
Operating
Expenses
Operating expenses increased 17.1% to
Ps.1,923.9 million (U.S.$210.1 million) in 2000 from
Ps.1,643.5 million (U.S.$179.5 million) in 1999. As a
percentage of total revenues, operating expenses decreased to
33.6% in 2000 from 34.4% in 1999. Sales and advertising expenses
increased 34.4% from Ps.1,048.7 million
(U.S.$114.5 million) in 1999 to Ps.1,409.9 million
(U.S.$154.0 million) in 2000, primarily because of
increased commissions to distributors resulting from higher
sales and revenue-related increases in advertising. General and
administrative expenses decreased by 13.5% from
Ps.594.9 million (U.S.$65.0 million) in 1999 to
Ps.514.0 million (U.S.$56.1 million) in 2000 mainly due to
cost containment programs and higher productivity.
Depreciation
and Amortization
Depreciation and amortization expenses increased
by 48.6% to Ps.2,409.0 million (U.S.$263.1 million) in 2000
from Ps.1,621.0 million (U.S.$177.0 million) in 1999. This
increase was primarily due to the completion in late 1999 of the
deployment of the new Lucent Technologies analog and digital
network and the additional investments made in 1999 and 2000 to
satisfy the capacity and coverage requirements for continued
growth and quality standards. In addition, in the fourth quarter
of 1999, we completed the implementation of our new LHS cellular
billing system and we capitalized all associated costs. The
continued digitalization of the postpaid subscriber base
resulted in greater amortization expenses driven mainly by
increased purchases of more expensive digital handsets.
Operating
Loss
We recorded an operating loss of
Ps.423.3 million (U.S.$46.2 million) in 2000 as
compared to an operating loss of Ps.10.1 million
(U.S.$1.1 million) in 1999.
Integral
Financing Results
We recorded an integral financing cost of
Ps.548.5 million (U.S.$59.9 million) in 2000 compared to an
integral financing gain of Ps.602.4 million
(U.S.$65.8 million) in 1999. This change was primarily the
result of higher net interest expense due to the issuance by
Iusacell in December 1999 of U.S.$350.0 million in
14 1/4% senior notes due in 2006. Net interest expense
increased to Ps.982.5 million (U.S.$107.3 million) in
2000 from Ps.331.5 million (U.S.$36.2 million) in 1999. In
addition, as a result of the slight peso devaluation in 2000 as
compared to the peso appreciation against the U.S. dollar in
1999, we recorded a foreign exchange loss of
Ps.16.8 million (U.S.$1.7 million) in 2000 as compared
to a foreign exchange gain of Ps.180.9 million
(U.S.$19.8 million) in 1999. We also experienced a decrease
in gain in monetary position from Ps.752.9 million
(U.S.$82.2 million) in 1999 to Ps.450.7 million
(U.S.$49.2 million) in 2000 due to the effect
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on our net peso liability position of a lower
period-over-period inflation as measured by changes in the INPC,
12.3% in 1999 as compared to 8.9% in 2000.
Net
Income
As a result of the factors described above, our
net loss was Ps.1,122.5 million (U.S.$122.6 million) in
2000 compared to a net income of Ps.379.7 million
(U.S.$41.5 million) in 1999.
Income Tax,
Asset Tax and Employees' Profit Sharing
Beginning January 1, 1999, as a result of
Mexican income tax law amendments, we must limit our tax
consolidation to 60% of all our subsidiaries, except for five
entities (Iusatel, S.A. de C.V., Iusatelecomunicaciones, S.A. de
C.V., Infotelecom, S.A. de C.V., Iusacell PCS, S.A. de C.V. and
Punto-a-Punto Iusacell, S.A. de C.V.) which are not included in
our consolidated tax return (although they are consolidated for
financial reporting purposes), because we do not hold at least
51% of the voting shares of such subsidiaries. We filed an
injunctive action (amparo) against the new income tax law
amendments on the basis that the law is unconstitutional. This
injunctive action was rejected on technical grounds and we are
not allowed to file another motion on the same grounds.
In December 2000, the Mexican Treasury Department
(
Secretaría de Hacienda y Crédito Público
)
ruled that we could prepare consolidated tax returns for
ourselves and the subsidiaries in which we hold a majority of
voting shares and thereby apply our net operating loss
carryforwards against our and such subsidiaries' profits.
In April 2001, the Mexican Treasury Department ruled that
Iusacell Celular's net operating loss carryforwards would
be transferred to Iusacell, so that Iusacell could apply such
net operating loss carryforwards against its and its
majority-owned subsidiaries' tax result.
Iusacell and its subsidiaries pay an alternative
net asset tax, which is levied on the average value of
substantially all assets less certain liabilities. This tax,
which is 1.8% of the taxable base, is required to be paid if the
amount of the asset tax exceeds the computed income tax
liability. We provided for Ps.150.9 million
(U.S.$16.5 million), Ps.156.3 million
(U.S.$17.1 million) and Ps.146.4 million
(U.S.$16.0 million) as asset tax for 1999, 2000 and 2001.
These taxes may be applied in subsequent years against income
tax payments, to the extent income tax liabilities for such
years exceed the net asset tax calculation. Due to net losses,
we paid no income taxes in 2001 and paid the asset taxes
specified above. In 2000, as a result of the new tax
consolidation rules, we paid Ps.82.4 million
(U.S.$9.0 million) in income taxes as well as the asset tax
specified above, even though Iusacell recorded a net loss on a
fully consolidated basis. See Note 12 to the Consolidated
Financial Statements for a discussion of our carryforward tax
losses.
While we have no employees at the holding company
level, our subsidiaries are required under Mexican law to pay
their employees, in addition to their required compensation and
benefits, profit sharing in an aggregate amount equal to 10% of
the taxable income of the relevant subsidiary (calculated
without reference to inflation adjustments or amortization of
tax loss carryforwards). There was no statutory profit sharing
in any periods presented.
New Mexican
Accounting Pronouncements
In November 2001, the MIPA issued the revised
Bulletin C-9, "Liabilities, Provisions, Contingent Assets
and Liabilities and Commitments" (Bulletin C-9), which
establishes a methodology for valuation, presentation and
disclosure of liabilities and provisions, as well as for
valuation and disclosure of contingent assets and liabilities,
and for disclosure for commitments. The revised
Bulletin C-9 states that (i) all contingent assets
that have a practical true realization must be accounted and
disclosed in the financial statements; (ii) contingent
assets that have a probable realization cannot be accounted for
in the financial statements, but must be disclosed; and
(iii) contingent assets that do not have a probable
realization and cannot be accounted for in the financial
statements are not required to be disclosed. Bulletin C-9
requires disclosure of committed amounts when it represents
significant fixed assets additions. The provisions of
Bulletin C-9 are required to be applied beginning on
January 1, 2003, although early adoption is recommended.
In addition, in December 2001, the MIPA issued
revised Bulletin C-8, "Intangible Assets"
(Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a
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future economic benefit. Revised
Bulletin C-8 states that pre-operating costs should be
expensed as a period cost, unless they could be classified as
development costs. Bulletin C-8 requires that intangible
assets with finite useful lives should be amortized over its
useful life. The provisions of Bulletin C-8 are required to
be applied beginning on January 1, 2003, although early
adoption is recommended.
U.S. GAAP
Reconciliation
The principal differences between Mexican GAAP
and U.S. GAAP as they relate to Iusacell are the adjustment for
the effects of inflation, minority interest, purchase
accounting, deferred income taxes, capitalization of
pre-operating costs, derivative financial instruments,
provisions for consolidation of facilities and accounting for
non-monetary exchanges, and sale-leaseback transactions. See
Note 23 to the Consolidated Financial Statements for a
reconciliation to U.S. GAAP of stockholders' equity and net
profit (loss) for the respective periods presented.
New U.S.
Accounting Pronouncements
In July 2001, the FASB issued FAS No. 141,
"Business Combinations," which supercedes APB
No. 16, "Business Combinations" and amends or
supercedes a number of related interpretations of APB
No. 16. The Statement is effective for all business
combinations initiated after June 30, 2001 and for all
business combinations accounted for by the purchase method that
are completed after June 30, 2001. FAS No. 141
addresses financial accounting and reporting for business
combinations, eliminates the pooling-of-interests method of
accounting for business combinations, and prescribes the initial
recognition and measurement of goodwill and other intangible
assets, accounting for negative goodwill and the required
disclosures in respect of business combinations. The Company
applied SFAS 141 to the Portatel acquisition and
SFAS 142 to the intangible assets acquired therein.
In July 2001, the FASB also issued FAS
No. 142, "Goodwill and Other Intangible Assets",
which supercedes APB No. 17, "Intangible Assets."
The Statement is effective for fiscal years beginning after
December 15, 2001 and may not be retroactively applied to
financial statements of prior periods. FAS No. 142 requires
that goodwill, including previously existing goodwill and
intangible assets with indefinite useful lives not be amortized
but should be tested for impairment annually, or more frequently
if impairment indicators arise. Goodwill and intangible assets
with indefinite useful lives will no longer be tested for
impairment under FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." The Company expects that due to the adoption
of SFAS 141 and 142, amortization of approximately
Ps.169,833, corresponding to all of the Company's goodwill
at December 31, 2001, will not be recorded during 2002,
which previously would have been.
The Financial Accounting Standards Board
("FASB") recently issued SFAS 143,
"Accounting for Obligations Associated with the Retirement
of Long-Lived Assets", which is effective for fiscal years
beginning after June 15, 2002. The objectives of
SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation
and its associated asset retirement cost.
In 2001, the FASB issued SFAS 144,
"Accounting for the Impairment of Long-Lived Assets",
which supersedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of", and APB 30, "Reporting the Results
of Operations-Reporting the Effects of Disposal of a Segment of
a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions". SFAS 144 provides
new guidance on (1) the recognition of impairment losses on
long-lived assets to be held and used or to be disposed of and
(2) how the results of a discontinued operation are to be
measured and presented. It also broadens the definition of what
constitutes a discontinued operation. It is effective for fiscal
years beginning after December 15, 2001.
In April of 2002, the FASB issued SFAS 145,
"Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections." As a result, companies will no longer be
allowed to classify gains and losses from extinguishments of
debt as extraordinary items unless they meet the criteria of
APB 30. Gain and losses from extinguishments of debt that
have been classified as extraordinary in prior years that do not
meet the criteria of APB 30 shall be reclassified on a go
forward basis. In addition, SFAS 145 requires that capital
leases that are modified so that the resulting lease agreement
is classified as an
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operating lease be accounted for under the
sale-leaseback provisions of SFAS 28 or 98, as applicable,
instead of SFAS 13. The provisions of this statement with
regard to SFAS 4 will be effective for fiscal years
beginning after May 15, 2002, and those for SFAS 13
will be effective for transactions occurring after May 15,
2002.
We are currently evaluating the adoption of SFAS
143, 144 and 145 will have on our results of operations and
financial position.
Critical
Accounting Policies
We have identified certain key accounting
policies on which our consolidated financial condition and
results of operations are dependent. These key accounting
policies most often involve complex matters or are based on
subjective judgments or decisions. In the opinion of our
management, our most critical accounting policies under both
Mexican GAAP and U.S. GAAP are those related to the accounting
for revenue recognition, allowance for doubtful accounts, the
evaluation of long-lived assets, depreciation and amortization
and deferred taxes. For a full description of all of our
accounting policies, see Notes 4 and 23 to the Consolidated
Financial Statements included in this Annual Report.
Revenue
recognition
The recognition of revenue from the sale of
prepay cards to mobile wireless customers requires a certain
degree of management estimates. For periods presented we
recognized revenue at the date of the sale, rather than on a
deferred basis, because the length of the average consumption
period for such prepay cards is approximately one to one and
one-half months, which we believe is not a significant period
and is not material to our results of operations. We estimate
the average consumption period taking into consideration the
date cards are shipped to distributors and vendors to when the
minutes are registered in our systems. In 2002, based on more
precise methods of monitoring card usage, we modified our
revenue recognition methodology.
Allowance
for doubtful accounts
The allowance for doubtful accounts represents
our estimate of the probable loss inherent in all accounts
receivable. We consider a number of factors in determining the
proper level of the allowance including historical collection
experience, current economic trends, the aging of the accounts
receivable portfolio and changes in the credit-worthiness of our
customers. Systems to detect fraudulent call activity are in
place within our network, but if these systems fail to identify
such activity, we may realize a higher degree of uncollectible
accounts. While we believe that our estimates are reasonable,
changes in our customers trends or any of the above mentioned
factors could materially affect our bad debt expense.
Evaluation
of long-lived assets
We have recognized on our balance sheets certain
long-lived assets and capitalized costs including goodwill,
property, plant and equipment, pre-operating expenses and Telmex
special projects. These assets are assigned useful lives which
impact annual depreciation and amortization expense, the
assignment of which involves significant judgments and
estimates. These long-lived assets are evaluated for impairment
on a periodic basis and we recognize an impairment to the extent
we believe that the carrying value is no longer recoverable from
future cash flows. Factors we take into consideration include
the future cash flows to be generated by the assets and the
possible impact that inflation may have in our ability to
generate cash flow since, with inflation accounting, the
carrying value is restated by inflation prior to an impairment
analysis. Key assumptions we evaluate include inflation,
currency fluctuations and future revenue growth. If our
assumptions are not correct, we would have to recognize a
write-off or accelerated amortization of the carrying value of
these assets.
Depreciation
and amortization
We depreciate property, plant and equipment and
amortize goodwill and other intangible assets using
straight-line methods over the period of time we estimate we
will benefit from each asset. For US GAAP purposes, we do not
amortize goodwill related to Portatel and beginning January 2002
we no longer amortize goodwill of indefinite-lived intangible
assets, but instead evaluate them for impairment.
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The cost of mobile wireless telephones given to
customers under exclusive service contracts is amortized on a
straight-line basis. During 2001, we reduced the amortization
period of mobile wireless telephones from an average of
18 months to 12 months. The term of service contracts
varies on a customer by customer basis. Due to the
cost-ineffectiveness of tracking phones on an individual
contract basis for amortization purposes, we estimate the
average term of our contracts based on current trends.
Deferred
taxes
We have recorded a net deferred tax asset mainly
reflecting the benefit of tax loss carryforwards, which expire
in varying amounts in the future. Realization is dependent on
generating sufficient taxable income prior to expiration of the
loss carryforwards. Although realization is not assured,
management believes it is more likely than not that a portion of
the net deferred tax asset will be realized based on our
business plan estimate of future taxable income over the next
five years in an amount sufficient to utilize the net deferred
tax losses recorded. Although we feel we will use our loss
carryforwards, given the fact that we've experienced
significant losses, a valuation allowance for a majority of the
asset has been recognized.
Our estimate of future taxable income is based
primarily on and supported by (i) the significant
improvement in operating performance through 2001, as evidenced
by the success of the implementation of the Verizon wireless
business model which has produced strong subscriber annual
compound growth of 50% through 2001, improved revenues mainly
driven by subscriber growth and lower network and operating
costs, (ii) Vodafone's strong experience and success
in the prepaid market, (iii) additional increases in
revenues generated by the CPP feature with an important taxable
operating margin, (iv) the change in Mexican income tax law
to increase the useful lives for network equipment from
3.3 years to 12.5 years, representing an important
decrease in depreciation expense for income tax purposes and
(v) an increase in 2002 of the potential effects of
additional cost cutting. We will continue to evaluate our
deferred tax asset every year.
B.     Liquidity and
Capital Resources
As part of the equity recapitalization and
restructuring of Iusacell completed in August 1999, Iusacell
acquired 99.5% of the capital stock of Iusacell Celular. Prior
to that time, Iusacell had nominal assets and no operations,
indebtedness or liabilities. As a result of a second exchange
offer launched in the United States by Iusacell for the
remaining Iusacell Celular ADSs and completed on
February 29, 2000, Iusacell held 99.9% of the capital stock
of Iusacell Celular. On March 30, 2001, Iusacell
Celular's shareholders approved a 30,000 to 1 reverse stock
split, which became effective in May 2001. As a result of such
transactions, Iusacell now holds 100% of the capital stock of
Iusacell Celular.
General
Our liquidity requirements arise from cash used
in operating activities, purchases of network equipment,
interest and principal payments on outstanding indebtedness and
acquisitions of and strategic investments in businesses. We have
financed our growth to date through equity contributions from
our principal shareholders, public offerings and private
placements of debt and equity securities, bank debt and vendor
financing.
We believe that funds from operating activities,
vendor financing and proceeds from tower monetization
transactions will be sufficient to meet our debt service and
principal amortization requirements, working capital
requirements and capital expenditure needs for our existing
businesses through 2003, although we cannot provide any
assurance in this regard.
With respect to our new businesses, our strategic
plan is to substantially complete the build-out our PCS networks
and deploy non-network infrastructure in Regions 1 and 4 in
northern Mexico in order to provide PCS services in those
regions by the end of 2002. In addition, we expect to
significantly increase the quality and coverage of our newly
acquired cellular network in Region 8 in southern Mexico. Our
capital expenditure needs and working capital requirements to
develop these businesses will require a significant amount of
additional funding in the second half of 2002 and beyond. We are
seeking to obtain this financing from equipment vendors and
other sources. There can be no assurance that we will be able to
obtain any such financing.
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Our future operating performance and ability to
service and repay our indebtedness will be subject to future
economic and competitive conditions and to financial, business
and other factors, many of which are beyond our control.
Changes in
Financial Position
Historically, our cash generated from operating
activities has not been sufficient to meet our debt service,
working capital and capital expenditure requirements. We have
relied on the capital markets for new equity and debt financing,
vendor financing and borrowings and equity contributions for our
principal shareholders to meet such funding needs. For the year
ended December 31, 1999, our ratio of earnings to fixed
charges was 2.59:1.00. For the years ended December 31,
2000 and 2001, our earnings were insufficient to cover our fixed
charges by Ps.914.0 million (U.S.$99.8 million) and
Ps.279.6 million (U.S.$30.5 million), respectively.
Cash Flows From
Operating Activities
We generated positive cash flows from operating
activities in the years ended December 31, 2001 and
December 31, 2000. Net cash provided by operating
activities was Ps.2,059.3 million (U.S.$224.9 million)
for 2001 compared to Ps.1,488.7 million
(U.S.$162.6 million), for 2000. The increase in 2001
resulted mainly from a Ps.637.9 million
(U.S.$69.7 million) smaller loss from continuing operations
than in 2000, and an increase in depreciation and amortization
of Ps.210.2 million (U.S.$23.0 million), partially
offset by resources used in working capital of
Ps.231.8 million (U.S.$25.3 million). We also
generated positive cash flows from operating activities in the
year ended December 31, 1999, of Ps.1,305.3 million
(U.S.$142.6 million).
Cash
Flows from Financing Activities
For the year ended December 31, 2001, net
cash provided by financing activities amounted to
Ps. 375.5 million (U.S.$41.0 million) compared to
Ps. 777.9 million (U.S.$85.0 million) for the
year ended December 31, 2000. The decrease was mainly
attributable to an increase in the principal payments on
long-term debt of Ps. 1,930.7 million
(U.S.$210.9 million), a decrease in the amount of proceeds
received from effect of rights and primary offerings of
Ps. 1,604.1 million (U.S.$175.2 million),
partially offset by an increase in the proceeds received from
long-term debt of Ps. 2,342.7 million (U.S.$255.9
million) and an increase of Ps. 932.4 million
(U.S.$101.8 million) in capital stock. Net cash provided by
financing activities in 1999 was Ps. 4,178.7 million
(U.S.$456.4 million). The decrease in 2000 from 1999 was
mainly due to a decrease in the proceeds received from long-term
debt of Ps. 4,000.1 million (U.S.$436.9 million)
and capital stock from the capitalization of stockholders debt
of Ps. 446.8 million (U.S.$48.8 million) and an
increase in the principal payments on long-term debt of
Ps. 1,190.9 million (U.S.$130.1 million),
partially offset by an increase in the proceeds received from an
effect of rights and primary offerings of
Ps. 1,187.3 million (U.S.$129.7 million) and an
increase in the issuance of notes payable of
Ps. 852.8 million (U.S.$93.1 million).
Cash
Flows Used for Investing Activities
Net cash used in investing activities was
Ps. 2,706.4 million (U.S.$295.6 million) in 2001.
We purchased Ps. 3,205.7 million
(U.S.$350.1 million) of property, equipment and other
assets including the acquisition of Portatel. These purchases
were partially offset by the release of the escrow account
amounting to Ps. 495.3 million
(U.S.$54.1 million). Net cash used in investing activities
was Ps. 2,889.9 million (U.S.$315.6 million) in
2000 and was primarily attributable to purchases of
Ps. 3,397.3 million (U.S.$371.0 million) of
property, equipment and other assets including additional
capital contributions to associated companies, which were
partially offset by the release of the escrow account of
Ps. 507.4 million (U.S.$55.4 million).
Net cash used in investing activities in 1999 was
Ps. 4,499.6 million (U.S.$491.4 million). In
1999, we made investments in an aggregate amount of
Ps. 3,051.1 million (U.S.$333.2 million).
Substantially all of these expenditures were for the purchase of
property, equipment and other assets. In addition, in connection
with the issuance and sale of our senior notes due 2006, we
provided security for those notes in the form of a cash escrow
account in the amount of Ps. 1,442.5 million
(U.S.$157.5 million).
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Tax
Loss Carryforwards
We have recorded a net deferred tax asset of
Ps. 173.1 million (U.S.$18.9 million) mainly
reflecting the benefit of tax loss carryforwards, which expire
in varying amounts between 2005 and 2010. Realization is
dependent on generating sufficient taxable income prior to
expiration of the loss carryforwards. Although realization is
not assured, management believes it is more likely than not that
a portion of the net deferred tax asset at December 31,
2001 will be realized based on our business plan estimate of
future taxable income over the next five years in an amount
sufficient to utilize the net deferred tax losses recorded as of
December 31, 2001.
Our estimate of future taxable income is based
primarily on and supported by (i) the significant
improvement in operating performance through 2001, as evidenced
by the success of the implementation of the Verizon wireless
business model which has produced strong subscriber annual
compound growth of 50% through 2001, improved revenues mainly
driven by subscriber growth and lower network and operating
costs, (ii) Vodafone's strong experience and success
in the prepaid market, (iii) additional increase in
revenues generated by the CPP feature with an important taxable
operating margin, (iv) the change in the income tax law to
increase the useful lives for network equipment from 3.3 years
to 12.5 years, representing an important decrease in
depreciation expense for income tax purposes and (v) an
increase in 2002 of the potential effects of additional cost
cutting.
The amount of the deferred tax asset considered
realizable could be reduced in the near term if estimates of
future taxable income during the carry forward periods are
reduced.
As of December 31, 2001, we had a valuation
allowance of Ps. 309.7 million
(U.S.$33.8 million), to reduce our deferred tax assets to
estimated realizable value. The valuation allowance primarily
relates to the deferred tax assets arising from tax loss
carryforwards and tax credits. To the extent that the Mexican
tax loss carryforwards cannot be used by our subsidiaries, 60%
of such tax loss carryforwards can be used to offset our future
consolidated income.
At December 31, 2001, we had net operating
losses for income tax purposes that may be carried forward and
applied against future taxable earnings of
Ps. 2,597.4 million (U.S.$283.7 million) expiring
in various amounts from 2005 through 2011. See Note 12 to
the Consolidated Financial Statements.
Capital
Expenditures
In 2002 and 2003, we expect to make capital
expenditures to extend our network infrastructure, build out our
cellular and long distance networks, continue the build-out of
our PCS networks in Regions 1 and 4 in northern Mexico,
enhance our new billing systems, and support existing operations
and new business opportunities. The degree and timing of capital
expenditures will remain strongly dependent on the competitive
environment and economic developments in Mexico, including
inflation and exchange rates, as well as on the timing of
regulatory actions and on the availability of suitable debt
and/or equity financing.
If we acquire additional mobile wireless
concessions in Mexico, we may be required to increase our
capital expenditure budget. We would expect to finance these
capital expenditures through a combination of debt and vendor
financing, equity capital and operating cash flow.
We expect capital expenditures for 2002 and 2003
to total approximately U.S.$430.0 million, not including
amounts in respect of capitalized interest. We expect to invest
up to U.S.$250.0 million of this amount during 2002,
including up to U.S.$150.0 million in our core cellular
business in central Mexico, approximately U.S.$79.0 million
to continue the build-out of our PCS networks in Regions 1 and 4
in northern Mexico and approximately U.S.$21.0 million to
increase the quality and coverage of our cellular network in
Region 8 in southern Mexico.
We expect to make capital expenditures of
approximately U.S.$180.0 million in 2003, including
U.S.$7.0 million to continue the build-out of our PCS
networks and deployment of non-network infrastructure in
Regions 1 and 4 and U.S.$10.0 million to develop our
cellular network in Region 8 in southern Mexico. The
remaining U.S.$163.0 million will be used in our core
cellular business in central Mexico.
Total capital expenditures in 2001 were
U.S.$213.8 million. From this amount, approximately
U.S.$189.8 million was used primarily for the development
of the wireless network in central regions and to
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construct new and remodel existing customer sales
and service centers. The balance of U.S.$24.0 million was
primarily:
•
invested in developing and launching PCS services
    in the cities of Tijuana and Monterrey in Regions 1 and 4;
    and
•
used to develop and increase the quality of the
    wireless network in the recently acquired Region 8 in
    southern Mexico.
We believe that funds from operating activities,
other vendor financing, existing short-term facilities and the
proceeds from tower monetization transactions will be sufficient
to meet our debt service and principal amortization requirements
and the working capital requirements and capital expenditure
needs of our existing businesses through 2003, although we
cannot provide any assurance in this regard.
Total capital expenditures in 2000 were
U.S.$217.4 million. Approximately U.S.$175.0 million
of this amount was used for the development of the Iusacell
Celular wireless network.
Total capital expenditures in 1999 were
U.S.$144.5 million, not including Lucent Technologies
trade-in credits in the amount of U.S.$19.2 million and
capitalized interest in the amount of U.S.$17.1 million.
Capital expenditure amounts were derived using
historical pesos translated at the exchange rate in effect at
the end of the corresponding year.
Contractual
Obligations
The following table outlines our obligations for
payments under our indebtedness, including notes payable to
suppliers, and operating leases for the periods indicated using
balances as of December 31, 2001. Please see the discussion
following this section for a separate discussion of Iusacell
Celular's debt obligations, operating leases and other
financing arrangements:
Payments due by Period
(Figures in thousands of U.S. Dollars as of
December 31, 2001)
Iusacell Indebtedness(1)
2002
2003
2004
2005
2006
Thereafter
Total
Senior notes due 2006
350,000
350,000
BNP Paribas facilities:
Non-GIEK-Guaranteed Loan
2,020
4,039
4,039
4,039
4,040
2,020
20,197
BNP Paribas (Oslo) Non-GIEK- Guaranteed Loan
891
1,782
891
3,564
GTE Venholdings B.V. Loan
7,800
7,800
Harris facility
—
1,188
2,125
2,125
938
6,376
Total indebtedness
2,911
14,809
7,055
6,164
354,978
2,020
387,937
Operating leases(2)
2002
2003
2004
2005
2006
Thereafter
Total
MATC Celular
172,551
172,551
172,551
172,551
172,551
862,755
1,725,510
Buildings and others
108,327
80,645
64,638
55,987
46,250
—
355,847
Total operating leases
280,878
253,196
237,189
228,538
218,801
862,755
2,081,357
(1)
These amounts are principal payments.
(2)
These amounts include minimum lease payments.
The degree to which we are leveraged and the
covenants with which we must comply under our various financing
agreements may adversely affect our ability to finance future
operations, to finance necessary capital expenditures, to
service our indebtedness, to compete effectively against better
capitalized competitors and to withstand downturns in our
business or the Mexican economy in general. Our high level of
indebtedness could limit our ability to pursue business
opportunities that may be in our interest and that of holders of
our securities. In addition, in the event that the Iusacell
Celular senior notes have not been refinanced by March 31,
2004, the outstanding amount of the senior refinancing secured
loan will become due on that date.
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The terms of our and our subsidiaries' debt
impose significant operating and financial restrictions. These
restrictions will affect, and in many respects significantly
limit or prohibit, our ability and the ability of our
subsidiaries to, among other things:
•
borrow money;
•
pay dividends on stock;
•
make capital expenditures and other investments;
•
use assets as security in other transactions; and
•
sell certain assets or merge with or into other
    companies.
If we do not comply with these restrictions, we
could be in default even if we can currently pay our debt. In
addition, under our senior refinancing secured loan, we are
required to remain in compliance with certain financial ratios,
and the failure to do so would result in a default under the
facility. In the event of a default under any of our debt which
remains unsecured after any applicable grace period, holders of
the relevant debt could demand immediate payment of the
aggregate amount of that debt. Furthermore, this could trigger a
default under certain of our other debt as well. We may not be
able to make such payments. This could lead to a
concurso
mercantil
, a two-stage procedure under Mexican law
commencing with negotiations with our creditors and, if such
negotiations fail to reach an agreement, we would be declared
bankrupt.
Iusacell
Long-Term Indebtedness
Iusacell
senior notes
In December 1999, Iusacell issued
U.S.$350.0 million of 14 1/4% senior notes due 2006
under an indenture dated as of December 16, 1999 among
Iusacell, Bell Atlantic now Verizon, and The Bank of New York,
as trustee, which we refer to as the Iusacell indenture.
U.S.$133.6 million of the proceeds from the issuance of the
Iusacell senior notes were deposited in a security account for
purposes of payment of the first six semiannual installments of
interest thereon. The security account contains funds sufficient
to pay scheduled interest through December 2002. In June 2000,
substantially all of the Iusacell senior notes were exchanged
for identical 14 1/4% Senior Notes due 2006, which are also
governed by the Iusacell indenture, pursuant to an exchange
offer registered with the SEC. The Iusacell indenture restricts
the ability of Iusacell and its subsidiaries to incur
indebtedness. Under certain circumstances involving a change of
control of Iusacell or Iusacell Celular, Verizon, jointly and
severally with Iusacell, will be required to make an offer to
repurchase the Iusacell senior notes.
BNP
Paribas Facilities
In July 2000, our subsidiary Iusacell
Infraestructura, S.A. de C.V. entered into financing agreements
for the purpose of purchasing NERA microwave equipment
consisting of:
•
a seven-year senior amortizing term facility in
    the principal amount up to U.S.$30.5 million, guaranteed by
    the Export Import Bank of Norway, which we refer to as the
    GIEK-Guaranteed Facility; and
•
a four-year senior loan in the principal amount
    up to U.S.$5.4 million, which we refer to as the
    Non-GIEK-Guaranteed Loan.
The GIEK-Guaranteed Facility bears interest at
six-month LIBOR plus 0.6%. The Non-GIEK Guaranteed Loan bears
interest at six-month LIBOR plus 2.0%. We guarantee the
obligations of our subsidiary under both of these facilities. As
of December 31, 2001, we had drawn down
U.S.$20.2 million in principal amount under the
GIEK-Guaranteed Facility and U.S.$3.6 million in principal
amount under the Non-GIEK-Guaranteed Loan, all of which was
outstanding on that date. Our subsidiary obtains the funds to
pay the interest and principal on these purchase money debt
through rental payments made to it by Iusacell Celular and its
subsidiaries for such microwave transmission equipment.
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GTE
Venholdings B.V. Loan
On May 8, 2001, we signed a
U.S.$7.8 million promissory note in favor of GTE
Venholdings B.V. that accrues interest at an annual rate equal
to 11.5%, and matures on May 8, 2003. The proceeds from the
issuance of this note were used to complete the funding of the
acquisition of Portatel.
Harris
Facility
In August 2000, our subsidiary Iusacell
Infraestructura de México, S.A. de C.V. entered
into a purchase framework agreement for the purpose of
purchasing Harris microwave equipment. This vendor financing
consisted of a five-year senior amortizing term loan facility in
the principal amount of up to U.S.$6.9 million, with
interest accruing at a rate of the average term LIBOR plus
1.25%. We guarantee the obligations of our subsidiary under this
facility. As of December 31, 2001, we had drawn down
U.S.$6.4 million in principal amount under this facility,
all of which was outstanding on that date. Our subsidiary
obtains the funds to pay the interest and principal on these
purchase money debt through rental payments made to it by
Iusacell Celular and its subsidiaries for such microwave
transmission equipment.
Building
and others
Building and others consisted of operating leases
for our administrative offices, sales branches and service
facilities. Building leases are Pesos-denominated and contain
escalation clauses for inflation. Amounts represents the future
annual minimum rental payments on leases current at
December 31, 2001.
The following table outlines Iusacell
Celular's obligations for payments under its indebtedness,
including notes payable to suppliers and operating leases for
the periods indicated using balances as of December 31,
2001.
Payments due by Period
(Figures in thousands of U.S. Dollars as of
December 31, 2001)
Iusacell Celular Indebtedness
(1)
2002
2003
2004
2005
2006
Thereafter
Total
Senior notes due 2004
150,000
150,000
Senior refinancing secured loan
—
—
99,608
132,810
33,203
265,621
Short-term credit lines:
Banco Santander Mexicano
12,000
12,000
Motorola Credit Corporation
9,106
9,106
Vendor Financing (notes payable)
4,362
4,362
Total indebtedness
25,468
—
249,608
132,810
33,203
—
441,089
Operating leases
(2)
2002
2003
2004
2005
2006
Thereafter
Total
MATC Celular
168,599
168,599
168,599
168,599
168,599
842,995
1,685,990
Buildings and others
105,291
77,701
64,194
55,987
46,250
—
349,423
Total operating leases
273,890
246,300
232,793
224,586
214,849
842,995
2,035,413
(1)
These amounts include principal payments.
(2)
These amounts include the minimum lease payments.
Iusacell Celular
Long-Term Indebtedness
Iusacell
Celular senior notes
In July 1997, Iusacell Celular issued
U.S.$150.0 million of its 10% Senior Notes due 2004, which
we refer to as the Iusacell Celular senior notes, under an
indenture dated as of July 25, 1997 among Iusacell Celular,
the subsidiaries of Iusacell Celular guaranteeing such senior
notes and First Union National Bank, as trustee, which we refer
to as the Iusacell Celular indenture. Substantially all of the
Iusacell Celular senior notes were exchanged in January 1998 for
identical 10% senior notes due 2004 which are also governed by
the Iusacell Celular indenture, pursuant to an exchange offer
registered with the SEC.
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The Iusacell Celular indenture limits the ability
of Iusacell Celular to make dividend payments to Iusacell. In
addition, it restricts the ability of Iusacell Celular and its
principal subsidiaries to incur indebtedness.
In connection with the Senior Refinancing Secured
Loan described below, Iusacell Celular was required, under the
terms of the Iusacell Celular Indenture, to equally and ratably
secure all amounts due under the Iusacell Celular senior notes
by a second priority lien on its cellular concessions, certain
equipment and suppliers.
Senior
Refinancing Secured Loan
On March 29, 2001, Iusacell Celular
completed the refinancing of its senior secured credit facility
by entering into an Amended and Restated Senior Secured Credit
Loan Agreement, which we refer to as the senior refinancing
secured loan, which consists of:
•
a Tranche A Loan in an aggregate principal
    amount of U.S.$189.8 million for the purpose of refinancing
    existing indebtedness under the senior secured credit facility
    and under a certain bridge loan used to make a principal
    amortization payment under the senior secured credit facility in
    January 2001; and
•
a Tranche B Loan in an aggregate principal
    amount of U.S.$75.8 million for the purpose of paying
    existing indebtedness under certain Eximbank facilities and
    under a certain bridge loan used to make a principal
    amortization payment under the Eximbank facilities in January
    2001.
The senior refinancing secured loan bears
interest at a rate per annum equal to one-, two-, three- or
six-month LIBOR (at Iusacell Celular's option) plus a
spread ranging from 1.75% to 2.25%, depending on Iusacell
Celular's leverage ratio. Iusacell Celular's
obligations under the senior refinancing secured loan are
unconditionally guaranteed, jointly and severally, by the
principal operating subsidiaries of Iusacell Celular and its
subsidiaries holding cellular concessions and are secured by a
pledge of substantially all the capital stock and equity
interests held by Iusacell Celular and substantially all assets
used in connection with or related to such cellular concessions.
Upon the acquisition of Portatel, the cellular concession
covering Region 8 was mortgaged under this loan, and all
capital stock and equity interests of Portatel are in the
process of being pledged under this loan.
The senior refinancing secured loan begins
amortizing on May 31, 2004 in equal quarterly amounts and
matures on February 28, 2006. However, in the event that
the Iusacell Celular senior notes have not been refinanced by
March 31, 2004, the outstanding amount of the senior
refinancing secured loan will become due on that date.
Loan
Covenant Waivers and Modifications
On December 7, 2001 the senior refinancing
secured loan was amended, and a waiver and consent were granted
by the lenders allowing Iusacell Celular to (i) create
liens encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or
other interest hedging agreement up to the principal amount of
indebtedness of Iusacell Celular and its subsidiaries with
floating rates of interest; (ii) make loans or advances to
Iusacell in lieu of paying dividends at such times and in such
amounts as necessary to permit Iusacell to pay scheduled
interest (including any tax gross-up with respect thereto) and
principal payments as and when due in respect of the Iusacell
senior notes and (iii) make loans or advances to Iusacell
in lieu of paying dividends in an amount not to exceed
U.S.$5.0 million, so long as an event of default has not
occurred, to discharge other liabilities of Iusacell incurred in
the ordinary course of business.
Short-term
debt
Banco
Santander Mexicano
In February 2001, Iusacell Celular obtained a
one-year unsecured term credit facility from Banco Santander
Mexicano in the principal amount of U.S.$12 million to be
used solely to acquire cellular handsets. Loans outstanding
under this facility bore interest at an annual rate of 6.99%.
Interest was paid quarterly and the principal was paid in
February 25, 2002.
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Motorola
Credit Corporation Loan
Upon the acquisition of Portatel, Iusacell
Celular assumed a U.S.$9.1 million loan that Portatel del
Sureste, S.A. de C.V., a subsidiary of Portatel, had
incurred from Motorola Credit Corporation in March 2000 to
purchase certain cellular infrastructure equipment. Interest
under this loan was calculated at a floating annual rate equal
to six-month LIBOR plus 6%.
In connection with the acquisition of Portatel
and its subsidiaries, Iusacell Celular, Portatel del
Sureste, S.A. de C.V., and Motorola Credit Corporation
entered into a series of agreements pursuant to which a partial
payment of U.S.$3.0 million was paid on this loan on
March 29,27, 2002, and the remaining U.S.$6.1 million
was paid on April 26, 2002.
Vendor
Financing
From time to time, we incur indebtedness with
vendors in order to finance purchases of equipment, hardware,
software and services. As of December 31, 2001, we had
U.S.$4.4 million of such vendor financing outstanding.
Vendor financing is classified as notes payable to suppliers.
Risks
Associated With Our Ability to Service or Refinance Our
Debt
Our ability to satisfy our obligations under our
debt in the future will depend upon our future performance,
including our ability to increase revenues significantly and
control expenses. Our future operating performance depends upon
prevailing economic, financial, business and competitive
conditions and other factors, many of which are beyond our
control.
Iusacell Celular's debt agreements severely
restrict the ability of Iusacell Celular and its subsidiaries to
pay cash dividends or otherwise make cash available to Iusacell,
except, under some circumstances, for scheduled interest
(including any tax gross-up with respect thereto) and principal
payments in respect of the Iusacell senior notes, so long as no
event of default has occurred and is continuing, scheduled
interest (including any tax gross-up) as an when due in respect
of the notes issued to refinance the Iusacell senior notes, and
loans or advances or dividend payments to Iusacell in an amount
up to U.S.$5.0 million in order to discharge other
liabilities of Iusacell incurred in the ordinary course of
business. While such restrictions exist, we expect to meet
Iusacell's other liquidity requirements with funds provided
by future equity and debt offerings and capital contributions
from our principal shareholders. Our principal shareholders are
under no obligation to make capital contributions to us.
Total Iusacell debt, including notes payable to
suppliers, was Ps. 7,601.8 million
(U.S.$830.3 million) at December 31, 2001. At
December 31, 2001, Iusacell's average cost of
outstanding bank debt was approximately 10.3%, with a remaining
average maturity of approximately 3.8 years. At
December 31, 2001, Iusacell's ratio of debt to total
capitalization was 51.5% compared to 54.8% at December 31,
2000 and 60.1% at December 31, 1999.
Iusacell Celular's liquidity has been
provided by cash from operations, short and long-term
borrowings, vendor financing and capital contributions. Total
Iusacell Celular debt, including trade notes payable, was
Ps. 4,044.6 million (U.S.$441.7 million)
outstanding at December 31, 2001, 6.3% lower than the total
debt of Ps. 4,315.2 million (U.S.$471.3 million)
outstanding at December 31, 2000. At December 31,
2001, Iusacell Celular's average cost of outstanding bank
debt was approximately 6.9%, with a remaining average maturity
of approximately 3.0 years. At December 31, 2001,
Iusacell Celular's ratio of debt to total capitalization
was 32.2% compared to 36.2% at December 31, 2000 and 46.8%
at December 31, 1999.
If we do not have sufficient funds to satisfy our
obligations, we may take specific actions, including delaying or
reducing capital expenditures, attempting to refinance our debt
at or prior to its maturity or, in the absence of such
refinancing, attempting to sell assets quickly in order to make
up for any shortfall in payments under circumstances that might
not be favorable to getting the best price for the assets, or
seeking additional equity capital. Our ability to refinance our
debt and take other actions will depend on, among other things,
our financial condition at the time, the restrictions in the
instruments governing our debt and other factors, including
market conditions, the macroeconomic environment, and the level
of such variables as the Peso-Dollar exchange rate and benchmark
money-market rates in Pesos and Dollars.
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All of our and substantially all of Iusacell
Celular's debt outstanding at December 31, 2001 was
U.S. dollar-denominated and only partly hedged against foreign
exchange risk. See Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital
Resources — Liquidity — Hedging" and
"Item 11 Quantitative and Qualitative Disclosures
About Market Risk."
Certain
Trading Activities
On December 30, 1999, Iusacell Celular
entered into a foreign exchange hedge using forward rate
contracts to hedge its exchange rate exposure for
U.S.$77.0 million, representing approximately 50% of the
principal and interest payments on its indebtedness coming due
over the period from April 2000 to April 2001. This transaction
resulted in a U.S.$9.8 million loss. On November 22,
2000, Iusacell Celular entered into a second foreign exchange
hedge for U.S.$15.0 million. This transaction resulted in a
U.S.$1.7 million loss. On August 9, 2001, Iusacell
Celular entered into a third foreign exchange hedge using
forward rate contracts for U.S.$11.0 million on its
indebtedness coming due over the period from November 2001 to
November 2002. As of December 31, 2001, the fair value of
the hedge resulted in an unrealized loss of U.S.$1.4 million.
In August and October 2001, Iusacell Celular
entered into a foreign exchange hedge using forward rate
contracts to hedge 100% of the principal amount of
U.S.$150 million and interest of U.S.$34.5 million on
its 10% senior notes due 2004. This hedge was intended to
benefit from the strength of the U.S. dollar relative to the
peso to mitigate foreign exchange exposure. This hedge becomes
due between July 2002 and July 2004. As of December 31,
2001, the fair value of the hedge resulted in an unrealized loss
of U.S.$17.0 million. In accordance with the terms of the
foreign exchange hedge, we posted cash collateral in the amount
of U.S.$2.0 million. We determine the fair value of
derivative financial instruments using an external third-party
expert.
As of December 31, 2001, Iusacell Celular
maintained forward-rate contracts for U.S.$201.0 million
partially hedging its principal and interest payments due in the
period from January 2002 to July 2004.
Interest
Rate Collars
In July 1998, Iusacell Celular entered into an
interest rate collar agreement for a notional amount of
U.S.$35 million until July 30, 2002. The collar
agreement limits the maximum effective LIBOR cost to 6.12% if
six-month LIBOR is lower than 7.12%, and 7.12% if LIBOR equals
or exceeds 7.12%. Iusacell Celular can participate in a decline
in LIBOR to 5.30%.
On February 26, 1999, Iusacell Celular
entered into an additional interest rate collar agreement to
limit the maximum interest rate which must be paid on
U.S.$15.0 million of its floating rate debt until July
2002. This collar agreement limits the maximum effective LIBOR
cost to 5.82% if six-month LIBOR is lower than 6.82%, and 6.82%
if LIBOR equals or exceeds 6.82%. Iusacell Celular can
participate in a decline in LIBOR to 4.75%.
For the year ended December 31, 2001, due to
the significant decrease in the LIBOR interest rates, Iusacell
Celular recognized additional interest expense of
Ps. 5.4 million (U.S.$0.6 million) for the
interest rate collars, which was offset by the lower interest
expense on its floating rate debt. Accordingly, these
derivatives were highly effective.
The U.S.$50.0 million aggregate notional
amount of the above interest rate collar agreements does not
quantify risk or represent assets or liabilities of Iusacell,
but is used in the determination of cash settlements under the
agreements.
We are exposed to credit loss from counterpart
non-performance, but we do not anticipate any such loss from the
interest rate collar agreements, which are with a major
financial institution.
Recent
equity offerings
On August 10, 1999, we completed a
comprehensive equity recapitalization and restructuring. As part
of this transaction, we issued 23,596,783 new series V
shares at a price of U.S.$1.05 per share and 18,405,490 new
series V shares at a price of U.S.$0.70 per share. After
commissions and expenses, we received net proceeds of
approximately U.S.$33.7 million, which were used primarily
for the acquisition of cellular network infrastructure
equipment. In April and May 2000, we sold 10,529,700 American
depositary shares represent-
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ing series V shares at U.S.$15.125 per
American depositary share. After commissions and expenses, we
received net proceeds of approximately U.S.$153.0 million
from these offerings, which we used primarily to fund
investments in our cellular network as well as the first phase
of our PCS network deployment in Regions 1 and 4 in
northern Mexico. See Item 4, "Information on the
Company — History and Development of the Company."
On November 6, 2001, we completed a rights
offering to holders of our outstanding series A and
series V shares and series V American depositary
shares raising an aggregate of U.S.$100 million.
Iusacell's principal shareholders, Verizon and Vodafone,
subscribed for approximately U.S.$81 million of the
offering. Verizon's subscription included all of the
series V shares offered to, but not subscribed by, public
shareholders. In the United States and Mexico, public
shareholders subscribed approximately U.S.$15 million and
U.S.$4 million of the offering, respectively.
Tower
Monetization
In December 1999, Iusacell Celular entered into a
series of agreements with MATC Celular. These agreements, among
other things, gave MATC Celular the right to acquire
approximately 330 existing Iusacell Celular non-strategic
towers. In 2001, we sold 244 towers to MATC Celular,
receiving in excess of U.S.$34 million in net gains. In May
2002, we sold 25 additional non-strategic towers, receiving
U.S.$3.7 million in net gain. We expect to sell up to 61
additional non-strategic towers to MATC Celular during 2002.
Iusacell is leasing back the sold towers from MATC Celular and
subleasing them to its operating subsidiaries.
Dividend
Policy
We have never paid dividends in the past, and we
currently have no plans to initiate dividend payments. In
addition, the Iusacell indenture, the Iusacell Celular indenture
and the senior refinancing secured loan limit both
Iusacell's and Iusacell Celular's ability to pay
dividends.
C.     Research and
Development, Patents and Licenses, Etc.
Iusacell does not undertake research and
development activities.
D.     Trend
Information
In addition to the events and developments
identified elsewhere in this Item 5, "Operating and
Financial Review and Prospects," our financial condition
and results of operations could also be materially affected by
the following events and developments:
New
Competition
As a direct result of the spectrum auctions
organized by COFETEL, which concluded in May 1998, we are now
facing additional mobile wireless competition operating in the
1.9 GHz (PCS) spectrum in our cellular territories and
additional local telephony competition operating in the
3.4-3.7 GHz (Wireless Local Loop) spectrum. The experience
of other countries suggests that, although overall demand for
wireless telephony services will increase, prices will
experience downward pressure, especially at the time of market
entry by the new competitors. New competition has not caused us
to decrease prices, we did not increase prices from March 1999
until mid-April 2001, when we apply a 4.5% increase on a
weighted average basis, in the regular monthly fees of our
postpaid plans.
Price
Increases and Rollbacks
We have attempted, and continue to attempt, to
exercise price leadership in the Mexican cellular market, with a
strategy of having our prices keep pace with inflation if
economic and competitive conditions permit.
In late March 1999, we raised airtime prices on
our postpaid plans by approximately 12% on a weighted average
basis and approximately 6% for prepay customers. These price
increases remained in place as the competition followed our lead.
In mid-April 2001, after not having raised our
prices for more than two years, we increased the regular monthly
fees of our postpaid plans by approximately 4.5% on a
weighted-average basis and the monthly fees
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for one-single rate service of our postpaid plans
by approximately 15% on a weighted average basis. We also
increased the airtime charges of one of our postpaid plans by
4.8%. These price increases have remained effective despite the
fact that the competition has not followed us. Our revenues will
be adversely affected to the extent that our price increases
cannot keep pace with inflation. We believe that the
implementation of the CPP modality accelerated the prepay
subscriber growth and increased the subscriber usage throughout
the Mexican wireless market.
Regulatory
Developments
The Mexican authorities resolved several critical
regulatory issues over the last several years and will likely
continue to resolve additional important regulatory issues
during 2002 which may have a material effect on Iusacell's
financial condition and results of operations.
Local
Interconnection
On November 27, 1998, COFETEL issued a
resolution which established the per-minute interconnection rate
for telephone calls made from wireless customers to wireline
customers at Ps. 0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for
inflation.
COFETEL declined to provide for any amount of
reciprocity in the interconnection fee payable by Telmex to
wireless operators for interconnection services that Iusacell
and other wireless operators provide Telmex for calls made by
wireline customers to mobile wireless customers.
In March 2001, we negotiated a rate reduction
with Telmex, retroactive to January 1, 2001, that decreases
the interconnection rate per minute for telephone calls made
from wireless customers to wireline customers from Ps. 0.31
per full minute, payable on a per-second basis, to the peso
equivalent of U.S.$0.0125 per full minute, payable on a
per-second basis.
In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
Calling
Party Pays
On November 27, 1998, COFETEL ruled that the
calling party pays modality would be implemented by May 1,
1999 as an option for the wireless customer. CPP is a cellular
telephony payment scheme similar to the existing wireline
payment scheme, where the wireline or fixed wireless party that
places a local call to a cellular telephone, and not the
cellular subscriber receiving the call, will be billed for
interconnection access, and the recipient will not be billed for
the airtime charges corresponding to that call. COFETEL
established the CPP interconnection tariff at Ps. 1.80 per
minute or fraction of a minute, which was to be indexed on a
monthly basis for inflation as of October 1, 1998, for
calls from Telmex wireline customers to mobile wireless
customers. CPP would only apply to local calls, and the
"mobile party pays" modality would continue to apply
to incoming long distance and incoming calls to a roamer.
In April 1999, after a legal action by Telmex to
attempt to suspend the scheduled implementation of CPP, Telmex
and the Cellular A-Band carriers completed negotiating a new
mobile wireless-Telmex local wireline interconnection agreement
with the approval of COFETEL. The calling party pays modality
was implemented on May 1, 1999. All mobile wireless
customers were automatically converted to CPP, with the right to
revert to the mobile party pays modality. The interconnection
rate was frozen for six months at Ps. 1.90 per minute or
fraction of a minute. Had the indexing established by the
November 27, 1998 COFETEL resolution been applied, the rate
for May 1999 would have been Ps. 2.06 per minute or
fraction of a minute. The price which Telmex may charge its
customers was frozen at Ps. 2.50 per minute or fraction of
a minute, plus Telmex's applicable per-call local charge.
Iusacell cannot predict whether COFETEL intends to extend the
same tariff and surcharge at the same rates and for how long.
Telmex greeted the May 1, 1999 implementation of CPP with
an advertising campaign critical of the high costs to wireline
customers, whom Telmex urged to block CPP calls. But after a
moderate decline in traffic during the first two weeks of May
1999, we began to experience a gradual increase in traffic over
the last two weeks of May 1999, slightly
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exceeding pre-CPP traffic levels by the end of
the month. Since then, we experienced traffic growth in 1999 and
2000. In particular, since the initiation of CPP we experienced
an increase in the percentage of total calls that were incoming
calls from 39% to 60% in 2000. In early 2000, Telmex reversed
its opposition to CPP, publicly announcing support for it. In
2001, the percentage of total calls that were incoming calls
experienced a reduction to 56%, which makes us believe the CPP
effect has been exhausted.
The overwhelming majority of our cellular
customers have chosen not to opt out of the CPP modality. We
believe that the implementation of the CPP modality has
accelerated prepay subscriber growth and increased subscriber
usage throughout the Mexican wireless market.
We are currently discussing with COFETEL and
Telmex the possibility of extending the CPP modality to incoming
national long distance calls. If this proposal is accepted, the
mobile party pays modality would continue to apply only to
incoming international long distance calls.
Long
Distance Interconnection
In a separate resolution issued on
November 27, 1998, COFETEL also established the
interconnection tariff between long distance and local wireline
carriers at Ps. 0.2573 per full minute payable on a
per-second basis, which will be indexed on a monthly basis for
inflation.
In March 2001, we negotiated a rate reduction
with Telmex, retroactive to January 1, 2001, that decreases
the per-minute interconnection rate for terminating long
distance telephone calls made by our long distance customers in
Telmex's local wireline network to the peso equivalent of
U.S.$0.0125 for a full minute.
In December, 2001, Telmex, Alestra and Avantel
reached an agreement to further reduce the long distance
interconnection rate from U.S.$0.0125 per minute to U.S.$0.00975
per minute. We are currently in negotiations with Telmex to
obtain similar terms for both our long distance business and
local cellular interconnection rate.
Long
Distance Concession
In December 1997, COFETEL authorized a
modification of our concession to provide long distance
services, modifying coverage requirements and permitting the use
of microwave and other non-fiber technologies for transmission
purposes. Together with fiber-swapping agreements reached by
Iusacell with two of our competitors, the modified concession
permits a more efficient, more technologically flexible long
distance network and eliminated more than U.S.$200 million
in Iusacell capital expenditure requirements from 1998 to 2000.
On January 1, 2001, Telmex, Avantel and
Alestra announced a preliminary agreement with respect to how
much, through what means and over how much time Avantel and
Alestra will pay for the special projects implemented by Telmex
prior to January 1997 in order to permit competition in long
distance telephony, including the numbering and signaling plans
and expenditures to facilitate interconnection. Avantel, Alestra
and Telmex agreed that the total amount reimbursable to Telmex
for such special projects by all long distance carriers was
U.S.$777.0 million, including interest payable from
December 1997 until October 1999. In March 2001, Iusatel
negotiated a similar agreement with Telmex, in which Iusatel
agreed to pay for its portion of such special projects in two
parts: (i) a fixed payment of approximately
U.S.$13.6 million, payable in twelve equal monthly
installments beginning in April 2001, and (ii) a
U.S.$0.0053 per full minute, usage-based surcharge to the local
wireline interconnection rate from January 1, 2001 through
December 31, 2004 for long distance calls terminated in
Telmex's local wireline network. Since these special
projects payments relate to capital investments made by Telmex,
we are recording them as a deferred asset and consequently we
are amortizing them.
Quality
Standards
In October 1999, we entered into an agreement
with COFETEL to maintain certain cellular quality standards
measured in terms of connection time, dropped calls and
ineffective attempts. We currently meet these quality standards.
Failure to maintain these quality standards may result in refund
obligations to subscribers and governmental sanctions.
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Although we met COFETEL's quality standards
in 2000, we nevertheless determined voluntarily to compensate
our subscribers in Region 9 in light of perceived quality
problems during 1999 due to network digitalization and rapid
traffic growth. Our subscribers as of December 31, 1999
received, if a postpaid subscriber, 20% more included minutes in
their postpaid package in April and May 2000, or if a prepay
customer, five free minutes. The financial impact of this
voluntary compensation program was not material.
Iusacell met successfully COFETEL's quality
standards, that in 2001 were set as follows:
•
Drop calls 6%
•
Ineffective attempts 5%
Portatel significantly increased its quality
standards in the fourth quarter of 2001, the rate in ineffective
attempts improved to 0.7% after receiving in initial audits in
the city of Mérida, a 14.9% rate.
The terms and conditions for the 2002 quality
standards agreed by concessionaires and COFETEL are:
•
Drop calls 4%
•
Ineffective attempts 5%
•
Connection time 12 seconds
The 2002 quality tests began June 3, 2002
and will end December 13, 2002, and will held revisions in
the 30 largest cities in terms of number of wireless mobile
users, that represents 70% of the total wireless mobile users in
Mexico.
Other
Developments
Distributor
Defection
In June 2001, SAGO Interamericana, S.A. de C.V.,
a distributor that represented at that time slightly less than
10% of our monthly gross postpaid additions and approximately 2%
of our monthly gross prepay additions, notified us that it was
immediately terminating its distribution agreement with us. We
believe that this action violated the termination provisions of
the distribution agreement and we are seeking compensatory
damages. In addition, we are seeking to recover approximately
Ps.44.0 million in net receivables owed to us by SAGO.
Telereunion
Default
In December 1999, Iusatel agreed to swap dark
fiber optic cable in the amount of U.S.$17.3 million and
sell approximately U.S.$7.4 million of additional dark
fiber optic cable to Telereunion, S.A. de C.V., an affiliate of
Telscape International, Inc. Upon the execution of this
agreement, Telereunion issued promissory notes to Iusatel for
the purchase price but defaulted on the payment of each of these
notes. In April 2001, Telereunion's United States parent
Telscape International, Inc. filed for reorganization under the
Chapter 11 of the United States Bankruptcy Code. As part of
a settlement arrangement, on September 17, 2001,
Telereunion and Iusatel executed an agreement by means of which
the former transferred dark fiber optic assets in the amount of
U.S.$7.4 million to the latter in exchange for full
settlement of the past notes receivable in the same amount.
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ITEM
6.     DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES
A 12-member Board of Directors manages Iusacell.
The directors nominated by Verizon have the power under our
by-laws to approve, without the affirmative vote of any other
directors, all resolutions of the Board of Directors, except
with respect to some transactions over which the Iusacell
Shareholders Agreement grants Vodafone supermajority rights.
Pursuant to the Iusacell Shareholders Agreement, Fares F.
Salloum is the Chairman of the Board of Directors and possesses
a tie-breaking vote except on any matter which requires a
supermajority vote. See Item 7, "Major Shareholders
and Related Party Transactions — Major
Shareholders — Governance" for a description of
the Iusacell Shareholders Agreement, which governs the
appointment of directors as between our major shareholders.
A.     Directors and
Senior Management
Directors
On April 30, 2002, Iusacell elected new
directors who will hold office for a period of one year and
until the election of their successors at duly convened general
ordinary shareholders meetings.
The following table presents information with
respect to our directors at April 30, 2002.
Name
Age
Position(s)
Fares F. Salloum
51
Chairman of the Board of Directors and
    Series A Director
Carlos Espinal
52
Series A Director
Alfred C. Giammarino
45
Series A Director
Terry W. Lewis
45
Series A Director
Carlos Peralta Quintero
49
Series A Director
Javier Martínez del Campo
42
Series A Director
Tomas Isaksson
48
Series A Director
Alan Bowers
45
Series V Director
Michael J. Pitt
45
Series V Director
David Anderson
45
Series V Director
Ignacio Mas
37
Series V Director
Ignacio Gómez Morin
41
Series V Director
Our by-laws authorize alternate directors to
serve on the Board of Directors in place of directors who are
unable to attend meetings or otherwise participate in the
activities of the Board of Directors. The series A alternate
directors as of April 30, 2002 are: any of Peter H.
Burrowes, Russell A. Olson, Christopher M. Bennett, Rubén
G. Perlmutter and Henry Ruiz for any of Fares F. Salloum, Carlos
Espinal, Alfred C. Giammarino, Terry W. Lewis, Carlos Peralta
Quintero and Javier Martínez del Campo, and Richard Harman
for Tomas Isaksson. The series V alternate directors as of
April 30, 2002 are: any of Marty Enriquez, Richard Harman,
Jack Lester and Mark Hickey for any of Alan Bowers, Michael
Pitt, David Anderson and Ignacio Mas, and Howard Svigals for
Ignacio Gómez Morin.
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Executive Officers
The following table presents information relating
to our executive officers at December 31, 2001:
Name
Age
Position(s)
Peter H. Burrowes
50
President and Director General*
Russell A. Olson
43
Executive Vice President, Finance and Audit, and
    Chief Financial Officer*
Koren Borges
36
Senior Vice President, Marketing**
Juan Carlos Merodio
39
Senior Vice President, Legal and Regulatory
Henry M. Ruiz
39
Vice President, Technical Operations*
Anthony Llompart
39
Vice President, Sales*
José Bellido
43
Vice President, Human Resources
Andrew G. Hunkin
38
Vice President Data and Long Distance
Jorge Halvas
39
Vice President, Administration
*
Indicates an employee of Verizon who is serving
    as an executive officer of Iusacell.
**
Indicates an employee of Vodafone who is serving
    as an executive officer of Iusacell.
Biographies
Fares F. Salloum
has
been Chairman of the Board of Directors of Iusacell since August
2000. Mr. Salloum has 29 years of experience in global
telecommunications and since July 2000 has served as
Verizon's President, International for the Americas.
Mr. Salloum is responsible for Verizon's non-domestic
wireline and wireless investments in the western hemisphere and
international support services. From June 1997 through June
2000, Mr. Salloum served as Senior Vice-President of
International Operations for GTE and was responsible for
GTE's wireline and wireless international operations. For
24 years prior to his appointment as Senior Vice-President,
Mr. Salloum served in various operational and engineering
capacities at BC Telecommunications Inc., a Canadian
telecommunications provider and predecessor of Telus
Corporation, and its affiliates. From 1995 until June 1997,
Mr. Salloum served as Executive Vice-President of
Communications Services for BC Telecom and was responsible for
sales and services for local, long distance, data, multimedia
and wireless businesses as well as advanced communications
systems and systems support. From 1993 to 1995, Mr. Salloum
served as President of BC Tel Services. From 1991 to 1995,
Mr. Salloum served as Vice-President of Emerging Businesses
at BC Telecom. Mr. Salloum is a director of Telus
Corporation (Canada), CANTV (Venezuela), CODETEL (Dominican
Republic), CTI Holdings S.A. (Argentina) and TELPRI (Puerto
Rico). Mr. Salloum received a B.S. in electrical
engineering from the University of Alberta and an M.B.A. from
the University of British Columbia.
Carlos Espinal G.
has been a member of the Board of Directors of Iusacell since
April 2002. Mr. Espinal has served as Verizon's Senior
Group Vice-President, International for the Americas since April
2002. Before being appointed Senior Group Vice-President,
Mr. Espinal was Chairman and Chief Executive Officer (since
April 2000) of CTI Movil, a leading wireless carrier in
Argentina, of which Verizon is a significant shareholder. Before
joining CTI Movil, Mr. Espinal was General Manager and then
President and Chief Executive Officer of Codetel, a subsidiary
of Verizon in the Dominican Republic. Before joining GTE/
Verizon, Mr. Espinal served as Chairman and/or Chief
Executive Officer for various large multinational firms in the
industrial sector in Mexico, Venezuela, and Thailand, and was
the Managing Director of Hondutel (the Honduran telephone
company) in Honduras. After graduating with honors in Electronic
Engineering from the Universidad Javeriana in Colombia,
Mr. Espinal enrolled in a graduate program in
Telecommunications Engineering at the NTT in Japan. Later, he
obtained a M.S. degree in Industrial Engineering &
Management from the Asian Institute of Technology in Thailand,
and completed the Program for Management Development at the
Harvard Business School. He has been member of several
professional and industry associations throughout Latin America
and is currently a member of the Board of the AmCham in
Argentina.
Alfred C. Giammarino
has been a member of the Board of
Directors of Iusacell since August 10, 2000.
Mr. Giammarino was named Senior Vice-President and Chief
Financial Officer of Information Services and International for
Verizon in January 2000. Previously, he had served as Senior
Vice-President of International
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Finance, Planning and Business Development for
GTE since July 1998, where he was responsible for business
development in countries where GTE did not have existing
operations. At GTE, Mr. Giammarino was also responsible for
financial analysis and administration, budgets, benchmarking and
planning for the International organization, as well as
providing financial support for all business-development
activities. In addition, Mr. Giammarino was responsible for
international strategic planning, coordination of business
transaction, due-diligence activities and project integration.
Prior to that, he had served as Vice-President of International
Finance and Planning since 1997 and before that he served as
Vice-President of Finance. Mr. Giammarino began his GTE
career in 1985. He served as Vice-President of Finance and
Planning for the GTE Telecommunications Products & Services
group and, prior to that, as Assistant Controller of Corporate
Accounting for GTE Corporation. Mr. Giammarino previously held
positions with Freeport-McMoRan Inc. and Arthur Andersen LLP.
Mr. Giammarino is a director of TELPRI (Puerto Rico), CANTV
(Venezuela), CTI Holdings S.A. (Argentina), and FLAG Telecom
(UK). He holds a bachelor's degree in accounting from St.
John's University and is a certified public accountant.
Terry W. Lewis
has
been a member of the Board of Directors of Iusacell since April
2001. Mr. Lewis is a Group Senior Vice-President of
Business Services and Support for Verizon and is responsible for
supporting all international units in the areas of wireline,
wireless, advanced communications and Internet protocol (IP),
information technology, operations and engineering, and
marketing and sales. Prior to the Bell Atlantic/ GTE merger,
Mr. Lewis was President of GTE Telecommunications Services,
Inc., a position he held since July 1997. He led a team
responsible for developing and delivering software-based
solutions to the wireless telecommunications industry throughout
North America, Latin America and Europe. He was also accountable
for overall company operations, customer satisfaction and
financial performance. Prior to joining GTE Telecommunications
Services, Mr. Lewis served as Vice-President of Marketing
and Product Management for GTE Wireless, where he was
responsible for strategy and pricing, carrier relations,
distribution, customer marketing and planning, marketing
communications, product management, marketing for seven
geographic areas and media relations. Mr. Lewis joined GTE
in 1979 as a management trainee with GTE Telephone Operations in
Indiana, where he was named accounting manager. He held
accounting, regulatory and financial management positions of
increasing responsibility with GTE's North Area until 1989
when he moved to Telephone Operations headquarters as Director
of Sales Administration. After several promotions within sales
and product management, he was named Director of Consumer
Services in 1994. Mr. Lewis joined GTE Wireless in June
1995 as Vice-President of Voice Products. Mr. Lewis is an
alternate director of CTI Holdings S.A. (Argentina) and CANTV
(Venezuela). He holds a bachelor's degree in accounting
from Indiana University.
Carlos Peralta Quintero
has been a member of the Board of
Directors of Iusacell since August 1998. Mr. Peralta was a
member of the Board of Directors of Iusacell Celular from
October 1992 until February 2000 and served as Vice Chairman of
Iusacell Celular from October 1992 until February 1997. He also
serves as the Chairman of the Board of Directors and Chief
Executive Officer of Grupo Industrial IUSA, S.A. de C.V.
Mr. Peralta is a member of the boards of directors of
Compañía Industrial de Parras, S.A. de C.V., Hilaturas
Parras, S.A. de C.V., Cambridge Lee Industries Ltd. and Alper
Holdings Ltd.
Javier Martínez del Campo Lanz
has been a member of the Board of
Directors of Iusacell since April 4, 2001 and was an
alternate member of the Board of Directors of Iusacell from
August 1999 until April 2001. Mr. Martínez del Campo
has also been a member of the Board of Directors of Iusacell
Celular since February 1997. He has been a partner with the
Mexico City based law firm of De Ovando y Martínez del
Campo, S.C. since 1984. Mr. Martínez del Campo holds a
law degree from the Universidad Anáhuac and a master's
degree from the University of San Diego. Mr. Martínez
del Campo is a member of the Mexican Bar Association and an
international associate of the American Bar Association.
Mr. Martínez del Campo serves as the secretary of the
board of directors of various Mexican corporations, including
Grupo Gigante, S.A. de C.V., one of Mexico's largest
retailers.
Tomas Isaksson
has
been a member of the Board of Directors of Iusacell since
April 30, 2002. Mr. Isaksson is Chief Executive
Officer for the Vodafone Americas Region, a position he has held
since January 2002. He is responsible for Vodafone's
interests in the Americas and Vodafone Global Platform and
Internet Services (VGP). Prior to assuming the Chief Executive
role, he had been President of VGP since its
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inception in March 2000. Mr. Isaksson has
worked in the telecommunications industry for the past
24 years, starting with Ericsson in 1978. During the
16 years he was with Ericsson, he held a variety of key
positions and was appointed President and Chief Executive
Officer of Ericsson Radio Systems Inc. in the United States in
1991. In 1994, he left Ericsson to become President of Swedish
mobile operator Europolitan and in November 1995 was appointed
President and Chief Executive Officer. In 1999, after its merger
with AirTouch, Vodafone became Europolitan's majority
owner. Mr. Isaksson holds an M.S. in electrical engineering
from the Royal Institute of Technology in Stockholm, Sweden. He
is a member of the Verizon Wireless Board and the Vodafone Group
Executive and Operational Review Committees. He is also a member
of the Board of Directors of Ledstiernan AB (publ).
Alan Bowers
has been
a member of the Board of Directors of Iusacell since
April 30, 2002. Mr. Bowers is the Managing Director of
International Operations for Vodafone Americas Region, with
responsibility for oversight of the company's operations in
Mexico. Prior to his appointment as Managing Director on
July 1, 2000, Mr. Bowers was the country manager for
Korean operations. Mr. Bowers has held a variety of other
international positions with the company including the position
of Chief Financial Officer of Belgacom Mobile, Vodafone's
joint-venture with Belgacom in Belgium. Prior to working for
Vodafone, Mr. Bowers was an economist at the World Bank in
Washington, D.C. Mr. Bowers has a M.S. degree in Economics
from Georgetown University, and an M.B.A. from the University of
California at Berkeley.
Michael J. Pitt
has
been a member of the Board of Directors of Iusacell since
April 4, 2001. Mr. Pitt serves as Financial Director
of Group Operations within the Vodafone Group. He has served as
Financial Director of Vodafone Group International Limited and
Vodafone Europe Limited since 1993, the same year he joined
Vodafone as Financial Controller. He has been closely involved
in a number of cellular license bids and has had a leading role
in many of the Group's overseas acquisitions and disposals.
Prior to joining Vodafone, he spent six years with Coopers &
Lybrand and worked in the printing and engineering industries.
Mr. Pitt is a chartered accountant and has a degree in
Economics and Accounting. Mr. Pitt serves as a director of
various Vodafone companies, including Mannesmann Mobilfunk GmbH,
Mannesmann AG, Libertel (Netherlands), Telecel (Portugal) and
Omnitel Pronto Italia SpA (Italy).
David Anderson
has
served as a director of Iusacell since April 4, 2001. He is
currently the Group Corporate Finance Director of Vodafone Group
Plc, which he joined in December 2000. Prior to joining
Vodafone, Mr. Anderson worked at Lazard Freres for
17 years and became managing director in 1997.
Mr. Anderson holds a first class degree in mathematics and
philosophy from Oxford University.
Ignacio Mas
has been
a member of the Board of Directors of Iusacell since
April 4, 2001. Mr. Mas has been the Group Business
Strategy Director at Vodafone since January 2000. He joined
Vodafone from Intel Capital, Intel Corporation's venture
investing arm, where he was Senior Strategic Investments Manager
with responsibility for telecommunications investments in
Europe, based in Munich, Germany. From 1996 until 1999,
Mr. Mas was a Principal Consultant at Analysys Ltd., a
UK-based telecoms strategy consultancy, where he led consulting
activities in internet, broadband and e-commerce. After leaving
Analysys, Mr. Mas became a non-executive director at the
company, but he resigned that position on December 2000. Prior
to joining Analysys, Mr. Mas spent 7 years at the
World Bank in Washington DC, where he had several roles as
financial sector economist and within the bank's treasury
area. Mr. Mas has undergraduate degrees in Mathematics and
Economics from the Massachusetts Institute of Technology, and a
PhD in Economics from Harvard University. He has also twice been
a Visiting Professor of International Business at the Graduate
School of Business at the University of Chicago.
Ignacio Gómez Morin
has been a director of Iusacell since
April 4, 2001 and served as an alternate director of
Iusacell between August 1999 and April 2001. Mr. Gómez
Morin has been an alternate director of Iusacell Celular since
February 1997. He has been a partner of the law firm De Ovando y
Martínez del Campo, S.C. since 1992. Mr. Gómez
Morin holds a law degree from the Universidad Nacional
Autónoma de México and was admitted to practice law in
1991. Mr. Gómez Morin holds the offices of secretary
or alternate secretary of several companies within the
financial, industrial and commercial sectors.
Peter H. Burrowes
has been a member of the Board of
Directors of Iusacell since September 2001. Mr. Burrowes
was appointed President and Director General of Iusacell on
April 23, 2001. Prior to this appointment Mr. Burrowes
was for 8 years President and Chief Executive Officer of
Comunicación Celular,
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S.A., a leading Colombian cellular services
provider. Before that, Mr. Burrowes served in different key
positions in multinational corporations, including Director
General of Parker Gillete, S.A. de C.V., Director General of
Givaudan Roure, S.A., a Colombian subsidiary of Hoffman La
Roche, Finance and Administration Director of Compañía
Química Borden and Regional Finance Director of General
Foods International, among others. Mr. Burrowes holds an
Economics degree from the Universidad de los Andes, Colombia, an
administration and marketing degree from the Ealing Technical
College of London, Great Britain and participated in the
Executive Program on Competition and Strategy at the Harvard
School of Business.
Russell A. Olson
has
served as Executive Vice President of Finance and CFO of
Iusacell since October 2001, after serving as Executive Director
of Business Analysis for Verizon International for the Americas
since June 2000. Mr. Olson has served in a variety of
financial positions within Verizon and its predecessor company,
GTE, for over 16 years, including financial reporting,
auditing, treasury, international, strategic planning and
business analysis. Mr. Olson holds a B.A. degree in
Business Administration — Finance from the University
of Arizona and a M.S. degree in Finance from Fairfield
University.
Koren Borges
was
appointed Senior Vice-President of Marketing on April 23,
2001. Ms. Borges has been employed by Vodafone and its
predecessors for seven years, and has served in a variety of
positions in the marketing and business development areas. Prior
to joining Iusacell, Ms. Borges served as Marketing
Director of Vodafone Malta for two years and as Marketing
Director of Click GSM, Vodafone's subsidiary in Egypt for
two years. Ms. Borges holds an M.B.A. from the Wharton
School at the University of Pennsylvania, an M.A. in
International Relations from the School of Advanced
International Studies at John Hopkins University and a B.A. in
Biology and Theology from Brandeis University.
Juan Carlos Merodio López
was appointed Senior Vice-President,
Legal and Regulatory Affairs on April 23, 2001.
Mr. Merodio has been involved in the practice of law for
20 years, primarily in the transportation industry. During
the two years prior to joining Iusacell, Mr. Merodio was a
partner and director of the Mexican law firm M&A Bufete
Merodio S.C. Mr. Merodio was also in private practice from
1991 until 1995, as a partner of M&A Bufete Merodio y Alfaro
S.C. Mr. Merodio spent 11 years working for Grupo
Servia S.A. de C.V. and its subsidiary Transportación
Marítima Mexicana S.A. de C.V. (TMM). Mr. Merodio served as
General Counsel of TMM from 1985 until 1991, as President of
Grupo Servia S.A. in 1995 and as President and Director General
of TMM from 1996 until 1999. Mr. Merodio has served as a
director of Cintra S.A., Mexicana S.A. and Aeromexico S.A. and
was Vicechairman of the Mexican Shipowners Association from 1997
until 1999. He is a graduate of the Universidad Nacional
Autónoma de Mexico, a member of the Mexican Bar association
and a member of the Association of the Bar of the City of New
York.
Henry M. Ruiz
has
served as Vice-President of Technical Operations of Iusacell
since July 31, 2000 as an alternate director of Iusacell
since August 2000 and as a director of Iusacell Celular since
April 2001. Mr. Ruiz also served as Director of Engineering
and Operations for Iusacell in Region 5 from March 1998 to
September 1998 and as Director of Executive Support for
Iusacell's Vice-President of Technical Operations from
January 1997 until March 1998. Mr. Ruiz has been an
employee of Verizon and Bell Atlantic for 16 years. From
October 1998 until June 2000, he served as Chief Technology
Officer of Excelcomindo Pratama in Indonesia, where he was
responsible for network, engineering operations and information
technology. From August 1990 until December 1996, Mr. Ruiz
supported business development efforts worldwide for Bell
Atlantic International Inc. Prior to that, Mr. Ruiz worked
for New Jersey Bell for six years in various engineering and
operations capacities. Mr. Ruiz received a B.S. in
Mathematics and Computer Science at Stevens Institute of
Technology and a degree from the Professional Program for
Managers of Telecommunications and Information Technology at
Carnegie Mellon University.
Anthony Llompart
was
named Vice president of Sales & Distribution of Iusacell on
April 29, 2002. Mr. Llompart served three years as
Director Channel Management for Verizon International and has
held a variety of Sales & Marketing positions for Verizon
and its predecessor company, GTE, for over 8 years. These
include Sales Management, Product Management, Distribution, and
Customer Support. Mr. Llompart has over 12 years
experience in the wireless industry, and holds a B.S. degree in
Business Management from the University of Phoenix.
Jose Bellido Valerio
has served as Vice-President of Human
Resources of Iusacell since February 2000 after serving as
Director of Human Resources of Iusacell from August 1999 until
January 2000. From May
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1994 until April 1996, Mr. Bellido served as
Human Resources Manager for Iusacell Celular and since May 1996
he has served as Director of Human Resources of Iusacell
Celular. Prior to joining Iusacell Celular, Mr. Bellido
served as Manager of Industrial Relations for Aeromexico, S.A.
de C.V. for more than four years. Mr. Bellido holds a law
degree in labor law from the Universidad Nacional Autónoma
de Mexico, a specialized degree in law from Universidad
Panamericana, a diploma in human resources strategic planning
from the University of California at Berkeley, and a masters
degree in business from the Instituto Panamericano de Alta
Dirección de Empresas (IPADE).
Jorge Halvas Begovich
has been Vice-President of
Administration of Iusacell since September 2001 and, prior
thereto served as Vice-President of Regulatory Affairs of
Iusacell since February 2000 and, before that he served as
Director of Regulatory Affairs of Iusacell from August 1999
through January 2000. Mr. Halvas has also been Director of
Regulatory Affairs of Iusacell Celular since June 1997 and from
December 1995 until June 1997 served as Manager of Regulatory
Affairs of Iusacell Celular. For more than eight years prior to
being appointed to such position, Mr. Halvas worked in
various capacities in the banking and brokerage industries. From
January 1995 through November 1995, Mr. Halvas served as a
consultant to the Vice-President of Specialized Supervision of
the
Comisión Nacional Bancaria y de Valores
and from
February 1993 until December 1994, he served as a Credit
Director for Banca Confia, S.A. Abaco Grupo Financiero.
Mr. Halvas holds an undergraduate business degree from
Universidad Panamericana and an M.B.A. from the Instituto
Panamericano de Alta Dirección de Empresas (IPADE).
Andrew G. Hunkin
was
appointed Vice-President of Data and Long Distance of Iusacell
in April 2001. Mr. Hunkin has over sixteen years of
telecommunications experience, including fourteen years with
Verizon. Mr. Hunkin has held several positions during his six
years with Verizon International and eight years with GTE
Telephone Operations. Mr. Hunkin served as Director/
General Manager of Data Communications for Puerto Rico Telephone
Company (a Verizon company) from May 1999 until March 2001.
Before that, Mr. Hunkin served as Director of Business
Development Asia/ Pacific from November 1997 until April 1999
and as Manager of International Marketing Support from March
1996 until October 1997. Mr. Hunkin holds an M.B.A. from
Indiana Wesleyan University and a B.S. from Indiana University
at Bloomington.
B.     Compensation
The aggregate amount of compensation, including,
without limitation, base salary and benefits, paid by Iusacell
in 2001 to all directors and executive officers as a group was
Ps.84.1 million (U.S.$9.2 million), compared to
Ps.85.9 million (U.S.$9.4 million) in 2000. The
aggregate amount excludes any amounts paid by Verizon and
Vodafore to their employees who are directors and executive
officers of Iusacell. See Item 7, "Major Shareholders
and Related Party Transactions — Related Party
Transactions."
In addition, in 2001 Iusacell granted purchase
rights with respect to a total of 659,000 series V shares
to its executive officers under the management employee stock
purchase plan described below, which were later exchanged for
series V shares. Individuals who are currently Iusacell
executive officers and those executive officers whose labor
relationship with Iusacell Celular terminated during 2001 and in
the first four months of 2002 did not exercise any purchase
rights with respect to series V shares. In addition, purchase
rights with respect to the 659,000 series V shares were
forfeited by executive officers whose labor relationship with
Iusacell terminated during 2001.
As part of our general compensation policy, we
conduct periodic reviews of our management and employees to
determine bonus compensation. Iusacell also provides executive
officers with use of an automobile. In addition, we provide our
executive officers and other employees with food stamps (up to
Ps.1,226.1 per month), gas stamps (up to 320 liters per month)
and with contributions to a savings plan (up to Ps.1,665.8 per
month).
C.     Board
Practices
Iusacell has established Executive, Finance and
Strategic Planning, Audit and Human Resources and Compensation
Committees of the Board of Directors. All decisions of these
committees require a majority vote of their members, including
the favorable vote of at least one member appointed by the
series A
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shareholders. Mexican law requires the Audit
Committee to be comprised of a majority of independent directors
and chaired by an independent director.
The Executive Committee, an administrative and
decision-making body of the Board of Directors, may act for the
Board of Directors except where Mexican law requires action of
the Board of Directors. Since April 30, 2002, the members
of the Executive Committee are Messrs. Salloum, Espinal,
Giammarino, Lewis, Isaksson and Bowers.
The Finance and Strategic Planning Committee
reviews, evaluates and makes recommendations to the Board of
Directors regarding investment policies, financing policies and
strategic planning of the Company. Since April 30, 2002,
the members of the Finance and Strategic Planning Committee are
Messrs. Salloum, Espinal, Svigals and Lester.
The Audit Committee recommends Iusacell's
public accountants, reviews our annual consolidated financial
statements, provides oversight of Iusacell auditing, accounting,
financial reporting and internal control functions, and reviews
with management and Iusacell's independent public
accountants the plans and results of the auditing function. The
members of the Audit Committee elected on April 30, 2002
are Messrs. Martinez del Campo, Salloum, Giammarino and
Lester.
The Human Resources and Compensation Committee
reviews, evaluates and makes recommendations to the Board of
Directors regarding Iusacell's executive compensation
standards and practices, including salaries, bonus
distributions, grants under the executive employee stock
purchase plan (described below) and deferred compensation
arrangements. Since April 30, 2002 the members of the Human
Resources and Compensation Committee are Messrs. Salloum,
Giammarino, Lewis and Hickey.
Iusacell does not provide benefits upon
termination of employment for its directors.
D.     Employees
At December 31, 2001, Iusacell and our
subsidiaries had an aggregate of 1,940 full-time and part-time
employees, 129 temporary employees and 8 full time Verizon
seconded employees or consultants. Approximately 33.6% of the
full time employees were members of a labor union. We have never
experienced a work stoppage and management considers our
relationship with our employees to be good.
E.     Share
Ownership
Our directors and officers as a group own, in
aggregate, less than 1% of our shares. See Item 7,
"Major Shareholders and Related Party
Transactions — Major Shareholders."
Management
Employee Stock Purchase Plan
Iusacell's management employee stock
purchase plan became the successor to Iusacell Celular's
management employee stock purchase plan upon the close of
Iusacell's reorganization in August 1999. The plan helps to
retain key executives and better align their interests with
those of Iusacell's shareholders. The stock purchase plan
is administered by a management trust with the assistance of the
trust division of Bancrecer, S.A. Under the stock purchase plan,
the technical committee of the management trust (the
"Technical Committee"), which is composed of certain
executive officers of Iusacell at the direction of the Human
Resources and Compensation Committee, determines the executive
employees to whom series V shares of Iusacell will be offered
for purchase under the stock purchase plan.
The Technical Committee, upon direction from the
Human Resources and Compensation Committee, determines the
number of series V shares to be offered for purchase to such
executive employees, the purchase price per share for such
purchase rights, the vesting schedule for such purchase rights,
the payment terms and all other terms and conditions. The
purchase price per share for the purchase rights is one-tenth
the closing price for the series V shares held in form of
American Depositary Shares (ADSs) on the New York Stock Exchange
on the business day selected by the Technical Committee as the
date of sale, converted into pesos at the prevailing exchange
rate published by the Banco de México.
Grantees who leave Iusacell forfeit unvested
purchase rights and, after a period of time, forfeit vested but
unexercised purchase rights, all of which forfeited purchase
rights may be reissued by the Technical
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Committee to other employees. The number of
series V shares that may be granted under the stock purchase
plan cannot exceed 4.9% of the aggregate number of issued and
outstanding Iusacell shares.
Upon the close of the Iusacell reorganization in
August 1999, outstanding purchase rights with respect to
Iusacell Celular series L shares were exchanged for rights to
purchase Iusacell series V shares. In addition, 39 Iusacell
management employees exercised the right to purchase 1,220,690
series V shares at U.S.$0.70 per share (Ps.6.52 on the date
immediately prior to the date of the launch of the offer) in the
rights offer in respect of the shares held in the management
trust administering the plan.
In 2000, the Human Resources and Compensation
Committee and the Technical Committee granted purchase rights
with respect to a total of 681,000 Iusacell series V shares
to 5 executive employees at a purchase price of Ps.15.35 per
series V share. All such purchase rights vest in three
equal annual installments commencing a year after the date of
grant. In 2001, the Human Resources and Compensation Committee
and the Technical Committee granted purchase rights with respect
to a total of 659,000 Iusacell series V shares to 4
executive employees at a weighted average purchase price of
Ps.8.96 per series V share. All such purchase rights vest
in three equal annual installments commencing a year after the
date of grant.
As of December 31, 2001, purchase rights
with respect to 4,292,638 series V shares had not been
exercised and were outstanding in the management trust
administering the plan, of which 2,079,135 series V shares were
held by executive employees and 2,213,503 previously forfeited
series V shares were held by the trust and awaiting
reassignment. In addition, in 2001, purchase rights with respect
to 1,210,110 shares held by the trust were exercised.
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ITEM 7.     MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
We have two principal shareholders. The first,
Verizon, is comprised of various subsidiaries of Verizon. Since
February 1997, we have been under management control of
subsidiaries of Bell Atlantic, now Verizon. Our second principal
shareholder is a subsidiary of Vodafone Group Plc. No other
shareholder owns more than 5% of any class of our shares. At
April 30, 2002, based on the information made available to
us, our shareholders were as follows:
Number of Shares
Shareholders
A Shares
%
V Shares
%
Total
%
Verizon(1)
657,966,431
68.4
76,152,002
8.5
734,118,433
39.4
Vodafone(2)
303,326,053
31.6
339,617,555
37.7
642,943,608
34.5
Public investors(3)
—
—
484,962,753
53.8
484,962,753
26.1
Total
961,292,484
100.0
900,732,310
100.0
1,862,024,794
100.0
(1)
The address of Verizon Communications Inc. is:
    1095 Avenue of the Americas, New York, New York.
(2)
The address of the Vodafone Group Plc is: Max
    Eunvelaan 61, 3062 MA. Rotterdam, The Netherlands.
(3)
Includes the series V shares held by the
    trust administering our executive employee stock purchase plan.
Our directors and officers as a group own, in the
aggregate, less than 1% of Iusacell's shares.
Of Iusacell's series V shares
outstanding at April 30, 2002, 233,644,100 series V
shares were held in the form of American Depositary Shares by 40
holders of record. Assuming that the holders of ADSs are located
in the United States, then 42.8% of the series V shares
(which includes all but 1,400,000 series V shares held by
Verizon which are held in the form of ADSs) are held in the
United States.
In August 1999, we completed a reorganization of
Iusacell. The reorganization included U.S.$132.5 million in
borrowings from our principal shareholders between August 1998
and March 1999 that were immediately converted into equity, an
offer to exchange the shares of Iusacell Celular for shares of
Iusacell, primary equity offerings that raised
U.S.$33.7 million in net proceeds for Iusacell and a
U.S.$106.5 million secondary offering by our principal
shareholders. This reorganization more than doubled the number
of Iusacell's publicly held shares. Before the August 1999
primary and secondary offerings, Verizon (then Bell Atlantic)
had a 47.2% interest in Iusacell Celular and the Peralta Group
had a 43.8% interest. After the August 1999 reorganization,
Verizon and the Peralta Group each had a 40.4% interest in
Iusacell. On January 31, 2000, we launched a second
exchange offer to acquire the remaining 0.5% interest in
Iusacell Celular held by public shareholders. This offer was
completed on February 29, 2000 and, as a result, we then
held 99.9% of the outstanding Iusacell Celular shares. See
Item 4, "Information on the Company —
History and Development of the Company." Since this second
exchange offer placed additional series V shares with
public shareholders, both Verizon and the Peralta Group were
slightly diluted.
On March 30, 2000, Iusacell Celular's
shareholders approved a 30,000 for 1 reverse split of its shares
which became effective in May 2001. Iusacell now holds 100% of
the outstanding Iusacell Celular shares.
During the fourth quarter of 1999 and the first
quarter of 2000, relatives of Mr. Carlos Peralta sold
approximately 34,900,000 series V shares on the open
market. In April and May 2000, Iusacell sold 10,529,700 American
Depositary Shares for U.S.$15.125 per ADS in a public offering,
receiving approximately U.S.$153.0 million in net proceeds.
As a result, as of May 31, 2000, Verizon held a 37.2%
interest in Iusacell and the Peralta Group and associated
individuals held a 34.5% interest in Iusacell.
On April 4, 2001, Vodafone closed the
purchase of the Peralta Group's 34.5% interest in Iusacell.
In connection with this purchase, the shareholders agreement
among Iusacell, Verizon and the Peralta Group terminated and
Iusacell, Verizon and Vodafone entered into a new shareholders
agreement, which we refer to as the Iusacell Shareholders
Agreement.
On September 27, 2001, our shareholders
authorized a rights offering to holders of our outstanding
series V shares and ADSs. The rights offering involved
newly issued series V shares representing ADSs and
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series A shares for up to U.S.$100 million.
The subscription period started on October 5, 2001 and
ended on November 1, 2001. Iusacell's principal
shareholders, Verizon and Vodafone, purchased their pro rata
portion of series A and series V shares. 67% of the
non-Verizon and Vodafone shareholders exercised their rights on
the series V shares. In addition, Verizon's
subscription included all of the series V shares offered
to, but not subscribed by, public shareholders.
As of April 30, 2002, Verizon held a 39.4%
interest in Iusacell and Vodafone held a 34.5% interest in
Iusacell.
Governance
In accordance with Iusacell's by-laws and
the Iusacell Shareholders Agreement, our Board of Directors
consists of twelve members. The series A shareholders have
the right to appoint seven directors and their alternates
(including the Chairman of the Board of Directors) and the
series V shareholders have the right to appoint five
directors and their alternates. Mexican law, Iusacell's
by-laws and the Iusacell Shareholders Agreement give Verizon, as
majority owner of the series A shares, the right to elect six of
the series A directors. Under Iusacell's bylaws and the
Iusacell Shareholders Agreement, Verizon, as holder of the
majority of the series A shares, has the right to elect the
Chairman of the Board of Directors, whose vote breaks a tie.
Vodafone, as holder of greater than 10% but less than 20% of the
capital stock of Iusacell in the form of series A shares, has
the right to appoint the remaining series A director and,
as the controlling owner of the series V shares, all five
series V directors, subject to (i) the right of any
holder of a 10% or greater equity interest in Iusacell in the
form of series V shares to elect one director, and
(ii) the right, granted to Verizon under the Iusacell
Shareholders Agreement, to nominate one of the series V
directors. If Vodafone is unable to elect Verizon's
series V director nominee, then Vodafone has agreed, under
the Iusacell Shareholders Agreement, to nominate a Verizon
nominee as the seventh series A director.
Our by-laws and the Iusacell Shareholders
Agreement provide that resolutions of the Board of Directors
will be valid when approved by a majority vote of the members
present, including a majority of the series A directors, except
for certain matters which require a supermajority vote. For
actions of the Board of Directors present and voting at such
meeting, a "supermajority vote" means the affirmative
vote of a majority of the members of the Board of Directors,
including a majority of the series A directors and the
series A director or directors elected by holders of a 10%
or greater equity interest in Iusacell in the form of
series A shares.
Our by-laws and the Iusacell Shareholders
Agreement also provide that resolutions of our shareholders will
be valid when approved by a majority of our outstanding shares,
including a majority of the outstanding series A shares,
except for certain matters which require a supermajority vote.
For actions by the shareholders, "supermajority vote"
means the affirmative vote of the beneficial owners of a
majority of the series A shares and series V shares,
including 75% of the outstanding series A shares.
The following transactions are subject to a
supermajority vote by our Board of Directors or our shareholders:
•
acquisitions of non-telecommunications businesses
    for a purchase price in excess of U.S.$30.0 million;
•
certain investments, joint ventures and mergers
    within the telecommunications business involving assets in
    excess of U.S.$100.0 million;
•
certain dispositions of assets for consideration
    in excess of U.S.$30.0 million;
•
incurrence of indebtedness in an amount exceeding
    U.S.$100.0 million in the aggregate within any Iusacell fiscal
    year;
•
certain issuances of capital stock in an amount
    exceeding U.S.$50.0 million in the aggregate within any
    Iusacell fiscal year;
•
entering into, amending or terminating contracts
    with or for the benefit of certain affiliates of Iusacell,
    except for any renewals or extensions on terms substantially
    similar to those of certain consulting and seconded employee
    arrangements of Iusacell with Verizon affiliates;
•
termination or disposition of any
    telecommunication transmission business with annual revenues of
    more than U.S.$10.0 million in each of the two most recent
    fiscal years;
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•
termination of concessions relating to
    telecommunications operations;
•
the determination of how Iusacell will vote its
    shares and grant proxies to vote its shares on any supermajority
    transaction within entities in which Iusacell holds 10% or more
    of the capital stock; and
•
the granting of powers-of-attorney in connection
    with any such supermajority transactions.
As provided by the Mexican law, our by-laws
require our Board of Directors itself, without delegation, to
approve certain matters:
•
non-ordinary course of business related party
    transactions;
•
sales/purchases of 10% or more of assets;
•
guarantees involving more than 30% or more of
    assets; and
•
other non-ordinary course of business
    transactions including more than 1% of assets.
Our by-laws and the Iusacell Shareholders
Agreement provide that any shareholder or group of shareholders
holding shares that represent at least 25% of the total capital
stock of the Company, provided that such holding includes at
least 11% of such capital stock in series V shares and at least
10% in series A shares, which we refer to as a Qualified
Minority Shareholder, shall be entitled to elect one of the
chief operations officer, the chief financial officer, the chief
marketing officer or the chief technical officer of Iusacell.
Our Board of Directors or our Executive Committee shall
determine the officer to be designated by each Qualified
Minority Shareholder.
Pursuant to the Iusacell Shareholders Agreement,
Verizon and Vodafone have agreed to some restrictions on the
transfer of their Iusacell shares. Verizon and Vodafone have
granted to each other a right of first refusal on the transfer
of any series A shares.
Pursuant to the Iusacell Shareholders Agreement,
each of Verizon and Vodafone has the right to cause us to
facilitate two registered secondary public offerings of their
respective shares and on one occasion, a shelf-registration for
sale of their respective shares in a bona-fide public offering
for a period not to exceed 180 days. After one party's
exercise of its registration rights, all other parties having
registration rights may elect to include their shares in the
offering. Any party holding registration rights may not exercise
such rights during the 90-day period commencing on the effective
date of any registration statement filed by Iusacell for a
primary equity offering in which gross proceeds are expected to
exceed U.S.$30.0 million.
The Iusacell Shareholders Agreement also provides
that if we register any equity securities for a primary or
secondary public offering, we must permit Verizon and Vodafone
(and anyone to whom they have transferred shares otherwise than
in a public offering) to include their shares in such offering.
We have agreed to bear all expenses of any of the
above-described primary or secondary public offerings, other
than the fees of counsel to the holders of the registration
rights and any underwriting commissions or discounts. In
addition, we have agreed not to effect any public sale or
distribution of securities similar to those being registered
during the period commencing 21 days prior to the effective date
of a registration statement covering the registered securities
and continuing until 90 days following such effective date.
B.     Related Party
Transactions
General
Policy
We adopted a policy on transactions with related
parties in November 1993 in connection with the acquisition by
Bell Atlantic of its initial holdings in Iusacell. This policy
provides that we will not, and will not permit any of our
subsidiaries to, enter into any contract or transaction with or
for the benefit of any of their affiliates (excluding
transactions with, between or among wholly owned subsidiaries),
which is not at a price and on other terms at least as favorable
to us or the subsidiary as those which could be obtained on an
arm's-length basis from an unaffiliated third party. This
policy has been formalized in the Iusacell Shareholders
Agreement.
Consulting
and Secondment Agreements
Iusacell Celular and Verizon have entered into a
series of consulting and secondment agreements pursuant to which
Verizon has agreed, for an indefinite term, to provide Iusacell
with management, technical,
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marketing, legal and other consulting services
and seconded employees. Seconded employees generally agree to
expatriate assignments of two to three years duration, with such
employees' compensation being paid by Verizon and
reimbursed by Iusacell. Verizon charges Iusacell for the
provision of seconded employees at cost, and for the provision
of consulting services at or below market rates. Vodafone has
recently entered into a similar agreement with Iusacell.
With respect to consulting services and seconded
employees provided in 2001, Iusacell Celular has been credited
by Verizon for a total of U.S.$7.2 million to adjust
previous overcharges. At December 31, 2001, Iusacell
Celular owed Verizon U.S.$6.3 million for consulting
services and seconded employees provided in 1999, 2000 and 2001.
Vodafone charged to Iusacell for consulting fees and secondment
agreements a total of U.S.$219,216 in 2001.
In March 2001, Verizon and Iusacell agreed that
Verizon would accept a transfer of all rights in connection with
a U.S.$15.0 million advance paid by Iusacell Celular to an
affiliate of Nortel Networks Inc. in exchange, on a
dollar-for-dollar basis, for the cancellation of all existing
charges invoiced by Verizon to Iusacell with respect to
consulting services and seconded employees and a credit against
any and all future such charges until the sum of all canceled
and credited against charges equals U.S.$15.0 million. See
Item 8 "Financial Information — Consolidated
Statements and Other Financial Information — Legal
Proceedings — Non Judicial Disputes."
Roaming
Agreements
GTE Telecommunications Services, Inc., which we
refer to as TSI, provides clearinghouse services for roaming
arrangements. In 2001, TSI paid Iusacell U.S.$134,821 for such
services. In October 2001, we entered into an inter-carrier
roaming agreement with Verizon Wireless in the United States.
Interests of
Directors
The Peralta Group, which was one of our principal
shareholders until April 4, 2001, owns Fraccionadora y
Constructora Mexicana, S.A. de C.V., known as Fracomex, a
company engaged in real estate investment and management that
has entered into 13 lease agreements with some subsidiaries
of Iusacell. In 2001, Iusacell paid Fracomex rent for
U.S.$392,858. Additionally, in 2001 Iusacell acquired some
equipment from Fracomex for a total of U.S.$9,671. Payments
totaled U.S.$402,529.
Two Peralta Group members lease land to Iusacell
at the Peralta Group industrial complex in Pastejé, Mexico,
upon which Iusacell has built and operates warehouses. These
land leases expire in December 2015, but can be terminated
before then if either party gives the other one year's
prior written notice. Currently, Iusacell pays these two Peralta
Group entities U.S.$23,064 per month for these land leases. In
2001, payments for these leases totaled U.S.$299,835.
In 2001, Manufacturas Electrónicas
Pastejé, S.A. de C.V., a joint venture between the Peralta
Group and Mr. Marco Antonio de la Torre Barranco, an
alternate director of Iusacell until April 2001, provided
telephone and accessory repair services to Iusacell in the
amount of Ps.14.8 million (U.S.$1.6 million).
Mr. Fernando de Ovando, a director of
Iusacell until April 2000, Mr. Javier Martínez del
Campo, a director of Iusacell since April 2001 and a director of
Iusacell Celular since February 1997, and Mr. Ignacio
Gómez Morin, a director of Iusacell since April 2001 and an
alternate director of Iusacell Celular since February 1997, are
members of the law firm of De Ovando y Martínez
del Campo, S.C., which, in 2001, provided legal services to
Iusacell in the amount of approximately Ps.2.2 million
(U.S.$240,280).
C.     Interests of
Experts and Counsel
Not Applicable.
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ITEM 8.     FINANCIAL
INFORMATION
A.     Consolidated
Statements and other financial information
Financial
Statements
See Item 19(a) for a list of financial
statements filed under Item 18.
Legal
Proceedings
Although we are a party to legal proceedings in
the ordinary course of our business, management believes that
none of these proceedings, individually or in the aggregate, are
likely to have a material adverse effect on Iusacell.
Suit
by Mitsubishi
Mitsubishi Electronics America, Inc. filed a
complaint with the Circuit Court of Cook County, Illinois,
United States, on July 28, 1996 against Iusacell Celular,
Bell Atlantic Corporation and Bell Atlantic Latin American
Holdings, Inc. Mitsubishi's complaint alleged, among other
things, that we breached a purported contract for the purchase
of 60,000 local wireless telephone terminals at a cost of
U.S.$510 each. Mitsubishi later filed an amended complaint
against Iusacell Celular adding a fraud allegation against
Iusacell Celular. Mitsubishi sought judgment in an amount in
excess of U.S.$50,000 for each of the three counts against
Iusacell Celular, plus punitive damages for one of those counts.
Mitsubishi filed answers to interrogatories claiming damages in
an amount of U.S.$8,825,343.
Our motions to dismiss the complaint for lack of
personal jurisdiction and on substantive grounds were rejected,
although the court reserved judgment on Iusacell Celular's
motion to dismiss for
forum non conveniens
. Although we
believed the lawsuit had no basis, we nevertheless created a
contingency reserve of U.S.$3.0 million with respect to
such litigation.
After discovery, we filed a motion for summary
judgment. On December 7, 2000, the Circuit Court granted
our motion and all counts of the complaint against Iusacell
Celular were dismissed. As a result, in the fourth quarter of
2000, we reversed Ps.23 million (U.S.$2.4 million) of
the contingency reserve. In January 2001, in order to avoid
further litigation, we reached a settlement with Mitsubishi.
Suit
against SAGO
In June 2001, SAGO Interamericana, S.A. de C.V. a
distributor that at that time represented slightly less than 10%
of our monthly gross post paid additions and approximately 2% of
our monthly gross prepay additions, notified us that it was
immediately terminating its distribution agreement. We believe
that this action violated the termination provisions of the
distribution agreement, and have filed a lawsuit seeking
compensatory damages. We cannot predict whether we will prevail
in this lawsuit.
Telemedic
lawsuit
In March 2002 Telemedic S.A de C.V. filed a
lawsuit against Iusacell S.A de C.V. seeking compensatory
damages. We are now in the process of submitting evidence to the
judge. Those compensatory damages, if any, shall be determined
by the judge at the end of the process.
Non-Judicial
Disputes
In May 1998, we discovered that our former
corporate headquarters in Mexico City, of which one of Iusacell
Celular subsidiaries is the owner, is encumbered by liens
incurred by the prior owner for an amount in excess of the
estimated fair market value of the property. In March 2001, we
filed suit against the Director of the Public Registry of
Property of the Federal District of Mexico in the 48th Civil
Superior Tribunal in the Federal District of Mexico, seeking
cancellation of the liens in the public registry on the basis
that the underlying obligation has been discharged. We prevailed
in the lawsuit and consequently, the lien will be cancelled in
the Public Registry of Property of the Federal District of
Mexico.
Dividend
Policy
Since becoming a public company in 1999, we have
not paid any dividends. We do not contemplate paying dividends
in the foreseeable future.
B.     Significant
Changes
Not applicable.
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ITEM 9.     THE OFFER
AND LISTING
A.     Offer and
Listing Details
Iusacell's series A and series V shares have
been listed on the Mexican Stock Exchange since August 4,
1999, with the series V shares trading under the symbol
CEL. ADSs representing 10 Iusacell series V shares have
been listed on the New York Stock Exchange since August 4,
1999 and trade under the symbol CEL. The series V ADSs are
evidenced by American depositary receipts issued under a deposit
agreement with The Bank of New York, as depositary. Each of the
Iusacell series A and series V shares are without par
value and are in registered form. With respect to limitations on
the rights of series A and series V shares, see
Item 5, "Operating and Financial Review and
Prospects — Liquidity and Capital
Resources — Liquidity" and Item 7,
"Major Shareholders and Related Party
Transactions — Major Shareholders —
Governance."
Iusacell Celular's series D and L
shares were listed on the Mexican Stock Exchange until
February 29, 2000. ADSs representing 10 Iusacell Celular
series D shares were listed on the New York Stock Exchange
from June 21, 1994 until August 10, 1999 and traded
under the symbol CEL.d. ADSs representing 10 Iusacell Celular
series L shares were listed on the New York Stock Exchange
from June 21, 1994 until February 29, 2000 and traded
under the symbol CEL until August 4, 1999 and thereafter,
until February 29, 2000 under the symbol CEL.y.
The following tables present, for the periods
indicated, the high, low and period end sales prices of
(i) the Iusacell series V shares on the Mexican Stock
Exchange, as reported by the Mexican Stock Exchange, and
(ii) the Iusacell series V ADSs on the New York Stock
Exchange, as reported by the New York Stock Exchange. The table
also present the average trading volume of the shares and ADSs
for the periods indicated.
Mexican Stock Exchange (in Ps.) —
Series V Shares
Average Daily
Period-
Trading Volume
Period
High
Low
end
(shares)
Third Quarter 1999
10.86
9.00
9.00
14,018,252
(1)
Fourth Quarter 1999
17.00
8.80
14.10
412,852
First Quarter 2000
23.70
13.30
18.30
358,036
Second Quarter 2000
17.50
10.32
15.30
15,861
Third Quarter 2000
15.80
10.70
12.00
7,075
Fourth Quarter 2000
13.06
7.80
9.56
133,359
First Quarter 2001
13.80
7.10
7.85
560,670
Second Quarter 2001
8.50
6.00
6.39
255,810
Third Quarter 2001
6.53
2.10
2.20
849,920
Fourth Quarter 2001
3.80
2.05
3.56
1,082,520
December 2001
3.80
2.70
3.56
1,895,320
January 2002
4.18
3.40
3.90
2,691,500
February 2002
3.81
2.76
3.01
4,670,470
March 2002
3.36
2.97
3.29
4,462,560
April 2002
3.30
2.92
3.02
2,195,710
May 2002
3.04
2.38
2.39
1,240,156
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New York Stock Exchange (in U.S.$) —
Series V American Depository Shares
Average Daily
Period-
Trading Volume
Period
High
Low
end
(ADSs)
Third Quarter 1999
11.870
9.500
9.500
173,550
Fourth Quarter 1999
16.625
9.375
14.938
231,688
First Quarter 2000
26.500
13.750
20.250
235,592
Second Quarter 2000
20.375
10.625
15.625
244,840
Third Quarter 2000
17.1875
11.000
11.875
148,744
Fourth Quarter 2000
13.6875
8.0
9.75
222,947
First Quarter 2001
13.500
7.100
8.050
209,498
Second Quarter 2001
9.400
6.500
6.910
175,773
Third Quarter 2001
7.250
2.070
2.250
235,186
Fourth Quarter 2001
4.180
2.050
3.970
181,941
December 2001
4.180
2.850
3.970
173,400
January 2002
4.580
3.600
4.200
277,757
February 2002
4.300
2.900
3.390
477,658
March 2002
3.700
3.050
3.600
344,375
April 2002
3.650
3.080
3.200
93,959
May 2002
3.190
2.370
2.440
52,705
(1)
Reflects effect of the August 4, 1999
    exchange of shares over the Mexican Stock Exchange in connection
    with the Iusacell restructuring and recapitalization plan.
Source:
Bloomberg
L.P., Reuters.
B.     Plan of
Distribution
Not applicable.
C.     Markets
Trading on
the New York Stock Exchange
ADSs representing ten Iusacell series V shares
have been listed on the New York Stock Exchange since
August 4, 1999 and trade under the symbol CEL.
ADSs representing ten Iusacell Celular
series D shares were listed on the New York Stock
Exchange from June 21, 1994 until August 10, 1999 and
traded under the symbol CEL.d. ADSs representing ten Iusacell
Celular series L shares were listed on the New York Stock
Exchange from June 21, 1994 until February 29, 2000
and traded under the symbol CEL until August 4, 1999 and
thereafter until February 29, 2000, under the symbol CEL.y.
Trading on
the Mexican Stock Exchange
General
The Mexican Stock Exchange, which was founded in
1894 and has operated continuously since 1907, is located in
Mexico City and is Mexico's only stock exchange. The
Mexican Stock Exchange is organized as a corporation, and its
shares are owned by Mexico's 33 operating brokerage firms.
These firms are exclusively authorized to trade on the floor of
the Mexican Stock Exchange.
Electronic trading on the Mexican Stock Exchange
takes place between the hours of 8:30 a.m. and
3:00 p.m., Mexico City time, on each weekday other than
public holidays. Lot sizes are of 1,000 shares. Brokerage firms
are permitted to buy odd lots for their own account. The Mexican
Stock Exchange publishes an official daily price list that
includes price information for each listed security.
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Since January 11, 1999, the trading of
equity securities listed on the Mexican Stock Exchange is made
through the Electronic Negotiation System, an automated,
computer-linked system commonly known as
BMV-SENTRA
Capitales
. The trading of debt securities on the Mexican
Stock Exchange commenced in November 1995 through the system
known as
BMV-SENTRA Títulos de Deuda
.
The BMV-SENTRA system allows participation in the
securities markets through work stations set up for this purpose
on the trading floor of the Mexican Stock Exchange and on the
trading desks of each member broker. Member brokers must
maintain the number of work stations authorized by the Mexican
Stock Exchange, which work stations must be located in the
territory of Mexico. To access the BMV-SENTRA system, each
member broker is given a password.
Transactions may be carried out through ordinary
matched transactions during a trading day or through an auction
process. Ordinary transactions may take the form of firm bids
and offers that are matched on a given trading date, or matched
transactions
(operaciones de cruce)
in which the same
broker or brokers act for the seller and for the purchaser of
the relevant securities. Matched transactions may only occur if
existing bids or offers made on better terms are first matched.
Auctions may only be initiated with the approval of the Mexican
Stock Exchange in order to (i) determine the market price
of a security, (ii) commence the trading of a security on a
trading day or (iii) reinitiate trading of a security the
trading of which was suspended. Securities may only be traded at
prevailing market prices (which may be adjusted for corporate
events) or at auction prices.
Settlement is effected two trading days after a
share transaction is completed on the Mexican Stock Exchange.
Deferred settlements, even if by mutual agreement, are not
permitted without the approval of the CNBV. All securities
traded on the Mexican Stock Exchange are on deposit with
S.D.
Indeval, S.A. de C.V., Institución para el Depósito de
Valores
, known as Indeval, a privately owned central
securities depositary. Pursuant to the Mexican Securities Market
Law of 1975, the only persons authorized to be shareholders of
Indeval are the Mexican Central Bank, brokerage firms,
securities specialists, stock exchanges, credit institutions and
insurance and bonding companies. Indeval acts as a clearing
house, depositary, custodian, settlement, transfer and
registration institution for Mexican Stock Exchange
transactions, eliminating the need for physical delivery of
securities.
The Mexican Stock Exchange publishes a daily
official price list that includes information on each listed
security. The Mexican Stock Exchange may suspend trading of a
particular security for various reasons. Trading may be
suspended in the event of disclosure of material non-public
information, if the Mexican Stock Exchange considers that the
suspension is necessary for the public to be fully informed. The
Mexican Stock Exchange may also suspend trading of a particular
security as a result of significant price fluctuations during a
given trading day (fluctuations exceeding a given price level by
more than 15%) or as a result of unusual movements in the price
of a security, but in this last case, during no more than five
consecutive trading days. The Mexican Stock Exchange may also
suspend trading generally as a result of fortuitous events or
force majeure, or if unusual market fluctuations arise.
As of December 31, 2001, approximately 147
Mexican companies were listed on the Mexican Stock Exchange,
excluding mutual funds. During 2001, the ten most actively
traded equity issues represented approximately 60% of the total
volume of the shares traded on the Mexican Stock Exchange, not
including public offerings. Although there is substantial
participation by the public in the trading of securities on the
Mexican Stock Exchange, a major part of such activity reflects
transactions of institutional investors. There is no formal
over-the-counter market for securities in Mexico.
The Mexican Stock Exchange is Latin
America's second largest exchange in terms of market
capitalization, but it remains relatively small and illiquid
compared to major world stock markets and is subject to
significant volatility. During 1995, for example, the Mexican
Stock Exchange Index (
Indice de Precios
y Cotizaciones
), which is based on the share prices of
30 major Mexican issuers, declined on several occasions by
more than 5% (in peso terms) in one day. From October 21,
1997 to October 27, 1997, following sharp declines in Asian
stock markets, the Mexican Stock Exchange Index declined by
20.6%. There was another sharp decline of 38.8% in the Mexican
Stock Exchange Index from July 14, 1998 to
September 10, 1998 following a decrease in oil prices and
concerns about increasing inflation in Mexico. During 1999,
however, the Mexican Stock Exchange Index experienced steady
incremental growth, even though there was
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only one registered day of 5% growth or more.
During the first six months of 1999, the index gained 52%, and
by year-end 1999, the increase reached 82%, driven mainly by a
booming local economy and U.S. economic performance. During
2000, the deceleration in the U.S. economy as well as the
political uncertainty generated by the Mexican presidential
elections during the first six months of the year, led the
Mexican Stock Exchange Index to experience one-day gains or
losses of more than 3% on several occasions and end the year
2000 with a 21% loss. During 2001, the continued deceleration in
the U.S. economy and its implications in the Mexican
economy as well as the political and economic uncertainty
derived by the congress consideration and approval of a new tax
reform, led the Mexican Stock Exchange Index to experience 1-day
gains or losses of more than 3% on several occasions and ended
the year 2001 with a 12.7% gain.
Market
Regulation and Registration Standards
On April 28, 1995, the National Banking and
Securities Commission
Law (Ley de la Comisión Nacional
Bancaria y de Valores
) was enacted, which merged the former
Mexican National Securities Commission with the Mexican National
Banking Commission to create the CNBV, which now has supervisory
jurisdiction over both banking and securities activities. The
CNBV regulates the public offering and trading of securities and
imposes sanctions on illegal use of privileged information. The
CNBV regulates the Mexican securities market, the Mexican Stock
Exchange and brokerage houses through a Board of Governors
composed of 13 members, five of which are appointed by the
Mexican Ministry of Finance and Public Credit.
In order to offer securities to the public in
Mexico, an issuer must meet qualitative and quantitative
requirements, and only securities for which a listing
application has been approved by the Mexican National Securities
Commission may be listed on the Mexican Stock Exchange. CNBV
approval does not imply any kind of certification or assurance
relating to the merits or the quality of the securities or the
solvency of Iusacell. In June of 2000, the CNBV adopted new
general rules setting forth the requirements to become
registered in the National Securities Registry, which we refer
to as RNV, and to maintain such registration. These new rules
also repealed CNBV's 1993 general rules that established
Subsection A and B of the RNV. The new rules provide that to
become registered in the RNV, an issuer is generally required to
have:
•
at least three years operating history unless the
    issuer is a holding company, in which case the issuer's
    principal subsidiaries must have an operating history of at
    least three years;
•
stockholders' equity of at least 20,000,000
unidades de inversión,
which we refer to as UDIs,
    and which are inflation-indexed currency units (equivalent to
    Ps.61.1 million or U.S.$6.67 million as of
    December 31, 2001);
•
profits for the last three years of operation
    taken as a whole; and
•
a public float of at least 15% of the capital
    stock on a fully diluted basis, or of at least 7% of said
    capital, also on a fully diluted basis, if the issuer's
    offer represents a value of at least 160 million UDIs, in
    both cases excluding the shares of certain persons related to
    the issuer.
The new rules also provide that to maintain their
registration in the RNV, issuers are required to have:
•
stockholders' equity of at least 15,000,000
    UDIs (equivalent to Ps.45.8 million or
    U.S.$5.00 million as of December 31, 2001);
•
at least 36 transactions per semester on their
    publicly traded shares;
•
an average share price per semester higher than
    one peso;
•
no less than 8 million shares of the issuer
    and no less than 12% of the issuer's paid-in capital placed
    with the investment public at large; and
•
at least 100 stockholders.
The CNBV has the authority to waive some of these
requirements under certain circumstances. The Mexican Stock
Exchange carries out an annual review of each issuer to
determine if it continues to meet the eligibility requirements
for registration in the RNV. The Mexican Stock Exchange may
request issuers to submit a correction program when such issuers
have failed to comply with maintenance requirements. If the
program is not submitted or complied with by the issuer, the
registration and listing with the Mexican Stock
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Exchange may be canceled by the CNBV. Mexican
Securities which are offered outside Mexico are required to be
registered in the Special Section of the RNV.
Iusacell shares are registered under the
Securities and Special Section of the RNV.
Pursuant to the Mexican Securities Market Law,
the CNBV must be notified before shareholders of a company
listed on the Mexican Stock Exchange effect one or more
simultaneous or successive transactions outside the Mexican
Stock Exchange affecting 10% or more of such company's
capital stock. The holders of the shares being transferred in
the transactions are also obligated to inform the CNBV of the
results of the transactions within three days of completion of
the last transaction, or that the transactions have not been
completed. The CNBV will notify the Mexican Stock Exchange of
these transactions, without specifying the names of the parties
involved.
Issuers of listed securities are required to file
unaudited quarterly financial statements and audited annual
financial statements as well as various periodic reports with
the CNBV and the Mexican Stock Exchange.
D.     Selling
Shareholders
Not applicable.
E.     Dilution
Not applicable.
F.     Expenses of
the Issue
Not applicable.
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ITEM 10.     ADDITIONAL
INFORMATION
A.     Share
Capital
Not applicable.
B.     Memorandum and
Articles of Association
General
Iusacell was incorporated on August 6, 1998
as a variable capital corporation (
sociedad anónima de
capital variable
) established under the laws of Mexico.
Iusacell was registered in the Public Registry of Commerce of
the Federal District of Mexico under Commercial Number 242349 on
November 3, 1998. We were formed initially for the purpose
of acquiring and holding the shares of Grupo Iusacell Celular,
S.A. de C.V. On March 8, 2001, Iusacell's shareholders
approved new by-laws, which became effective on April 4,
2001, upon the closing of the sale by the Peralta Group to
Vodafone of its series A and series V shares in
Iusacell. On April 30, 2002, Iusacell's shareholders
approved amendments to its by-laws, in order to reflect certain
provisions of the Mexican Securities Market law (
Ley del
Mercado de Valores
).
Iusacell's corporate purpose is found under
Article Two of its by-laws. Iusacell's primary purpose
is to act as a holding company. The duration of our existence
under our by-laws is indefinite.
Directors
Under Mexican law, any member of the Board of
Directors who has a conflict of interest with Iusacell in any
transaction must disclose such fact to the other members of the
Board of Directors and abstain from voting on such matter at the
relevant meeting of the Board of Directors. Any member of the
Board of Directors who violates such provision may be liable for
damages caused to us. Additionally, members of the Board of
Directors may not represent any shareholders at any
shareholders' meeting.
Voting Rights
and Shareholders' Meetings
Each series A and series V share
entitles the holder to one vote at any general meeting of the
shareholders of Iusacell. Series A shareholders are
entitled to vote at a special meeting of the series A
shareholders to elect seven of the twelve members of our Board
of Directors and the corresponding alternate directors.
Series V shareholders are entitled to vote at a special
meeting of the series V shareholders to elect five of the twelve
members of our Board of Directors and the corresponding
alternate directors.
Under our by-laws, any shareholder or group of
shareholders holding shares of one same series of Iusacell
shares representing at least 10% of the total capital stock of
Iusacell, shall be entitled to designate one director
corresponding to such series of shares and the corresponding
alternate director for each 10% of the total capital stock of
Iusacell represented by the shares of such series held by such
shareholder or group of shareholders. In addition, any Qualified
Minority Shareholder shall be entitled, acting at a special
shareholders meeting, to designate and, as the case may be,
remove or substitute a member of each Committee, which shall be
one of the members designated by series V shareholders.
Under Mexican law, the holders of shares of any
series (or category of holders such as the Qualified Minority
Shareholder) are also entitled to vote at a special meeting of
the holders of shares of such series or category of holders on
any action that would prejudice the rights of such holders, and
such a holder would be entitled to judicial relief against any
such action taken without the approval of the required majority
of holders of the relevant series or category of holders at such
a meeting. Any determination that an action does not require a
vote at a special meeting would be subject to judicial challenge
by an affected shareholder, and the necessity for a vote at a
special meeting would ultimately be determined by a court.
Mexican law does not provide extensive guidance on the criteria
to be applied in making such a determination.
General shareholders' meetings may be
ordinary or extraordinary meetings. Extraordinary general
meetings are meetings called to consider the matters specified
in Article 182 of the
Ley General de Sociedades
Mercantiles,
which we refer to as the Mexican Companies Law,
including, principally, changes in the fixed share capital, any
amendments to the by-laws, liquidation, issuance of preferred
stock, merger, transformation from one type of company to
another, change in nationality and change of corporate purpose.
Under our
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by-laws, an extraordinary general
shareholders' meeting may also be called to consider
certain items (so long as they have not been approved at a
meeting of the Board of Directors or Executive Committee of the
Board of Directors) for which our by-laws require a
supermajority vote, as generally identified in Item 7,
"Major Shareholders and Related Party
Transactions — Major Shareholders —
Governance."
General shareholders' meetings called to
consider all other matters are ordinary meetings. An ordinary
general meeting of the shareholders of Iusacell must be held at
least annually during the four months following the end of each
fiscal year to consider matters specified in Article 181 of
the Mexican Companies Law, including, principally, the approval
of the report of the Board of Directors regarding the
performance of Iusacell, the approval of the financial
statements of Iusacell for the preceding fiscal year,
appointment of directors and statutory auditors and
determination of their compensation, and the declaration of
dividends.
Special meetings are meetings of the holders of a
particular series of shares or category of holders called to
consider matters relevant only to holders of such series of
shares or category of holders or which would prejudice the
rights of such holders. Special meetings of the series A
and the series V shareholders and the Qualified Minority
Shareholders, respectively, are to be held at least once a year
if necessary to elect the members of the Board of Directors (or
any committee of the Board of Directors) representing such
shareholders and to address other matters relating to the
relevant series or category of holders.
Under our by-laws, the quorum on a first call for
an ordinary general shareholders' meeting of the
series A and series V shareholders is at least 50%
plus one share of the outstanding series A and
series V shares. If a quorum is not available on the first
call, a second meeting may be called and validly held regardless
of the number of shares represented. In order for a resolution
of the ordinary general shareholders meeting to be validly
adopted as a result of a first or subsequent call, attendance by
and the favorable vote of the holders of a majority of the
series A shares is required.
The quorum on a first call for an extraordinary
general meeting is 75% of the outstanding shares. If a quorum is
not available on the first call, a second meeting may be called
and convened, provided that at least 50% plus one share of the
outstanding shares are present. Whether on a first or second
call, in order for a resolution of an extraordinary general
meeting to be validly adopted, the favorable vote of the holders
of a majority of the outstanding shares, including a majority of
the outstanding series A shares, is required; provided, however,
that the affirmative vote of at least 75% of the outstanding
series A shares is required to approve the supermajority items
referred to above as well as to approve amendments to certain
provisions of the by-laws and the early dissolution of Iusacell
and the designation of the corresponding liquidators.
The quorum on a first call for a special meeting
is 75% of the outstanding shares of the corresponding series or
category of holders. If a quorum is not available on the first
call, a second meeting may be called and convened, provided that
at least 51% of the outstanding shares of the corresponding
series or category of holders, as the case may be, are present.
Whether on a first or second call for a special meeting to take
action, the favorable vote of a majority of the outstanding
shares of the corresponding series or category of holders is
required.
The by-laws require the approval of holders of at
least 95% of the outstanding shares of Iusacell and the approval
from the CNBV for the amendment of the controlling
shareholders' obligation specified in Article 30 of
the by-laws for the repurchase of shares in the event of
delisting.
Holders of ADSs are entitled to instruct the
depositary as to the exercise of the voting rights pertaining to
the series V shares represented by the ADSs.
Under Mexican law, holders of 20% of our
outstanding capital stock may have any shareholder action set
aside by filing a complaint with a Mexican court of competent
jurisdiction within 15 days after the close of the general
shareholders' meeting at which such action was taken, by
showing that the challenged action violates Mexican law or our
by-laws. Relief under these provisions is only available to
holders:
•
whose shares were not represented when the action
    was taken or, if represented, were voted against it; and
•
whose complaint makes reference to the clause of
    the by-laws or the legal provision that was infringed.
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Shareholders' meetings may be called by the
Board of Directors, any of the statutory auditors or any Mexican
court of competent jurisdiction. In addition, the Board of
Directors or any of the statutory auditors may be required to
call a meeting of shareholders upon the written request of
holders of 10% of the outstanding capital stock. In addition,
the Board of Directors or the statutory auditors must call a
shareholders' meeting at the written request of any
shareholder if no ordinary general shareholders' meeting
has been held for two consecutive years or if the
shareholders' meetings held during such period have not
considered the items mentioned in Article 181 of the
Mexican Companies Law discussed above. Notice of a meeting must
be published in the Official Gazette of the Federation
(
Diario Oficial de la Federación
) and in a newspaper
of general circulation in Mexico City at least 15 days
prior to the meeting. In order to attend a shareholders'
meeting, a shareholder must request and obtain an admission card
by furnishing, at least 48 hours before the time set for
holding the shareholders' meeting, appropriate evidence of
its ownership of shares or depositing such shares with our
corporate secretary of the Board or with an institution
authorized to accept such deposit. If so entitled to attend the
meeting, a shareholder may be represented by proxy signed before
two witnesses.
Under Mexican law, an action for civil
liabilities against members of the Board of Directors may be
initiated by a shareholders' resolution taken at a general
shareholders' meeting. In the event shareholders decide to
bring such an action, the persons against whom such action is
brought will immediately cease to be members of the Board of
Directors. Additionally, shareholders representing not less than
15% of the outstanding shares of Iusacell may directly take such
action against members of the Board of Directors, provided that
(i) such shareholders have not voted in favor of a
resolution approved at the relevant general shareholders'
meeting pursuant to which it was resolved not to take any action
against the directors who are to be sued, and (ii) the
claim in question covers damages alleged to have been caused to
Iusacell and not only to the individual plaintiffs'
interests.
Shareholder
Conflicts of Interest
Under Mexican law, any shareholder that has a
conflict of interest in connection with any transaction must
abstain from voting at the relevant shareholders' meeting.
A shareholder that votes on a business transaction in which his
interest conflicts with that of Iusacell may be liable for
damages if the transaction would not have been approved without
such shareholder's vote.
Dividend
Rights
Each series A and series V share has
the same dividend rights. The declaration and payment of such
dividends will depend upon Iusacell's results of
operations, financial conditions, cash requirements, future
prospects and other factors deemed relevant by the shareholders.
In addition, Mexican law provides that Mexican companies may
only pay dividends from retained earnings included in the
year-end financial statements that have been approved by their
shareholders. Dividends may be paid only after all losses for
previous years have been paid for, a legal reserve equal to 20%
of paid-in capital has been achieved and shareholders have
approved the dividend payment. Some of Iusacell's
subsidiaries, including Iusacell Celular, have outstanding debt
obligations which limit the amount of dividends that can be paid
in any given year or prohibit dividends entirely. Iusacell and
its subsidiaries may agree to similar restrictions in the future
as they incur additional debt.
In accordance with the Iusacell Shareholders
Agreement, each of Verizon and Vodafone has the right to cause
Iusacell to pay dividends during any fiscal year in an amount of
up to 25% of the consolidated net income for the prior fiscal
year, provided that such payment is not in violation of
applicable law or contractual provisions and would not adversely
affect the foreseeable cash flow or capital requirements of
Iusacell. Consolidated net income for these purposes will be
determined in accordance with Mexican GAAP. However, the
Iusacell Shareholders Agreement provides that, if consolidated
net income so determined exceeds consolidated net income
determined in accordance with U.S. GAAP by more than 10%,
consolidated net income will be determined in accordance with
U.S. GAAP.
The Iusacell Shareholders Agreements also
provides that any declaration and/or payment of dividends that
would (i) in any fiscal year exceed 25% of Iusacell's
consolidated net income for the prior fiscal year or
(ii) be subject to Mexican withholding tax (except for
dividends required by Vodafone or Verizon, as
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discussed above) may be made only upon the
approval of holders of a majority of all outstanding shares,
including holders of a majority of the series A shares.
Under Mexican law, shareholders approve the declaration and
payment of dividends generally, but not necessarily, upon the
recommendation of the Board of Directors.
Holders of ADSs on the applicable record date are
entitled to receive dividends declared on the shares underlying
series V ADSs. The depositary will fix a record date for
the holders of ADSs in respect of each dividend distribution.
At the annual ordinary general meeting of
shareholders of Iusacell, the Board of Directors will generally
submit the financial statements of Iusacell for the previous
fiscal year, together with a report by the Board of Directors,
to the series A and series V shareholders for their
approval. The series A and series V shareholders,
having approved the financial statements, will determine the
allocation of Iusacell's net profits for such fiscal year.
At least 5% of such net profits must be allocated to a legal
reserve until the amount of the legal reserve equals 20% of
Iusacell's capital stock. Such reserve is not available for
distribution except as a stock dividend. Additional amounts may
be allocated to other reserve funds as the shareholders
determine including a reserve to repurchase shares. The
remaining balance of net profits, if any, is available for
distribution as dividends but only after losses, if any, of
previous years have been paid for.
All shares of each series outstanding at the time
a dividend or other distribution is declared are entitled to
share pro rata in such dividend or other distribution.
Partially-paid shares participate in any distribution to the
extent that such shares have been paid at the time of the
distribution.
The covenants contained in the Iusacell Indenture
limit Iusacell's ability to declare and distribute
dividends to its shareholders. The covenants contained in the
Iusacell Celular Indenture and in the terms of the Senior
Refinancing Secured Loan limit Iusacell Celular's ability
to declare and distribute dividends to Iusacell.
Liquidation
In the event that we are liquidated, one or more
liquidators must be appointed at an extraordinary general
shareholders' meeting to wind up our affairs. All
outstanding shares would be entitled to participate equally in
any distribution upon liquidation. Partially-paid shares
participate in any distribution to the extent that such shares
have been paid at the time of the distribution.
Changes in Share Capital and Rights of
    Shareholders
An increase of capital stock may be effected
through the issuance of new shares for payment in cash or in
kind, by capitalization of indebtedness or by capitalization of
certain items of shareholders' equity. No increase of
capital stock may be effected until all previously issued shares
of capital stock have been fully paid. A reduction of capital
stock may be effected to absorb losses, to make reimbursements
to shareholders, or to release shareholders from payments not
made. A reduction of capital stock to absorb losses may be
effected by reducing the value of all outstanding shares. A
reduction of capital stock shall also be effected on a pro rata
basis.
Shareholders may also approve the redemption of
fully-paid shares with retained earnings. Such a redemption
would be effected by a repurchase of shares listed on the
Mexican Stock Exchange or by lot.
The by-laws require that, unless a
shareholders' meeting resolves otherwise, any capital
increase effected pursuant to a capital contribution be
represented by new series A and series V shares in
proportion to the number of shares of each such series
outstanding. Our by-laws provide that the series V shares
may not exceed 50% less one share of our capital stock.
The fixed portion of our capital stock may only
be increased or decreased by resolution of an extraordinary
general meeting and an amendment to the by-laws, whereas the
variable portion of our capital stock may be increased or
decreased by resolution of an ordinary general meeting of
shareholders.
No resolution by the shareholders is required for
decreases in capital stock based on exercise of the right to
withdraw variable shares and of the purchase by Iusacell of our
own shares or for increases based on offers by us of shares we
had previously purchased.
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Preemptive Rights
In the event of a capital increase through the
issuance of new shares for payment in cash or in kind, a holder
of existing shares has a preferential right to subscribe for a
sufficient number of new shares to maintain the holder's
existing proportionate holdings of shares. Preemptive rights
must be exercised within the period and under the conditions
established for such purpose by the shareholders, and under
Mexican law and our by-laws in no case may such period be less
than 15 days and no greater than 30 days following the
publication of notice of the capital increase in the Official
Gazette of the Federation or following the date of the
shareholders' meeting at which the capital increase was
approved if all shareholders were represented. Otherwise, such
rights will lapse.
Under Mexican law, preemptive rights may not be
waived in advance by a shareholder, and cannot be represented by
an instrument that is negotiable separately from the
corresponding share. Holders of ADSs that are U.S. persons or
are located in the United States may be restricted in their
ability to participate in the exercise of preemptive rights.
Other Provisions
Fixed and
Variable Capital, Withdrawal Rights
As a
sociedad anónima de capital
variable
, we may issue shares constituting fixed capital and
shares constituting variable capital. The issuance of variable
capital shares, unlike the issuance of fixed capital shares,
does not require an amendment of our by-laws, although it does
require approval at an ordinary general meeting of shareholders.
Under the by-laws and CNBV regulations, variable
capital may not be greater than ten times the minimum fixed
portion of our capital stock specified in the by-laws. No shares
of Iusacell representing variable capital are currently
outstanding. Outstanding variable capital shares may be fully or
partially withdrawn. In contrast, the minimum fixed capital
required by law cannot be withdrawn. A holder of variable
capital shares that wishes to effect a total or partial
withdrawal of such shares would be required to notify us in an
authenticated written notice to that effect. If we received that
notice prior to the last quarter of the fiscal year, the
withdrawal would become effective at the end of the fiscal year
in which the notice was given. Otherwise, the withdrawal would
become effective at the end of the following fiscal year.
Redemption of variable capital shares of Iusacell
would be made at the lower of (i) 95% of the average share
price quoted on the Mexican Stock Exchange during the 30
business days prior to the date on which the withdrawal were to
become effective or (ii) the book value per variable
capital share as calculated from our financial statements for
the fiscal year at the end of which the withdrawal were to
become effective, as approved by our shareholders at an ordinary
general meeting. Any such amount to be paid by Iusacell would
become due on the day following such ordinary general meeting.
The covenants contained in the Iusacell Indenture
limit Iusacell's ability to issue variable capital shares.
The covenants contained in the Iusacell Celular Indenture and
the Senior Credit Refinancing Secured Loan limit Iusacell
Celular's ability to issue variable capital shares.
Forfeiture of Shares
As required by Mexican law, Iusacell's
by-laws provide that "current or future foreign
shareholders of the Company agree with the Ministry of Foreign
Relations to consider themselves as Mexican nationals with
respect to the shares that they may acquire or of which they may
be owners, and therefore not to invoke the protection of their
governments with respect to such shares under penalty, should
they violate this agreement, of forfeiting for the benefit of
the Nation the shares that they may have acquired."
In the opinion of de Ovando y Martínez del
Campo, S.C., special Mexican counsel to Iusacell and Iusacell
Celular, under this provision a non-Mexican shareholder is
deemed to have agreed not to invoke the protection of his own
government by requesting such government to interpose a
diplomatic claim against the Mexican government with respect to
its rights as a shareholder, but is not deemed to have waived
any other rights it may have with respect to its investment in
Iusacell, including any rights under U.S. securities laws (the
enforceability of which may be challenged in Mexico).
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If the shareholder should invoke such
governmental protection in violation of this agreement, its
shares could be forfeited to the Mexican government. Mexican law
requires that such a provision be included in the by-laws of all
Mexican corporations unless such by-laws prohibit ownership of
capital stock by foreign investors.
Purchase of Our Own Shares
According to Mexican law, we may repurchase any
series of our shares on the Mexican Stock Exchange at any time
at the then prevailing market price. Any such repurchase must be
done by affecting our shareholders' equity account, while
we hold the repurchased shares, or by reducing our capital
stock, if such shares are to be converted into treasury stock.
No resolution from a shareholders meeting is required for such
reduction, but a shareholders meeting must approve, for each
year, the maximum amount of funds that may be used to repurchase
shares, which amount may not exceed the amount of our net
earnings (including retained earnings). During the period we own
repurchased shares, such shares may not be represented at any
shareholders' meeting. Repurchased shares may be placed
among the investing public, without the need of approval from
our Board of Directors or shareholders, and the corresponding
capital increase shall not require a resolution of a
shareholders' meeting.
The covenants contained in the Iusacell Indenture
limit Iusacell's ability to repurchase its own shares. The
covenants contained in the Iusacell Celular Indenture and in the
terms of the Senior Refinancing Secured Loan limit Iusacell
Celular's ability to repurchase its own shares.
Repurchase in the Event of Delisting
In the event that the registration of our shares
in the Securities Section of the RNV is canceled, whether upon
our request or pursuant to a resolution adopted by the CNBV, our
by-laws and CNBV regulations require that our controlling
shareholders make a public offer to purchase the shares owned by
minority holders. The shares must be purchased by our
controlling shareholders at the higher of (i) the average
quotation price of the shares for the 30 trading days prior
to the date of the offer or (ii) the book value of the
shares, as reflected in the last quarterly report filed with the
CNBV and the Mexican Stock Exchange prior to the date of the
offer. If after said offer our controlling shareholders fail to
acquire 100% of our capital stock, the cancellation of the
registration of our shares will not become effective until our
controlling shareholders have created a trust with the funds
required to purchase the remaining shares at the same offering
price, with such trust being effective for at least 2 years.
Appraisal Rights
Whenever the shareholders approve a change of
corporate purpose, change of nationality, spin-off or
transformation from one type of corporate form to another, any
shareholder entitled to vote on such change or transformation
who has voted against it has the right to withdraw from Iusacell
and receive an amount generally equivalent to the book value of
our shares (in accordance with our last balance sheet approved
by a shareholders' meeting), provided such shareholder
exercises its right to withdraw within 15 days following
the adjournment of the meeting at which the change or
transformation was approved.
Foreign Investment Regulation
Foreign investment in capital stock of Mexican
corporations in certain economic sectors, including telephone
and cellular services, is regulated by the 1993 Foreign
Investment Law, as amended, and the regulations issued under
that law in 1998, which we refer to as the 1998 Regulations.
Under the 1993 Foreign Investment Law, foreign investment is
defined in general as the participation of foreign investors in
the voting capital stock of Mexican corporations and in
activities which are regulated by the 1993 Foreign Investment
Law. Foreign investors are defined as non-Mexican individuals,
non-Mexican legal entities and foreign entities without legal
personality.
The Mexican Foreign Investment Commission, the
Mexican Foreign Investment Bureau and the Mexican National
Registry of Foreign Investment are responsible for the
administration of the 1993 Foreign Investment Law and the 1998
Regulations. In order to comply with foreign investment
restrictions, Mexican companies that are engaged in specified
restricted industries typically limit particular classes of
their stock to
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ownership by Mexican individuals and by Mexican
corporations in which foreign investment has a minority
participation.
As a general rule, the 1993 Foreign Investment
Law allows foreign investment in up to 100% in the capital stock
of Mexican companies, except for those engaged in specified
restricted industries, such as basic telephone service, where
foreign investment is limited to 49% of the voting capital
stock. Foreign investment may, however, participate in a
proportion in excess of 49% of the voting capital stock of a
Mexican corporation engaged in the cellular telephone business
previous approval of the Mexican Foreign Investment Commission.
Iusacell has received such approval and, as a result, neither
our series A nor our series V shares are restricted to
Mexican ownership. See Item 4, "Information on the
Company — Business Overview — Government
Regulation — Foreign Ownership Restrictions."
Foreign states and foreign governments are
prohibited under the 1995 Telecommunications Law from holding a
concession or permit to provide telecommunications services,
from receiving any such concession or permit as a guarantee, or
from being the beneficiary of any such guarantee or from
directly or indirectly owning shares of Iusacell.
C.  Material Contracts
In December 1997, Iusacell Celular entered into
an agreement with subsidiaries of Lucent Technologies, Inc.
pursuant to which Iusacell Celular agreed (i) to replace
its existing analog wireless cellular network with a new Lucent
Technologies digital and analog network for a minimum
consideration of U.S.$188.0 million which. network swap-out
was completed in August 1999, and (ii) to continue
acquiring network equipment and services under the agreement in
order to improve its digital and analog network. Through
December 31, 2001, Iusacell Celular has purchased
approximately U.S.$409.9 million of network equipment and
services under this agreement.
In December 1999, Iusacell Celular, as a first
step toward minimizing its involvement in real estate management
and tower maintenance business, entered into an agreement with
MATC Celular, a Mexican subsidiary of American Tower Corporation
pursuant to which MATC Celular could acquire the majority of
towers currently owned and/or operated by Iusacell Celular. In
return, Iusacell would lease space on those towers and sublease
them to its operating subsidiaries. In 2001, we sold 244 towers
to MATC Celular, receiving in excess of U.S.$34 million in net
book gains. In May 2002, we sold 25 additional non-strategic
towers receiving in excess of U.S.$4.2 million in net
gains. We expect to sell up to an additional 61 towers to MATC
Celular during the remainder of 2002.
See also, Item 5, "Operating and
Financial Review and Prospects—Liquidity and Capital
Resources — Liquidity," for a summary of
Iusacell's material credit agreements and indentures.
D.  Exchange Controls
There are currently no exchange controls in
Mexico; however, Mexico has imposed foreign exchange controls in
the past. Pursuant to the provisions of the North American Free
Trade Agreement and in the event Mexico experiences serious
balance of payment difficulties or the threat thereof in the
future, Mexico remains free to impose foreign exchange controls
on investments made in Mexico, including those made by U.S. and
Canadian investors.
E.  Taxation
General
The following is a general summary of material
U.S. and Mexican federal income tax consequences of the
acquisition, ownership and disposition of Iusacell ADSs, the
Iusacell Celular 10% senior notes due 2004 and the Iusacell
14 1/4% senior notes due 2006 (the "Note" or the
"Notes") by U.S. holders.
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For purposes of this summary, a "U.S.
holder" is any holder of any of such securities that is,
for United States federal income tax purposes:
•
a citizen or resident of the United States;
•
a corporation, partnership, or other entity
    created or organized in or under the laws of the United States,
    or any political subdivision thereof;
•
an estate the income of which is includible in
    gross income for United States federal income tax purposes
    regardless of source; or
•
a trust if a court within the United States is
    able to exercise primary supervision over the administration of
    the trust and one or more United States persons have the
    authority to control all substantial decisions of the trust.
This summary does not constitute, and should not
be construed as, legal or tax advice to holders of Iusacell ADSs
or Notes. This summary does not purport to consider all the
possible U.S. or Mexican federal income tax consequences of the
purchase, ownership and disposition of the Iusacell ADSs or
Notes and is not intended to reflect the individual tax position
of any beneficial owner thereof. The summary is based upon
Mexican federal tax laws, their regulations and administrative
rules issued by the Mexican Ministry of Finance and Public
Credit, the Tax Treaty mentioned below and the Internal Revenue
Code of 1986, as amended (the "Code"), U.S. Treasury
regulations promulgated thereunder, published rulings by the
U.S. Internal Revenue Service ("IRS") and court
decisions, all as in effect as of the date hereof, all of which
authorities are subject to change or differing interpretations,
which changes or differing interpretations could apply
retroactively. Readers are cautioned that this is not a complete
analysis or listing of all potential tax effects that may be
relevant to a decision to purchase, hold or dispose of the
Iusacell ADSs or Notes.
This summary of U.S. federal income tax
consequences is limited to investors who hold the Iusacell ADSs
or Notes as "capital assets" within the meaning of
section 1221 of the Code (i.e., generally, property held for
investment) and does not purport to deal with investors in
special tax situations, such as financial institutions, tax
exempt organizations, insurance companies, regulated investment
companies, dealers in securities or currencies, persons holding
notes as a hedge against currency risks or as a position in a
"straddle," "conversion transaction," or
"constructive sale" transaction for tax purposes,
persons owning (actually or constructively) 10% or more of the
voting shares of the Company, or persons whose functional
currency (as defined in section 985 of the Code) is not the U.S.
dollar. In general, for U.S. federal income tax purposes,
holders of Iusacell ADSs will be treated as the owners of the
series V shares represented by those Iusacell ADSs.
Holders and prospective purchasers of the
Iusacell ADSs or Notes should consult their own tax advisors
concerning the application of Mexican and U.S. federal income
tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the
Iusacell ADSs or Notes arising under the laws of any state,
locality or foreign government or other taxing jurisdiction.
Mexico and the United States have signed and
ratified a Convention for the Avoidance of Double Taxation and
the Prevention of Tax Evasion with Respect to Taxes on Income
and related Protocols (collectively, the "Tax
Treaty"). The Tax Treaty is currently in effect and
provisions of the Tax Treaty that may affect holders of Iusacell
ADSs or Notes are summarized below. Holders should consult with
their tax advisors as to their entitlement to the benefits
afforded by the Tax Treaty. Mexico has also executed treaties to
avoid double taxation with other countries as well as agreements
providing for the exchange of information with respect to tax
matters, some of which presently are in force. The following
summary does not take into account the effect of any such
treaties. Readers should consult their tax advisors as to their
entitlement to the benefits afforded by such other treaties.
The U.S. Treasury has expressed concerns that
parties to whom ADSs are released may be taking actions that are
inconsistent with the claiming of foreign tax credits for U.S.
holders of ADSs. Accordingly, the analysis of creditability of
Mexican taxes described below could be affected by future
actions that may be taken by the U.S. Treasury.
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Taxation of Distributions of Iusacell
ADSs
U.S.
Federal Income Tax Considerations
Distributions paid out of Iusacell's current
or accumulated earnings and profits (as determined for U.S.
federal income tax purposes) with respect to the series V shares
represented by Iusacell ADSs will be includible in the gross
income of a U.S. holder as ordinary income when the
distributions are received by the depositary or by the U.S.
holder of a certificated ADS, and will not be eligible for the
dividends received deduction otherwise allowable to U.S. holders
that are corporations. To the extent that a distribution exceeds
earnings and profits, it will be treated first as a return of
the U.S. holder's tax basis to the extent of such tax
basis, and then as gain from the sale or disposition of a
capital asset. A U.S. holder must include in gross income as
ordinary income the gross amount of such dividends, including
any Mexican tax withheld therefrom, without regard to whether
any portion of such tax may be refunded to the U.S. holder by
the Mexican tax authorities. The amount of any dividend paid in
pesos will equal the U.S. dollar value of the pesos received,
calculated by reference to the exchange rate in effect on the
date the distribution is includible in income, regardless of
whether the pesos are converted into U.S. dollars. For U.S.
holders, that date would be the date the depositary receives the
dividend, regardless of whether the pesos are converted into
U.S. dollars. In addition, if dividends received in pesos are
not converted into U.S. dollars on the day they are received,
U.S. holders may recognize foreign currency gain or loss
(generally treated as ordinary gain or loss) upon the
disposition of such pesos measured by the differences between
such U.S. dollar value and the amount realized on such
disposition. Distributions generally will constitute foreign
source "passive income" (or, in the case of some
holders, "financial services income") for U.S. foreign
tax credit purposes.
Subject to certain conditions and limitations,
the Mexican tax withheld from dividend payments on Iusacell ADSs
(as described below under "— Mexican Tax
Considerations") will be treated as foreign income tax that
may be deducted from taxable income or credited against a U.S.
holder's U.S. federal income tax liability. However, the
Mexican tax may be deducted only if the U.S. holder does not
claim a credit for any Mexican or other foreign taxes paid or
accrued in that year. The foreign tax credit provisions are
complex, and U.S. holders are urged to consult their own tax
adviser as to the availability, if any, of a tax credit or
deduction to them.
Distributions of additional series V shares, if
any, to U.S. holders of Iusacell ADSs that are made as part of a
pro rata distribution to all shareholders of Iusacell generally
will not be subject to U.S. federal income tax.
Mexican
Tax Considerations
Apart from any liability that may result to
Iusacell from our paying of dividends to our shareholders,
dividends, either in cash or in any other form, paid with
respect to the series V shares represented by Iusacell ADSs,
will not be subject to a Mexican withholding tax.
Taxation of
Capital Gains of Iusacell ADSs
U.S.
Federal Income Tax Considerations
In general, upon the sale or other disposition of
Iusacell ADSs, a U.S. holder generally will recognize gain or
loss equal to the difference between the amount realized on such
sale or disposition (if the amount realized is denominated in a
foreign currency then its U.S. dollar equivalent, determined at
the spot rate on the date of disposition) and the U.S.
holder's adjusted tax basis in the shares (in U.S.
dollars). Such gain or loss will be treated as capital gain or
loss if the Iusacell ADSs were held as a capital asset and will
be long-term capital gain or loss if the Iusacell ADSs have been
held for more than one year on the date of such sale or other
disposition. For this purpose, a U.S. holder's holding
period for the Iusacell ADSs will generally include its holding
period for the Iusacell Celular ADSs. The deductibility of
capital losses is subject to limitations. Gain or loss
recognized by a U.S. holder on a sale or other disposition of
Iusacell ADSs generally will be treated as from sources within
the United States for U.S. federal income tax purposes.
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Mexican
Tax Considerations
The sale or other disposition of Iusacell ADSs by
holders who are non-residents of Mexico (as described below)
will not be subject to Mexican tax. Deposits of shares in
exchange for Iusacell ADSs and withdrawals of shares in exchange
for Iusacell ADSs will not give rise to Mexican tax.
Gains realized by an individual who is not a
resident of Mexico on the sale or other disposition of shares
representing capital stock of a Mexican corporation (like
Iusacell) through a recognized stock exchange, currently the
Mexican Stock Exchange only, are exempt from Mexican income tax
if the stock is on the list of publicly-traded shares published
by the Ministry of Finance and Public Credit through general
rules. The Iusacell series V shares are currently included on
that list. The proceeds from the sale or other disposition by an
entity that is not a resident of Mexico of shares representing
capital stock of a Mexican corporation (like Iusacell) through a
recognized stock exchange, currently the Mexican Stock Exchange
only, will be subject to a 5% withholding if the stock is on the
list of publicly-traded shares published by the Ministry of
Finance and Public Credit through general rules. However, under
general rules issued by the Ministry of Finance and Public
Credit on May 30, 2002 and in effect until
February 28, 2003, nonresident entities are given the right
not to pay said tax while said general rules are in effect.
Under current law, gains realized by a
non-resident holder on the sale or disposition of shares not
conducted through a recognized stock exchange generally are
subject to a Mexican tax at a rate of 25% of the gross sales
price. However, if the holder is a resident of a country which
is not considered to be a low tax rate country (by reference to
a list of low rate countries published by the Mexican Ministry
of Finance and Public Credit), the holder may elect to designate
a resident of Mexico as its representative, in which case taxes
would be payable at a maximum rate of 35% on the gain on such
disposition which maximum rate will be gradually reduced by one
percent per year until 2005. In 2005 and thereafter, said
maximum rate will be 32%. The United States is not considered to
be a low tax rate country.
However, even if the sale is not conducted
through a recognized stock exchange, pursuant to the Tax Treaty
gains realized by qualifying U.S. holders from the sale or other
disposition of shares will not be subject to Mexican income tax
so long as:
•
less than 50% of the assets of Iusacell consist
    of real property situated in Mexico;
•
such U.S. holder did not own 25% or more of the
    shares representing capital stock of Iusacell, directly or
    indirectly, during the 12-month period preceding such
    disposition; or
•
the gain is not attributable to a permanent
    establishment of the U.S. holder in Mexico.
Brokerage commissions paid in connection with
transactions on the Mexican Stock Exchange are subject to a
value added tax of 15%.
For purposes of Mexican taxation, an individual
is a resident of Mexico if he or she has established his or her
home in Mexico, unless he or she has resided in another country
for more than 183 days, whether consecutive or not, during
a calendar year and can demonstrate that he or she has become a
resident of that other country for tax purposes. An individual
of Mexican birth is deemed to be a Mexican resident for tax
purposes, unless proof is submitted to the contrary.
A legal entity is a resident of Mexico if it
(i) was established under Mexican law or (ii) has its
main management in Mexico. If a legal entity has a permanent
establishment in Mexico, such permanent establishment shall be
required to pay taxes in Mexico on income attributable to such
permanent establishment in accordance with relevant tax
provisions.
Other Mexican
Taxes
There are no inheritance or succession taxes
applicable to the ownership, transfer or disposition of Iusacell
ADSs or shares. There are no Mexican stamp, registration or
similar taxes or duties payable by holders of Iusacell ADSs or
shares.
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Information
Reporting and Backup Withholding
Each U.S. holder who holds ADSs through a broker
participating in the Depositary Trust Company ("DTC"),
or indirect participant holding Iusacell ADSs through DTC on
behalf of a beneficial owner and each paying agent making
payments in respect of Iusacell ADSs will generally be required
to provide the IRS with information, including the name, address
and taxpayer identification number of the beneficial owner of
the Iusacell ADSs, and the aggregate amount of dividends and
sale proceeds paid to such beneficial owner during the calendar
year. These reporting requirements, however, do not apply with
respect to certain beneficial owners, including corporations,
securities broker-dealers, other financial institutions,
tax-exempt organizations, qualified pension and profit sharing
trusts and individual retirement accounts.
In the event that a beneficial owner of Iusacell
ADSs fails to establish its exemption from such information
reporting requirements or is subject to the reporting
requirements described above and fails to supply its correct
taxpayer identification number in the manner required by
applicable law, or underreports its tax liability, as the case
may be, a holder may be subject to backup withholding at the
rate of 30% in 2002 and 2003 (and at a lower rate in subsequent
years) with respect to dividends and proceeds from the sale or
disposition of Iusacell ADSs. This backup withholding tax is not
an additional tax and any amounts withheld from a payment to a
holder of Iusacell ADSs will be refunded (or credited against
such holder's U.S. federal income tax liability, if any)
provided that the required information is furnished to the IRS.
The U.S. Treasury Department has issued final
regulations (the "Regulations") that unify current
certification procedures and modify reliance standards. The
Regulations are generally effective for payments made on or
after January 1, 2001. Potential investors and holders of
Iusacell ADSs should consult their own tax advisors concerning
the adoption of the Regulations and the potential effect on
their acquisition, ownership and disposition of Iusacell ADSs.
United States
Tax Consequences to Holders of Notes
Payments
of Interest and Additional Amounts
Generally, payments of interest and any
additional amounts (
i.e
., "gross-up payment")
paid by Iusacell or Iusacell Celular (the "Additional
Amounts") will be taxable to a U.S. holder as ordinary
income at the time such payments are accrued or are received, in
accordance with the U.S. holder's regular method of
accounting for Federal income tax purposes.
Market
Discount
If a U.S. holder purchases a Note for less than
its principal amount, the difference will be treated as a
"market discount" for U.S. federal income tax purposes
subject to a
de minimis
exception.
Under the market discount rules, a U.S. holder
will be required to treat any payment on a Note, or any gain on
its sale, exchange, retirement or other disposition, as ordinary
income to the extent of the accrued market discount which was
not previously included in income. If the Note is disposed of in
a non-taxable transaction (other than a non-recognition
transaction described in section 1276(c) of the Code), accrued
market discount will be includible as ordinary income to the
U.S. holder as if it had sold the Note at its fair market value.
In addition, a U.S. holder may be required to defer, until the
maturity of a Note or its earlier disposition (including a
non-taxable transaction other than a transaction described in
section 1276(c) of the Internal Revenue Code), the deduction of
all or a portion of the interest expense in respect of any
indebtedness incurred or continued to purchase or carry the
Note. Market discount will be considered to accrue on a
straight-line basis during the period from the date of
acquisition to the maturity date of the Note, unless the U.S.
holder elects to accrue on a constant-yield basis.
A U.S. holder of a Note may elect to include
market discount in income as it accrues on either a ratable or a
constant yield basis. If a U.S. holder makes this election, the
rules regarding the treatment of gain upon the disposition of
the Note and upon the receipt of certain cash payments as
ordinary income and regarding the deferral of interest
deductions will not apply. Currently, if a U.S. holder elects to
include market discount in income as it accrues, the election
will apply to all market discount obligations acquired during or
after the first taxable year to which the election applies.
Currently this election may not be revoked without the consent
of the Internal Revenue Service.
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Amortizable
Bond Premium
If a U.S. holder purchases a Note for more than
the amount payable at maturity (or on an earlier call date),
that excess will be considered an "amortizable bond
premium." This holder may elect to amortize the premium to
offset the interest and Additional Amounts from the Note such
holder would otherwise be required to include in income (subject
to special rules for early redemption provisions). In any tax
year, the holder can only use as much of the premium as the
constant yield method would allocate to that year. The U.S.
holder's basis in the Note will be reduced by the amount of
bond premium offset against interest and Additional Amounts.
Currently, if a U.S. holder elects to amortize the premium to
offset the interest from a Note, the election will apply to all
debt instruments acquired during or after the first taxable year
to which the election applies. Currently, this election may not
be revoked without the consent of the Internal Revenue Service.
Sale,
Exchange or Retirement of a Note
Except as discussed above, upon the sale,
exchange or retirement of a Note, a U.S. holder generally will
recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and such
U.S. holder's adjusted tax basis in the Note. For this
purpose, the amount realized does not include any amount
attributable to accrued interest on the Note (which will be
taxable as such). A U.S. holder's adjusted tax basis
in a new note will generally be the cost of the Note plus the
market discount, if any, the U.S. holder previously included in
income
minus
any amortizable bond premium and any
payments other than payments of stated interest made on the
Note. Such gain or loss generally will be long-term capital gain
or loss if the Note has been held for more than one year at the
time of such sale, exchange or retirement. The deductibility of
capital losses is subject to limitations. Gain or loss
recognized by a U.S. holder on a sale or other disposition of a
Note generally will be treated as from sources within the United
States for U.S. federal income tax purposes.
Foreign
Tax Credit and Effect of Withholding Taxes
Interest and Additional Amounts paid on Notes
will constitute income from sources outside the United States
for United States federal income tax purposes, and, with certain
exceptions, will be grouped together with other items of
"passive" income (or, in the case of some holders,
"financial services income"), for purposes of
computing the foreign tax credit allowable to a U.S. holder.
A U.S. holder will be required to include foreign
withholding taxes, if any, imposed on payments on a Note
(including any Additional Amounts payable by Iusacell or
Iusacell Celular) in gross income as interest income. Such
treatment will be required regardless of whether, as will
generally be true, Iusacell or Iusacell Celular is required to
pay additional amounts so that the amount of Mexican withholding
taxes does not reduce the net amount actually received by the
holder of the Note.
Subject to certain limitations, a U.S. holder may
be entitled to a credit against its United States Federal income
tax liability, or a deduction in computing its United States
Federal taxable income, for foreign income taxes withheld by
Iusacell or Iusacell Celular (which, as described above, would
include amounts withheld on Additional Amounts paid by Iusacell
or Iusacell Celular with respect to Mexican taxes). The foreign
tax credit provisions are complex, and U.S. holders are urged to
consult their own tax adviser as to the availability, if any, of
a tax credit or deduction to them.
Information
Reporting and Backup Withholding
For each calendar year in which the Notes are
outstanding, each DTC participant or indirect participant
holding an interest in a Note on behalf of a beneficial owner of
a Note and each paying agent making payments in respect of a
Note will generally be required to provide the IRS with certain
information, including such beneficial owner's name,
address and taxpayer identification number (either such
beneficial owner's Social Security number or its employer
identification number, as the case may be), and the aggregate
amount of interest, principal and Additional Amounts paid to
such beneficial owner during the calendar year. These reporting
requirements, however, do not apply with respect to certain
beneficial owners, including corporations, securities
broker-dealers, other financial institutions, tax-exempt
organizations, qualified pension and profit sharing trusts and
individual retirement accounts.
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In the event that a beneficial owner of a Note
fails to establish its exemption from such information reporting
requirement or is subject to the reporting requirements
described above and fails to supply its correct taxpayer
identification number in the manner required by applicable law,
or underreports its tax liability, as the case may be, a holder
may be subject to backup withholding at the rate of 30% in 2002
and 2003 (and at a lower rate in subsequent years) of each
payment of interest, principal and Additional Amounts with
respect to Notes. This backup withholding tax is not an
additional tax and will be allowed as a refund or credit against
the beneficial owner's United States Federal income tax
liability if the required information is furnished to the IRS.
Prospective purchasers of Notes are advised to
consult their own tax advisers as to the consequences of
acquiring and disposing of the Notes, including, without
limitation, (i) the applicability and effect of any state,
local or non-U.S. tax laws to which they may be subject, and of
any legislative or administrative changes in law, (ii) the
United States Federal income tax consequences of foreign
withholding taxes by Iusacell or Iusacell Celular (and of the
payment by Iusacell or Iusacell Celular of Additional Amounts
with respect thereto) and (iii) the availability of a
credit or deduction for foreign withholding taxes.
Mexican Tax
Consequences to Holders of Notes
The following is a summary of the principal
consequences under current Mexican federal tax law, their
regulations and administrative rules issued by the Mexican
Ministry of Finance and Public Credit and the Tax Treaty, in
force as of the date of this report, of the purchase, ownership
and disposition of Notes by a Foreign Holder. A "Foreign
Holder" is a holder who (i) is not a resident of
Mexico for tax purposes and (ii) will not hold Notes or a
beneficial interest in Notes in connection with the conduct of a
trade or business through a permanent establishment or a fixed
base in Mexico.
Taxation
of Payments of Interest and Principal
Under the Mexican Income Tax Law, payments of
interest made by Iusacell or Iusacell Celular to a Foreign
Holder in respect of their respective Notes will be subject to
Mexican withholding taxes assessed at a rate of 4.9% if,
(i) the Notes have been placed through banks or brokers in
a country with which Mexico has executed a treaty to avoid
double taxation and such treaty is in force, (ii) the Notes
have been registered in the Special Section of the National
Registry of Securities (the "Special Section"), and
(iii) as has been the case in the past, the issuer provides
the information required under general rules issued by the
Ministry of Finance and Public Credit (the "Reduced Rate
Regulation"), which is described below. Otherwise, payments
of interest made by Iusacell or Iusacell Celular to a Foreign
Holder in respect of their respective Notes will be subject to
Mexican withholding taxes assessed at a rate of 10%.
The information requirements under the
"Reduced Rate Regulation" are generally described
below:
•
that Iusacell and Iusacell Celular, as is the
    case, have timely filed with the Mexican Ministry of Finance and
    Public Credit information relating to the registration of their
    respective Notes in the Special Section and to the issuance of
    their respective Notes; and
•
that Iusacell and Iusacell Celular timely file
    each quarter of the calendar year with the Mexican Ministry of
    Finance and Public Credit information representing that no
    "party related" to Iusacell or Iusacell Celular, as
    the case may be, directly or indirectly, is the effective
    beneficiary of 5% or more of the aggregate amount of the
    interest payment, and Iusacell and Iusacell Celular maintain
    records evidencing compliance with this requirement.
Under the Mexican Income Tax Law and the Reduced
Rate Regulation any of the following would be a "party
related" to Iusacell or Iusacell Celular, as the case may
be: (1) shareholders of Iusacell or Iusacell Celular, as
the case may be, that own, directly or indirectly, individually
or collectively with related persons (within the meaning of the
Mexican Income Tax Law and the Reduced Rate Regulation) more
than 10% of the voting stock of Iusacell or Iusacell Celular, as
the case may be, or (2) corporations if more than 20% of
their stock is owned directly or indirectly, individually or
collectively by related persons of Iusacell or Iusacell Celular,
as the case may be.
Apart from the Reduced Rate Regulation, other
special rates of Mexican withholding income tax may apply. In
particular, under the Tax Treaty, the Mexican withholding tax is
reduced to 4.9% (the "Treaty
108
Table of Contents
Rate") for some holders that are residents
of the United States within the meaning of the Tax Treaty
provided they satisfy the circumstances contemplated in the Tax
Treaty and provided that the Notes are considered to be
regularly and substantially traded on a recognized securities
market, which is not expected to be the case. During 2002, the
Tax Treaty is not expected, generally, to have any material
effect on the Mexican tax consequences to holders of Notes
because, as described above, with respect to a Foreign Holder,
Iusacell and Iusacell Celular will be entitled to withhold taxes
in connection with interest payments under their respective
Notes at the Reduced Rate so long as the Reduced Rate Regulation
requirements described above are met. From March 2003 and
beyond, holders of the Notes should consult their tax advisors
as to the possible application of the Treaty Rate.
Interest paid on Notes held by a non-Mexican
pension or retirement fund will be exempt from Mexican
withholding tax if the fund (i) has been duly incorporated
as a fund pursuant to the laws of its country of origin, (ii) is
the effective beneficiary of the interest paid, (iii) is
registered with the Mexican Ministry of Finance and Public
Credit for that purpose, and (iv) the relevant interest
income is exempt from taxes in that country.
Iusacell and Iusacell Celular, have agreed,
subject to the exceptions and limitations contained in the
indentures under which the Notes were issued, to pay additional
amounts in respect of the Mexican withholding taxes mentioned
above to the holders of the Notes. Payment of these additional
amounts with respect to the Notes will be subject to Mexican
withholding tax at the same rate generally applicable to
interest paid in the Notes.
Under the Mexican Income Tax Law, a Foreign
Holder will not be subject to any Mexican income taxes in
respect of payments of principal made by Iusacell or by Iusacell
Celular in connection with the Notes.
Taxation
of the Sale and other Disposition of the Notes
Under the Income Tax Law it is not clear if a tax
will apply to gains resulting from a Foreign Holder's sale
or other disposition of Notes. Iusacell believes, but has not
verified, that the tax in question applies only to the gains
resulting from a Foreign Holder's sale or other disposition
of debt securities placed among the investment public at large
in Mexico.
Transfer
and other Taxes
There are no Mexican stamp, registration, or
similar taxes payable by a Foreign Holder in connection with the
purchase ownership or disposition of the Notes. A Foreign Holder
of Notes will not be liable for Mexican estate, gift,
inheritance or similar tax with respect to the Notes, although
gratuitous transfers of the Notes may in some circumstances
cause a Mexican income tax to be imposed on the recipient.
F.     Dividends and
Paying Agents
Not applicable, but see Item 5,
"Operating and Financial Review and Prospects —
Liquidity and Capital Resources — Dividend
Policy" and Item 8, "Financial
Information — Consolidated Statements and Other
Financial Information — Dividend Policy."
G.     Statement by
Experts
Not applicable.
H.     Documents on
Display
We file Annual Reports with and furnish other
information to the SEC as may be applicable from time to time.
You may read and copy any documents filed or furnished by
Iusacell at the SEC's public reference rooms in Washington,
D.C., New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. In addition, because Iusacell's American depositary
shares are listed on the New York Stock Exchange, reports and
other information concerning Iusacell can also be inspected at
the office of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
I.     Subsidiary
Information
Not applicable.
109
Table of Contents
ITEM
11.     QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Interest Rate
Risks
Iusacell's earnings are affected by changes
in interest rates as a result of long-term borrowings.
Iusacell has fixed rate debt under the Iusacell
senior notes and $7.8 million loan made by GTE Vendholdings
due 2003.
Iusacell also guarantees variable debt borrowed
by its infrastructure equipment purchase subsidiaries under the
BNP Paribas Facilities and the Harris Facility. Under the BNP
Paribas Facilities, the GIEK-Guaranteed Facility bears interest
at six-month LIBOR plus 0.6%, while the Non-GIEK Guaranteed Loan
bears interest at six-month LIBOR plus 2.0%. The Harris Facility
bears interest at a rate of six-month LIBOR plus 1.25%.
Iusacell Celular has fixed rate debt under its
Iusacell Celular senior notes. Iusacell Celular also had, as of
December 31, 2000, variable debt which was refinanced in
March 2001 with other variable debt.
Iusacell Celular's Senior Refinancing
Secured Loan bears interest at a variable rate per annum equal
to one, two, three or six-month LIBOR (at Iusacell
Celular's option) plus a spread ranging from, depending on
Iusacell Celular's leverage ratio, of 1.75% to 2.25%.
We do not enter into derivative financial
contracts for trading or speculative purposes. However, we have
managed the exposure to interest rate risk through the use of
interest rate collars and the exposure to foreign exchange risk
through forward rate contracts.
In July 1998, Iusacell Celular entered into an
interest rate collar agreement on a notional amount of
U.S.$35.0 million until July 30, 2002. The collar
agreement limits the maximum effective LIBOR cost to 6.12% if
six-month LIBOR is lower than 7.12% and 7.12% if LIBOR equals or
exceeds that level. On February 26, 1999, Iusacell Celular
entered into a second interest rate collar agreement to limit
the maximum interest rate Iusacell Celular must pay on
U.S.$15.0 million of its floating rate debt until July
2002. Under the terms of this second collar agreement, Iusacell
Celular's maximum effective LIBOR cost is limited to 5.82%
if six-month LIBOR is lower than 6.82% and, if six-month LIBOR
equals or goes above 6.82%, then Iusacell Celular's maximum
effective LIBOR cost is limited to 6.82%. These interest rate
collar agreements remain applicable to the debt under the Senior
Refinancing Secured Loan according to the March 2001 refinancing.
The following table summarizes the debt
obligations and derivative instruments that are sensitive to
changes in interest rates held by Iusacell as of
December 31, 2001. For the debt, the tables present
principal payment obligations that exist by maturity date and
the related average interest rate. For the collars, the table
present the notional amounts and average cap and floor rates
that exist by contractual date. Average interest rates for
liabilities are calculated based on weighted averages.. Dollar
denominated amounts have been converted to Mexican Pesos based
on the exchange rate of December 31, 2001, which was
1 U.S. $1 = Ps 9.1695
As of December 31, 2001 — Expected Maturity Date
2002
2003
2004
2005
2006
Thereafter
Total
Fair Value
in thousands of Mexican Pesos (U.S. Dollars)
Fixed Rate Debt
U. S. Dollar denominated
110,034
82,419
1,394,913
19,488
3,217,915
4,824,769
5,106,731
Weighted-average interest rate
12.7
%
12.8
%
11.6
%
14.2
%
14.2
%
Mexican Peso denominated
Weighted average interest rate
Variable Rate Debt
U. S. Dollar denominated
110,191
53,381
958,566
1,254,848
341,492
18,520
2,736,997
2,736,997
Weighted-average interest rate
4.7
%
6.6
%
7.6
%
7.6
%
7.4
%
6.2
%
Mexican Peso denominated
40,000
Weighted-average interest rate
12.4
%
Interest Rate Derivatives
Interest Rate Collars
Average Cap Rate
6.03
Average Floor Rate
5.13
Note: To determine the weighted-average
interest rate for variable rate debt, Libor interest rate was
forecasted by CIEMEX-WEFA assuming 2.40% for 2002, 4.30%. for
2003, 5.30% for 2004 and beyond. Foreign Currency Risk
110
Table of Contents
Iusacell's primary foreign currency exposure
relates to our foreign currency denominated debt.
Iusacell's debt obligations are denominated in
U.S. dollars while it generates revenues in Mexican pesos.
Therefore, Iusacell is exposed to currency exchange rate risks
that could significantly affect our ability to meet our
obligations. The exchange rate of pesos to the U.S. dollar
is a freely floating rate and the peso has experienced
significant devaluations in recent years. Any significant
decrease in the value of the peso relative to the
U.S. dollar in the near term may have a material adverse
effect on Iusacell and on our ability to meet our long-term debt
obligations.
In December 1999, Iusacell Celular used
forward-rate contracts to hedge its exchange rate exposure for
U.S.$77.0 million, approximately 50% of the principal and
interest payments coming due over the period April 2000 to April
2001. In November 2000, Iusacell Celular entered into another
forward-rate contract to hedge its exchange rate exposure for
U.S.$15.0 million of interest payments coming due between
then and January 2002. In August 2001, Iusacell entered into
another forward-rate contract for U.S.$11.0 million to
hedge its exchange rate exposure of interest payments coming due
between then and November 2002. In August and October 2001
Iusacell Celular hedged using forward rate contracts 100% of the
principal U.S.$150 million and U.S.$34.5 million of
associated interest of its 10% senior notes due 2004.
The following table summarizes Iusacell's
debt and derivative instruments that are sensitive to changes in
foreign currency exchange rates as of December 31, 2001.
For the debt, the tables present principal payment obligations
that exist by maturity date and the related average interest
rate. For the forward exchange contracts, the table presents the
amount of foreign currency that Iusacell has contracted to
purchase and the average exchange rates by contractual dates.
Average interest rates for liabilities are calculated based on
weighted average. Dollar denominated amounts have been converted
to Mexican Pesos based on the exchange rate of December 31,
2001, which was 1 U.S. $1 = Ps 9.1695.
As of December 31, 2001 — Expected Maturity Date
2002
2003
2004
2005
2006
Thereafter
Total
Fair Value
in thousands of Mexican Pesos (U.S. Dollars)
Fixed Rate Debt
U.S. Dollar denominated
110,034
82,419
1,394,913
19,488
3,217,915
4,824,769
5,106,731
Weighted-average interest rate
12.7
%
12.8
%
11.6
%
14.2
%
14.2
%
Variable Rate Debt
U.S. Dollar denominated
110,191
53,381
958,566
1,254,848
341,492
18,520
2,736,997
2,736,997
Weighted-average interest rate
4.7
%
6.6
%
7.6
%
7.6
%
7.4
%
6.2
%
Forward Exchange Derivatives
Receive Mexican Pesos/ Pay
    U.S. Dollars
—
—
—
—
—
—
Average exchange Rate
—
—
—
—
—
—
—
Receive U.S. Dollars/ Pay Mexican
    Pesos
209,065
140,752
1,984,279
—
—
—
—
Average exchange rate
9.955
9.384
12.026
—
—
—
—
Note: To determine the weighted-average
interest rate for variable rate debt, Libor interest rate was
forecasted by CIEMEX-WEFA assuming 2.40% for 2002, 4.30%. for
2003, 5.30% for 2004 and beyond.
111
Table of Contents
ITEM 12.     DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
112
Table of Contents
PART II
ITEM 13.     DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
See Item 5, "Operating and Financial
Review and Prospects — Liquidity and Capital
Resources — Loan Covenant Waivers and
Modifications" for a description of any default and the
correspondent waiver.
ITEM 14.     MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
Not applicable.
ITEM 15.     RESERVED
Not applicable.
ITEM 16.     RESERVED
Not applicable.
113
Table of Contents
PART III
ITEM 17.     FINANCIAL
STATEMENTS
We have responded to Item 18 in lieu of
responding to this Item.
ITEM 18.     FINANCIAL
STATEMENTS
Grupo Iusacell, S.A. de C.V.
Report of Independent Accountants
F-1
Consolidated Balance Sheets —
    December 31, 2001 and 2000
F-2
Consolidated Income Statements — Fiscal
    Years Ended December 31, 2001, 2000 and 1999
F-4
Consolidated Statements of Changes in
    Stockholders' Equity — Fiscal Years Ended
    December 31, 2001, 2000 and 1999
F-5
Consolidated Statements of Changes in Financial
    Position — Fiscal Years Ended December 31, 2001,
    2000 and 1999
F-6
Notes to the Consolidated Financial Statements
F-7
114
Table of Contents
REPORT OF INDEPENDENT ACCOUNTANTS
Mexico City, March 1, 2002, except for
Note 24 for which the date is May 29, 2002.
The Board of Directors and Stockholders of
Grupo Iusacell, S. A. de C. V.:
We have audited the accompanying consolidated
balance sheets of Grupo Iusacell, S. A. de C. V. and
subsidiaries (the Company) as of December 31, 2001 and
2000, and the related consolidated statements of income, of
changes in stockholders' equity and of changes in financial
position for each of the three years in the period ended
December 31, 2001 and the financial statement schedule
included in this Form 20-F. These financial statements and
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards in Mexico and the United
States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement and are prepared in
accordance with generally accepted accounting principles. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements and financial statement schedule referred to above
present fairly, in all material respects, the consolidated
financial position of Grupo Iusacell, S. A. de C. V. and
subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of its operations, changes in
stockholders' equity and changes in its consolidated
financial position for each of the three years in the period
ended December 31, 2001, in conformity with accounting
principles generally accepted in Mexico.
Accounting principles generally accepted in
Mexico vary in certain significant respects from accounting
principles generally accepted in the United States. The
application of the latter would have affected the determination
of consolidated net income for each of the three years in the
period ended December 31, 2001 expressed in Mexican Pesos
and the determination of consolidated stockholders' equity
at December 31, 2001 and 2000 also expressed in Mexican
Pesos to the extent summarized in Note 23 to the
consolidated financial statements.
PRICEWATERHOUSECOOPERS
Juan Manuel Ferrón Solís
Audit Partner
F-1
Table of Contents
GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Notes 1, 2, 3 and 4)
Expressed in thousands of
constant Mexican pesos as of December 31,
2001
December 31,
2001
2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 4c.)
Ps.
415,501
Ps.
687,124
Current portion of escrow account (Note 10b.)
439,791
456,337
Accounts receivable:
Trade, net of Ps.210,891 and Ps.221,684 of
    allowance for doubtful accounts in 2001 and 2000, respectively
    (Note 4e.)
595,286
637,101
Due from related parties (Note 5)
1,333
5,788
Recoverable taxes and other
650,274
580,646
1,246,893
1,223,535
Inventories — Net (Note 6)
253,689
249,388
Total current assets
2,355,874
2,616,384
Investments (Note 7)
34,063
32,952
Property and equipment — Net
    (Note 8)
9,469,044
8,550,620
Long-term portion of escrow account
    (Note 10b.)
—
478,749
Other assets — Net (Note 9)
2,637,035
2,707,000
Excess of cost of investments in subsidiaries
    over book value — Net of accumulated amortization of
    Ps.814,301 in 2001 and Ps.662,977 in 2000 (Note 4j.)
2,075,676
2,089,070
Total assets
Ps.
16,571,692
Ps.
16,474,775
LIABILITIES AND STOCKHOLDERS'
    EQUITY
CURRENT LIABILITIES:
Notes payable (Note 10g.)
Ps.
110,034
Ps.
120,391
Current portion of long-term debt (Note 10)
26,690
1,344,059
Trade accounts payable
764,196
546,858
Notes payable to suppliers, short-term
    (Note 11)
123,501
—
Due to related parties (Note 5)
60,082
155,134
Taxes and other payables
865,392
1,092,652
Income tax (Note 12)
54,498
38,158
Employee profit sharing (Note 12)
2,669
5
Total current liabilities
2,007,062
3,297,257
Long-term debt (Note 10)
7,211,557
6,517,612
Notes payable to suppliers, long-term
    (Note 11)
58,463
25,587
Due to related parties (Note 5)
76,960
—
Other accounts payable, long-term (Notes 4d.
    and 4m.)
54,742
3,419
Total liabilities
9,408,784
9,843,875
Commitments and contingencies (Note 13)
—
—
F-2
Table of Contents
GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS — (Continued)
(Notes 1, 2, 3 and 4)
Expressed in thousands of
constant Mexican pesos as of December 31,
2001
December 31,
2001
2000
STOCKHOLDERS' EQUITY:
Contributed capital (Notes 14, 15 and 16):
Capital stock
6,754,549
5,822,194
Capital contributed
1,329,197
1,329,197
8,083,746
7,151,391
Earned capital (Note 16):
Accumulated profits (losses):
Legal reserve
18,983
18,983
For prior years
(761,828
)
360,685
For the year
(499,989
)
(1,122,513
)
(1,242,834
)
(742,845
)
Accumulated other comprehensive income
196,911
196,911
Total majority stockholders' equity
7,037,823
6,605,457
Minority interest
125,085
25,443
Total stockholders' equity
7,162,908
6,630,900
Total liabilities and stockholders' equity
Ps.
16,571,692
Ps.
16,474,775
The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
F-3
Table of Contents
GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Notes 1, 2, 3 and 4)
Expressed in thousands of
constant Mexican pesos as of December 31,
2001
Years Ended December 31,
2001
2000
1999
Revenues:
Services
Ps.
5,634,306
Ps.
5,200,997
Ps.
4,285,910
Telephone equipment sales and other
607,131
528,713
497,061
6,241,437
5,729,710
4,782,971
Cost of sales:
Cost of services
1,532,366
1,464,120
1,221,938
Cost of telephone equipment sales and other
378,093
355,996
306,557
1,910,459
1,820,116
1,528,495
Gross profit
4,330,978
3,909,594
3,254,476
Operating expenses
2,076,698
1,923,935
1,643,520
Depreciation and amortization
2,619,225
2,408,977
1,621,023
Other operating income (Note 8)
307,886
—
—
Operating loss
(57,059
)
(423,318
)
(10,067
)
Other expenses (income) — Net
—
—
26,225
Integral financing cost (gain):
Interest expense — Net
808,678
982,462
331,499
Foreign exchange (gain) loss — Net
(224,793
)
16,783
(180,953
)
Gain from monetary position
(266,625
)
(450,706
)
(752,903
)
317,260
548,539
(602,357
)
Equity participation in net (profit) loss of
    associated companies and net (gain) loss on sale of equity
    investments (Notes 2 and 7)
(6,518
)
19,647
54,160
(Loss) profit from continuing operations before
    assets tax, income tax and minority interest
(367,801
)
(991,504
)
511,905
Provisions for:
Assets tax
146,404
156,335
150,889
Income tax
—
—
460,489
146,404
156,335
611,378
Loss from continuing operations before minority
    interest
(514,205
)
(1,147,839
)
(99,473
)
Minority interest
20,694
16,461
20,400
Loss from continuing operations
(493,511
)
(1,131,378
)
(79,073
)
(Profit) loss from discontinued operations (net
    of income tax) (Note 19)
—
(8,865
)
1,748
Loss after discontinued operations and before
    extraordinary item
(493,511
)
(1,122,513
)
(80,821
)
Extraordinary item:
Amortization of tax loss carryforwards
—
—
460,489
(Loss) profit after extraordinary item
(493,511
)
(1,122,513
)
379,668
Cumulative effect of the adoption of the new
    accounting pronouncement (Note 4d.)
6,478
—
—
Net (loss) profit for the year
Ps.
(499,989
)
Ps.
(1,122,513
)
Ps.
379,668
Weighted-average number of shares of common stock
    outstanding (thousands)
1,495,140
1,396,672
1,286,844
Basic net (loss) profit per share of common stock
    (pesos):
Loss from continuing operations
Ps.
(0.33
)
Ps.
(0.81
)
Ps.
(0.06
)
Profit (loss) from discontinued operations
—
0.01
(0.00
)
Extraordinary item
—
—
0.36
Cumulative effect of the adoption of the new
    accounting pronouncement
(0.00
)
—
—
Basic net (loss) profit per share of common stock
Ps.
(0.33
)
Ps.
(0.80
)
Ps.
0.30
The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
F-4
Table of Contents
GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2001, 2000
and 1999
(Notes 1, 2, 3 and 4)
Expressed in thousands of constant Mexican
pesos as of December 31, 2001
Accumulated profits (losses)
Accumulated
Capital
other
Total
stock
Capital
Legal
comprehensive
Minority
stockholders'
subscribed
contributions
reserve
Prior years
For the year
income
interest
equity
Balance at December 31, 1998
Ps.
11,031,253
Ps.
92,831
Ps.
5,075
Ps.
(3,919,200
)
Ps.
(1,657,470
)
Ps.
(868,820
)
Ps.
1,037
Ps.
4,684,706
Application of 1998 net loss
(1,657,470
)
1,657,470
—
Increase in capital stock from the capitalization
    of stockholders' debt
446,805
446,805
Effects of reorganization
(6,347,584
)
(92,831
)
(5,075
)
5,576,670
868,820
24,248
24,248
Effects of rights and primary offerings
247,812
168,974
416,786
Increase in minority interest
12,330
12,330
Comprehensive profit for the year
379,668
379,668
Balance at December 31, 1999
5,378,286
168,974
—
—
379,668
—
37,615
5,964,543
Application of 1999 net loss
18,983
360,685
(379,668
)
—
Increase in capital stock from the primary
    offering
443,908
1,160,223
1,604,131
Decrease in minority interest
(12,172
)
(12,172
)
Comprehensive loss for the year
(1,122,513
)
196,911
(925,602
)
Balance at December 31, 2000
5,822,194
1,329,197
18,983
360,685
(1,122,513
)
196,911
25,443
6,630,900
Application of 2000 net loss
(1,122,513
)
1,122,513
—
Increase in capital stock
932,355
932,355
Increase in minority interest
99,642
99,642
Comprehensive loss for the year
(499,989
)
(499,989
)
Balance at December 31, 2001
Ps.
6,754,549
Ps.
1,329,197
Ps.
18,983
Ps.
(761,828
)
Ps.
(499,989
)
Ps.
196,911
Ps.
125,085
Ps.
7,162,908
The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
F-5
Table of Contents
GRUPO IUSACELL, S. A. DE C. V. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
FINANCIAL POSITION
(Notes 1, 2, 3 and 4)
Expressed in thousands of constant
Mexican pesos as of December 31,
2001
Years Ended December 31,
2001
2000
1999
Operating activities:
Loss from continuing operations
Ps.
(493,511
)
Ps.
(1,131,378
)
Ps.
(79,073
)
Items not requiring the use of resources:
Depreciation and amortization
2,619,225
2,408,977
1,621,023
Equity participation in net (gain) loss of
    associated companies and net (gain) loss on sale of equity
    investments
(6,518
)
19,647
54,160
Minority interest
(20,694
)
(16,461
)
(20,400
)
2,098,502
1,280,785
1,575,710
Resources provided by (used for) operating
    activities:
Trade accounts receivable
68,326
168,204
(417,981
)
Related parties, net
(90,597
)
26,841
(22,305
)
Recoverable taxes and other
(52,070
)
110,008
62,364
Inventories
19,933
(39,706
)
26,714
Trade accounts payable
256,107
(157,265
)
(388,630
)
Taxes and other payables
(304,367
)
54,077
71,013
Income tax
15,968
36,594
(60,217
)
Employee profit sharing
2,664
(425
)
423
Other
51,323
723
(568
)
Resources provided by operating activities before
    discontinued operations, extraordinary item and cumulative
    effect of the adoption of the new accounting pronouncement
2,065,789
1,479,836
846,523
Cumulative effect of the adoption of the new
    accounting pronouncement
(6,478
)
—
—
Amortization of tax loss carryforwards
—
—
460,489
Profit (loss) from discontinued operations
—
8,865
(1,748
)
Resources provided by operating activities
2,059,311
1,488,701
1,305,264
Financing activities:
Proceeds from long-term debt
2,498,106
155,391
4,155,517
Principal payments on long-term debt
(3,121,530
)
(1,190,881
)
—
Proceeds from related parties financing
76,960
—
—
(Decrease) increase in notes payable
(10,357
)
12,340
(840,430
)
Increase in capital stock
932,355
—
—
Effect of rights and primary offerings
—
1,604,131
416,786
Accumulated effect of deferred taxes
—
196,911
—
Increase in capital stock from the capitalization
    of stockholders' debt
—
—
446,805
Resources provided by financing activities
375,534
777,892
4,178,678
Investing activities:
Purchase of property and equipment
(1,933,804
)
(2,140,344
)
(1,708,907
)
Sale (purchase) of common stock of
    associated companies
3,976
(19,602
)
(6,066
)
Acquisition of Portatel, net of cash
(495,320
)
—
—
Increase in telephones to be amortized
(521,782
)
(1,088,139
)
(862,577
)
Decrease (increase) in escrow account
495,295
507,390
(1,442,475
)
Purchase of other assets
(254,833
)
(149,179
)
(479,606
)
Resources used for investing activities
(2,706,468
)
(2,889,874
)
(4,499,631
)
Net (decrease) increase in cash and cash
    equivalents
(271,623
)
(623,281
)
984,311
Cash and cash equivalents at the beginning of the
    year
687,124
1,310,405
326,094
Cash and cash equivalents at the end of the year
Ps.
415,501
Ps.
687,124
Ps.
1,310,405
The accompanying twenty-four notes are an
integral part of these consolidated financial statements.
F-6
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
As of December 31, 2001, 2000 and
1999
Except as otherwise noted, expressed
in thousands of constant Mexican pesos as of
December 31, 2001.
Amounts expressed in U.S. Dollars are in
thousands.
Note 1 — Entity, Nature of Business
and Principal Stockholders
Entity and nature of business:
As a part of the recapitalization and
restructuring plan of Grupo Iusacell, S.A. de C.V., a new
holding company, Nuevo Grupo Iusacell, S.A. de C.V. was
incorporated on August 6, 1998 to acquire and hold all of
the outstanding shares of Grupo Iusacell, S.A. de C.V. On
March 1, 2000, both companies changed their names: Nuevo
Grupo Iusacell, S.A. de C.V. changed its name to Grupo Iusacell,
S.A. de C.V. (New Iusacell), and Grupo Iusacell, S.A. de C.V.
changed its name to Grupo Iusacell Celular, S.A. de C.V. (Old
Iusacell). In July 1999, New Iusacell initiated an offer to
exchange its two series of common stock for the four series of
common stock of Old Iusacell then outstanding on a one for one
basis. As a result of the exchange, New Iusacell acquired 99.5%
of Old Iusacell shares when the offer expired on August 10,
1999.
Prior to the exchange offer, New Iusacell had
nominal assets and liabilities and no operations. New Iusacell
also did not have any contingent liabilities or commitments. For
accounting purposes, New Iusacell is the successor business to
Old Iusacell, and the figures presented in the financial
statements and notes for dates prior to the exchange offer are
the consolidated financial information of Old Iusacell and its
subsidiaries. New Iusacell and its subsidiaries (Old Iusacell
and its subsidiaries prior to the recapitalization) are referred
to collectively herein as the Company.
Immediately after the first exchange offer, New
Iusacell completed both a rights offer of 18,405,490 shares
of its series V common stock, raising U.S.$12,884 in
proceeds, and a primary offer of 23,596,780 shares of its
series V common stock, raising U.S.$23,847 in net proceeds
(after commissions). Total net proceeds to the Company from the
rights and primary offerings amounted to Ps.416,786
(U.S.$36,731). New Iusacell's principal stockholders at
that time sold an aggregate of 101,403,220 shares of its
series V common stock, resulting in a 40.4% ownership
interest for each such shareholder.
On February 1, 2000, New Iusacell launched a
second exchange offer and at its conclusion, Old Iusacell's
ADS depositary, The Bank of New York, converted the remaining,
non-exchanged Old Iusacell ADSs into New Iusacell shares. As a
result of these transactions, New Iusacell increased its
ownership in Old Iusacell to 99.99%.
In April 2000, New Iusacell launched a primary
public offering under which New Iusacell sold 10,529,700
series V ADSs at a price of U.S.$.015125 per ADS raising
Ps.1,604,131 (U.S.$159,370) in net proceeds.
On June 15, 2000, New Iusacell launched a
private purchase offer under which the Company expected to
purchase the remaining Old Iusacell shares not tendered during
the two exchange offers. Pursuant to this private offer, New
Iusacell purchased a total of 9,717 series L shares of Old
Iusacell and 392 series D shares of Old Iusacell. When this
offer expired on September 29, 2000, there were
38,684 shares of Old Iusacell not owned by New Iusacell.
These 38,684 shares represented 0.002% of the total
outstanding shares of Old Iusacell at December 31, 2000.
On March 30, 2001, Old Iusacell's
stockholders approved a 30,000 to 1 reverse stock split.
Upon implementation of the reverse split in the second quarter
of 2001, the Company increased its ownership in Old Iusacell to
100%.
On September 27, 2001, at an ordinary and
extraordinary stockholders' meetings, the Company's
stockholders approved a capital stock increase for Ps.932,355
(U.S.$100,000) through the issuance of 224,461,739 series A
shares and 210,320,870 series V shares. The Company's
major stockholders' subscribed
F-7
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
their proportional part of the increase and the
Company launched a rights offering for the unsubscribed
series V shares. When the offer expired, a total of
82,046,734 series V shares where subscribed, leaving
40,694,059 series V shares unsubscribed, which were then
subscribed by Verizon Communications, Inc. (Verizon) through
some of its subsidiaries.
Old Iusacell is a holding company incorporated on
October 6, 1992. Its subsidiaries are primarily engaged in
the wireless telecommunications business and hold concessions to
operate cellular telephone systems in five market areas (each a
Region) in Mexico. New Iusacell, through Old Iusacell, holds the
non-wire line cellular concessions for Region 5
(Guadalajara), Region 6 (Leon), Region 7 (Puebla), a
cellular authorization for Region 9 (Mexico City), and in
2001, acquired the company that holds the concession for
Region 8 (Mérida) (Note 2).
New Iusacell subsidiaries also provide long
distance services, nationwide and international paging services
and, starting on December 2001, provide commercial wireless
personal communication services (PCS) in Regions 1 and
4 in northern Mexico.
Principal stockholders
In February 1997, after execution of a definitive
agreement between Old Iusacell's principal stockholders and
approval by the Mexican government, Bell Atlantic Corporation
(Bell Atlantic) assumed management control of Old Iusacell from
Carlos Peralta and companies and individuals controlled by or
related to him (together, the Peralta Group). After the
incorporation of New Iusacell, Bell Atlantic also has management
control of New Iusacell.
On June 30, 2000, Bell Atlantic and GTE
Corporation, completed their merger, creating Verizon.
References made to Verizon with respect to dates prior to
June 30, 2000 are references to Bell Atlantic prior to its
acquisition of GTE Corporation.
On April 4, 2001, after obtaining the
authorization of the Mexican regulatory agencies and the
finalization of a stockholders' agreement between the
Peralta Group and Vodafone Group Plc (Vodafone), the Peralta
Group and Vodafone closed the transaction under which the
Peralta Group sold its 34.5% ownership in New Iusacell to
Vodafone. Verizon and Vodafone hold substantial ownership
interests (direct or indirect) in New Iusacell.
Note 2 — Acquisitions, Dispositions
and Company Structure
In November 1999, the Company liquidated its
investment in Compañía Colombiana de Telefonía
Celular, S.A. (Telecel) and recorded a loss of Ps.56,621 before
taxes.
During 2000, the Company incorporated three new
subsidiaries: Iusacell Infraestructura, S.A. de C.V. and
Iusacell Infraestructura de México, S.A. de C.V., for the
purchase and lease of communications equipment, and Iusacell
Arrendadora, S.A. de C.V., for the lease and sublease of towers.
In 2000, Cellular Solutions de México, S.A.
de C.V. was merged into Iusacell, S.A. de C.V. The merger was
recorded as of December 31, 2000.
During 2001, the Company incorporated two new
subsidiaries: Iusacell PCS de México, S.A. de C.V. for the
financing of the development of the PCS services in
Regions 1 and 4, and Iusatel USA, Inc. to be engaged in the
long distance business in the United States of America.
On March 22, 2001, the Company sold its 65%
equity interest in Satelitrón, S.A. de C.V. As a result of
the sale, the Company recorded a gain of Ps.3,976 (U.S.$429)
before taxes.
F-8
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Acquisition of Grupo Portatel, S.A. de
C.V.
On October 19, 2001, Old Iusacell completed
the acquisition of a 78.34% ownership in Grupo Portatel, S.A. de
C.V. and its subsidiaries (Portatel) for Ps.522,533
(U.S.$56,588). The Company also reached an agreement to acquire
the remaining the 21.66% ownership in Portatel for U.S.$16,150.
The Company closed the acquisition of this remaining ownership
on February 8, 2002. Portatel is engaged in the wireless
communications business and holds the concession to operate
cellular telephone systems in the Region 8, which covers
the Mexican states of Yucatán, Campeche, Quintana Roo,
Chiapas and Tabasco in the southeast of Mexico.
The consolidated income statements of the Company
include the consolidated results of Portatel beginning
October 19, 2001. The assets acquired and liabilities
assumed were recorded at estimated fair values as determined by
the Company's management based on information currently
available, on current assumptions as to future operations and
independent appraisals. A summary of the assets acquired and
liabilities assumed in the acquisition is as follows:
Estimated fair values:
Assets acquired
Ps.
516,239
Liabilities assumed
(152,831
)
Goodwill (amortized by the straight-line method
    over the remaining life of the concession)
159,125
Purchase price
Ps.
522,533
Company Structure
Under the laws established by the Mexican
government, due to Verizon's control of New Iusacell, New
Iusacell may not own the majority of the voting stock of Mexican
companies that hold concessions to provide telecommunications
services other than cellular service. As of November 1998, Old
Iusacell and José Ramón Elizondo, a then director of
New Iusacell (the Mexican National), entered into a joint
venture formation agreement (the Agreement) pursuant to which
they agreed to participate together in the microwave frequencies
leasing, long distance, local telephony, PCS and paging
businesses. Old Iusacell and the Mexican National agreed that
Old Iusacell would own 94.9% of the economic interest and 49% of
the voting shares of Iusatel, S.A. de C.V. (Iusatel), the
Company's long distance concessionaire,
Iusatelecomunicaciones, S.A. de C.V. (Iusatelecomunicaciones),
the Company's fixed wireless local telephony operation,
Punto-a-Punto Iusacell, S.A. de C.V. (Punto-a-Punto Iusacell), a
microwave frequencies concessionaire and Iusacell PCS, S.A. de
C.V. (Iusacell PCS), which holds concessions for 1.9GHz
frequencies in Regions 1 and 4. Iusatel,
Iusatelecomunicaciones, Punto-a-Punto Iusacell and Iusacell PCS
are each referred herein as a Non-Cellular Subsidiary and
together, the Non-Cellular Subsidiaries. The Mexican National
owns 5.1% of the economic interest and 51% of the voting shares
of these companies.
The Mexican National does not have the unilateral
right to approve actions at the shareholder or board level of
the Non-Cellular Subsidiaries. Under each company's
by-laws, all shareholder or board actions must also be approved
by the majority of the shares held by Old Iusacell (or New
Iusacell) or a majority of the board members designated by Old
Iusacell (or New Iusacell), respectively.
The Agreement, together with each joint venture
company's by-laws, enable Old Iusacell or New Iusacell, as
the case may be, to have management control over the day-to-day
operations and financial administration of the Non-Cellular
Subsidiaries. The Mexican National cannot alone, among other
things, select, terminate or determine the compensation of
management or establish operating and capital decisions in the
ordinary course of business.
F-9
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Old Iusacell signed a joint venture agreement
with a Mexican company which holds a fifteen-year concession to
provide nationwide and international paging services through
July 2009. As of December 31, 2001, Infotelecom is owned
49%, 49% and 2%, by Old Iusacell, Banorte, S.A. (which acquired
Infomin, S.A. de C.V.'s interest in Infotelecom in exchange
for the retirement of debt) and the Mexican National,
respectively. Old Iusacell committed to contribute up to
U.S.$10,500. As of December 31, 2000, Old Iusacell had
invested all U.S.$10,500. If a partner does not fulfill its
responsibilities under the joint venture agreement, sanctions
could cause such partner to lose its investment and incur a
penalty of up to U.S.$1,000.
The subsidiaries of New Iusacell, which are
included in the consolidated financial statements, are the
following:
Economic interest
(direct or indirect)
as of December 31
Subsidiary
2001
2000
(%)
(%)
Iusacell PCS, S.A. de C.V. (Regions 1 and 4)
95
95
Iusacell PCS de México, S.A. de
    C.V.
100
—
Iusacell Infraestructura, S.A. de
    C.V.
100
100
Iusacell Arrendadora, S.A. de C.V.
100
100
Iusacell Infraestructura de México, S.A. de
    C.V.
100
100
Old Iusacell
100
100
S.O.S. Telecomunicaciones, S.A. de C.V.
    (Region 9)
100
100
Iusacell, S.A. de C.V.
100
100
Sistecel, S.A. de C.V.
100
100
Comunicaciones Celulares de Occidente, S.A. de
    C.V. (Region 5)
100
100
Sistemas Telefónicos Portátiles
    Celulares, S.A. de C.V. (Region 6)
100
100
Telecomunicaciones del Golfo, S.A. de C.V.
    (Region 7)
100
100
Inflight Phone de México, S.A. de
    C.V.
100
100
Inmobiliaria Montes Urales 460, S.A. de
    C.V.
100
100
Mexican Cellular Investments, Inc.
100
100
Iusanet, S.A. de C.V.
100
100
Promotora Celular, S.A. de C.V.
100
100
Iusatelecomunicaciones, S.A. de C.V.
95
95
Grupo Iusacell Nicaragua, S.A.
100
100
Satelitrón, S.A. de C.V.
—
65
Infotelecom, S.A. de C.V.
49
49
Punto a Punto Iusacell, S.A. de C.V.
95
95
Grupo Portatel, S.A. de C.V. and subsidiaries
    (Region 8)
78
—
Iusatel, S.A. de C.V.
95
95
Iusatel USA, Inc.
100
—
F-10
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 3 — Basis of
Presentation
a.     Basis of
presentation
The Company's consolidated financial
statements have been prepared in conformity with Mexican GAAP.
The consolidated financial statements have been presented in
thousands of constant Mexican pesos as of December 31, 2001
as required by Bulletin B-10, "Recognition of the
Effects of Inflation on Financial Information", as amended,
issued by the MIPA (Bulletin B-10).
b.     Consolidated
financial statements
Those companies in which the Company holds 50% or
more of the capital stock and/or exercises control over
operating and financing activities are included in the
consolidated financial statements. In addition, while the
Company owns less than 50% of the voting common stock of the
Non-Cellular Subsidiaries, it consolidates them because it
exercises management control over their day-to-day operations
and financial administration by appointment of the stockholders
and other arrangements (Note 2). All significant
inter-company balances and transactions have been eliminated in
consolidation.
c.     Use of
estimates
The preparation of financial statements in
conformity with Mexican GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Note 4 — Accounting
Policies
A summary of the Company's significant
accounting policies is as follows:
a.     Monetary
unit
The financial statements are presented in Mexican
pesos (Ps.), the currency that, based on Mexican laws, must be
used to prepare the accounting records of the Company and its
Mexican subsidiaries.
b.     Effects of
inflation on the financial statements
The consolidated financial statements of the
Company have been prepared in accordance with
Bulletin B-10. The Third Amendment to Bulletin B-10
requires the restatement of all comparative financial statements
to constant Mexican pesos as of the date of the most recent
balance sheet presented. Accordingly, the consolidated financial
statements have been restated as follows:
•
The balance sheet amounts as of December 31,
    2000 presented in the consolidated financial statements have
    been restated to constant Mexican pesos as of December 31,
    2001 based on the National Consumer Price Index (NCPI) published
    by Banco de México (the Mexican Central Bank).
•
Consolidated income statements for the current
    and prior years have been restated to constant Mexican pesos as
    of December 31, 2001 using the NCPI from the periods in
    which the transactions occurred.
•
Bulletin B-12, "Statement of Changes in
    Financial Information", issued by the MIPA
    (Bulletin B-12), addresses the presentation of the
    statement of changes in financial position when financial
    statements have been restated to constant Mexican pesos as of
    the latest balance sheet date. Bulletin B-12 identifies the
    origin and application of resources representing differences
    between beginning and ending balance sheet amounts in constant
    Mexican pesos, excluding the effect of holding non-monetary
    assets.
F-11
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Bulletin B-12 also provides that monetary
    and foreign exchange gains and losses should not be eliminated
    from resources provided by operating or financing activities.
The items that originate from the recognition of
effects of inflation on financial information are as follows:
Restatement
of non-monetary assets
Inventories are valued at the average price of
the purchases made during the period and are restated using the
NCPI, without exceeding net realizable value.
Based on the Fifth Amendment to
Bulletin B-10, property and equipment, net, and
depreciation for the year are restated using the NCPI, without
exceeding net realizable value.
Property and equipment are depreciated using the
straight-line method, based on the restated values. During the
second quarter of 2001, the Company completed a technical review
of the remaining useful lives of certain analog and digital
network equipment. As a result, the weighted-average useful life
for certain communications equipment is now ten years compared
with the previous 8.7 years. This change represented a
reduction of approximately Ps.452,000 in depreciation expense
for the year. The average annual rates of depreciation used by
the Company are as follows:
2001
2000
(%)
(%)
Buildings and facilities
4
4
Communications equipment
10
12
Furniture and fixtures
10
9
Transportation equipment
17
18
Computer equipment
29
21
Cellular rental telephones
25
25
The Company does not capitalize integral
financing cost for assets under construction, unless the
integral financing cost generated by loans are directly
attributable to those assets. For the years ended
December 31, 2001 and 2000, the Company did not capitalize
integral financing cost. Integral financing costs capitalized
during 1999 were Ps.184,718.
Investments in associated companies are accounted
for using the equity method based on the associated
company's equity and are adjusted for the effects of
inflation in accordance with Bulletin B-10.
Restatement of stockholders'
    equity
The contributed and earned capital accounts
include the effect of restatement determined by applying the
NCPI factor from the date capital was contributed or earned. The
restatement represents the amount required to maintain the
contributions and accumulated results in constant Mexican pesos
as of December 31, 2001.
The excess or deficit from restatement of capital
account is an element of stockholders' equity that includes
surplus or deficit from holding non-monetary assets, which
represents the excess or deficit in specific values of net
non-monetary assets in comparison with the increase attributable
to general inflation as measured by the NCPI.
Integral financing (gain)
    cost
Integral financing (gain) cost is comprised of
net interest expense, foreign exchange gains and losses, gains
and losses from net monetary position and fluctuations in the
market value of hedge derivative contracts on
foreign-denominated debt.
F-12
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Foreign exchange gains and losses on transactions
denominated in currencies other than Mexican pesos result from
fluctuations in exchange rates between the date transactions are
recorded and the date of settlement or period end.
Gains and losses from net monetary position
represent the effects of inflation, as measured by the NCPI, on
the Company's monetary assets and liabilities at the
beginning of each month. If monetary liabilities exceed monetary
assets, there is a gain from monetary position. If monetary
liabilities are less than monetary assets, there is a resulting
loss from monetary position.
c.
Cash and cash equivalents
During 2000, the MIPA issued Bulletin C-1,
"Cash", applicable to all Mexican companies beginning
January 1, 2001. This Bulletin provides guidance for the
valuation of foreign currencies and precious metals as currency.
Cash and cash equivalents consist primarily of
bank deposits. The Company invests its excess cash in deposits
with major banks.
As the Company follows the practices mentioned in
the Bulletin, the adoption of this Bulletin did not have a
material effect on the Company's financial statements and
disclosures.
d.
Financial instruments
Effective January 1, 2001,
Bulletin C-2, "Financial Instruments", issued by
the MIPA (Bulletin C-2), requires that all financial
instruments be recorded in the balance sheet at their fair value
and changes in the fair value be recorded in each period in the
income statement. Bulletin C-2 also requires that
derivative financial instruments used for hedging purposes be
recorded in the balance sheet and valued using the same
valuation criteria used to value the hedged asset or liability.
The Company's financial instruments consist
principally of cash and cash equivalents, restricted cash,
accounts receivable and payable, notes payable, long-term debt,
and foreign currency and interest hedge contracts.
The Company use derivative financial instruments
to manage the risk of variable interest rates and foreign
currency exchange fluctuations, which under Bulletin C-2,
are classified as hedge transactions.
The carrying amounts of financial instruments, as
reflected in the balance sheet, approximate their fair value as
of December 31, 2001, except for long-term debt which has a
quoted market value and for the foreign currency and interest
rate hedge contracts, which as of January 1, 2001, are
valued using the same valuation criteria used to value the
hedged asset or liability (Note 21).
As a result of the adoption of this new
accounting pronouncement, the Company recognized a cumulative
loss on derivative financial instruments of Ps.6,478 as of
January 1, 2001. Prior to January 1, 2001, the Company
recorded interest rate and foreign currency hedge contracts on a
cash basis.
e.
Allowance for doubtful accounts
The Company cancels service to customers with
invoices that are 60 days past due. The allowance for
doubtful accounts represents the Company's estimate of the
probable loss inherent in all accounts receivable based on
general historical trends of customer performance and factors
surrounding the specific customer's credit risk. The
Company wrote off accounts receivable for Ps.119,225 and
Ps.42,657 in 2001 and 2000, respectively. The charge to income
for the year for the allowance for doubtful accounts amounted to
Ps.108,432, Ps.94,531 and Ps.105,526 in 2001, 2000 and 1999,
respectively.
F-13
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
f.
Investment in associated companies
The Company carries under the equity method
long-term investments in associated companies in which it owns
between 20% and 50% of the company's voting common stock
and over which the Company can exercise significant influence.
Under the equity method, such investments are carried at cost
adjusted for the Company's share of the net income or
losses of these companies and the effects of restatement of
non-monetary assets in the associated companies. The effects of
transactions with such associated companies are eliminated
before applying the equity method.
g.
Cellular telephones
The cost of cellular telephones given to
customers under exclusive service contracts is amortized on a
straight-line basis based on the nature and terms of the service
contracts to match costs with the timing of earned revenues.
During the second quarter of 2001, the Company decided to reduce
the amortization period of cellular telephones from an average
of eighteen months to twelve months. This change represented an
increase of approximately Ps.184,347 in amortization expense for
the year. The cost of such telephones is included in other
assets, net of accumulated amortization, and does not exceed
market value.
At the end of the contract term, the customer
keeps the cellular telephone. In the event of an early
termination of an exclusive service contract, the customer
either (i) is required to return the phone to the Company
or (ii) acquires the telephone at its book value on the
date of termination.
The cost of cellular telephones sold to customers
is recorded as cost of sales based on the average cost of such
telephones. Telephones leased to customers are included in fixed
assets and are depreciated over the initial lease period,
generally two years.
h.
Concessions
Costs related to the acquisition of concessions
granted by the Mexican government to provide cellular telephone
services have been capitalized and are included in other assets.
Such costs are amortized on a straight-line basis over the
initial term of the respective concession. The Mexican
government requires the Company's compliance with the
specific terms of each concession. Through December 31,
2001, the Company had complied substantially with such
requirements, except for certain informational requirements of
the Mexican authorities. The Company believes that such
noncompliance does not expose it to any risk of concession
forfeiture, or any other material liability.
i.
Advertising
Advertising costs are expensed as incurred. The
cost of prepaid media advertising (including television air
time, magazine, directory and other print media) is deferred and
recorded in other assets until the advertising airtime or space
is used, at which time, such cost is recognized as an operating
expense. Advertising expense amounted to Ps.430,993, Ps.349,851
and Ps.260,344 for 2001, 2000 and 1999, respectively.
j.
Excess of cost of investments in subsidiaries
    over book value
The excess of cost over the book value of net
assets of acquired subsidiaries is amortized on a straight-line
basis over twenty years. Amortization expense was Ps.169,833,
Ps.164,998 and Ps.193,023 in 2001, 2000 and 1999, respectively.
k.
Evaluation of long-lived assets
The Company evaluates the recoverability of its
long-lived assets when events and circumstances indicate that
such assets might be impaired. The Company determines impairment
by comparing the undiscounted
F-14
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
cash flows estimated to be generated by these
assets to their respective carrying amounts. In the event
impairment exists, a loss is recognized based on the amount by
which the carrying value exceeds the fair value of the asset. If
quoted market prices for an asset are not available, fair market
value is determined primarily using the anticipated cash flows
discounted at a rate commensurate with the risk involved. Losses
on property and equipment to be disposed of are determined in a
similar manner, except that fair market values are reduced for
the cost to dispose.
l.
Deferred income taxes and employee profit
    sharing
As of January 1, 2000, the Company adopted
the provisions of revised Bulletin D-4, "Accounting
Treatment of Income Tax, Assets Tax and Employee Profit
Sharing", issued by the MIPA, (Bulletin D-4). This
revised Bulletin significantly modifies the previous accounting
treatment for the calculation of deferred taxes by the partial
liability method to a method based on comprehensive assets and
liabilities. The new method requires the recognition of future
tax consequences based on the difference between the financial
statements and tax basis of assets and liabilities —
temporary differences — as of the date of the
financial statements.
The accumulated effect at the beginning of the
year, because of the adoption of Bulletin D-4, increased
the deferred tax asset by Ps.173,102 and increased
stockholders' equity by the same amount. There was no net
effect to income for the years ended December 31, 2001 and
2000, since the Company decided to increase the net deferred
income tax asset and offset it by the creation of an allowance
to reduce the value of the tax losses carry forward
(Note 12).
Employee profit sharing is a statutory labor
obligation payable to employees and determined, for each
subsidiary with employees, on its pretax income, as adjusted, in
accordance with the provisions of Mexican labor and tax laws.
m.
Seniority premiums
In accordance with Mexican labor law, the
Company's employees are entitled to seniority premiums upon
retirement after 15 years of service or upon dismissal,
disability or death. The Company follows Bulletin D-3,
"Labor Obligations", issued by the MIPA
(Bulletin D-3). Under Bulletin D-3, the actuarially
determined projected benefit obligation is computed using
estimates of salaries that will be in effect at the time of
payment.
Personnel not yet eligible for seniority premiums
are also included in the determination of the obligation with
necessary adjustments made in accordance with the probability
that these employees will reach the required seniority. At
December 31, 2001, the average seniority of the eligible
employees was less than 4 years. The Company's
liability and related costs for seniority premiums are
immaterial for all periods presented.
In accordance with Mexican labor law, the Company
is liable for severance payments to employees who are dismissed
under certain circumstances. Such compensation is expensed when
paid.
The Company has no employee pension plans and
does not provide for post-retirement benefits.
n.
Profit (loss) per share
Bulletin B-14, "Earnings per
Share", issued by the MIPA (Bulletin B-14), requires
disclosure in the income statement of the basic net profit
(loss) per share and diluted profit (loss) per share, and the
per share effect of any extraordinary item affecting the net
profit or loss for the year. Basic profit (loss) per share is
computed by dividing profit (loss) available to common
stockholders by the weighted-average number of common shares
outstanding for the year. The computation of diluted profit
(loss) per share is similar to basic profit (loss) per share,
except that the denominator is increased to include the number
of additional common
F-15
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
shares that would have been outstanding if the
potentially dilutive common shares had been issued. For the
years ended December, 31, 2001, 2000 and 1999, the Company
did not compute nor disclose diluted profit (loss) per share
since it was not required by Bulletin B-14 because, for
those years, the Company incurred losses from continuing
operations.
o.
Revenue recognition
Cellular air time is recorded as revenue as
service is provided except for revenue from the sale of prepay
cards which is recognized at the date of sale. The Company
recognizes the revenue on the sale of prepay cards at the date
of sale rather than on a deferred basis because the length of
the average consumption period for such prepay cards is not
significant, i.e., approximately one to one and a half months,
and it is not material to results of operations for all periods
presented. Sales and cost of sales of equipment and related
services are recorded when goods are delivered and services are
provided. Cellular access charges are billed in advance and
recognized when the services are provided. Other revenues,
mainly from paging and long distance services, are recognized
when the related services are provided.
p.
Foreign currency transactions
Foreign currency transactions are recorded at the
exchange rates in effect at the transaction date. Assets and
liabilities denominated in foreign currencies are translated to
Mexican pesos using the exchange rates in effect at the time of
settlement or valuation at each balance sheet date, with the
resulting exchange differences being recognized as exchange
gains or losses.
q.
Comprehensive income (loss)
The Company adopted Bulletin B-4,
"Comprehensive Income", issued by the MIPA,
(Bulletin B-4), effective January 1, 2001. Based on
Bulletin B-4, the comprehensive income (loss) includes the
Company's consolidated net loss and any other item that,
because of specific accounting guidance, is recorded directly as
a part of stockholders' equity, and which are not capital
stock increases, decreases and/or distributions.
The comprehensive income (loss) line included in
the consolidated statement of stockholders' equity
represents the result of the performance of the Company during
the year (Note 20).
r.
New accounting pronouncements
In November 2001, the MIPA issued the revised
Bulletin C-9, "Liabilities, Provisions, Contingent
Assets and Liabilities and Commitments"
(Bulletin C-9), which establishes a methodology for
valuation, presentation and disclosure of liabilities and
provisions, as well as for valuation and disclosure of
contingent assets and liabilities, and for disclosure for
commitments. The revised Bulletin C-9 states that
(i) all contingent assets that have a practical true
realization must be accounted and disclosed in the financial
statements; (ii) contingent assets that have a probable
realization cannot be accounted for in the financial statements,
but must be disclosed; and (iii) contingent assets that do
not have a probable realization and cannot be accounted for in
the financial statements are not required to be disclosed.
Bulletin C-9 requires disclosure of committed amounts when it
represents significant fixed assets additions. The provisions of
Bulletin C-9 are required to be applied beginning on
January 1, 2003, although early adoption is recommended.
In addition, in December 2001, the MIPA issued
revised Bulletin C-8, "Intangible Assets"
(Bulletin C-8), which defines intangible assets as costs
incurred and rights or privileges acquired that will generate a
future economic benefit. Revised Bulletin C-8 states that
pre-operating costs should be expensed as a period cost, unless
they could be classified as development costs. Bulletin C-8
requires that intangible assets with finite useful lives should
be amortized over its useful life. The provisions of
Bulletin C-8 are required to be applied beginning on
January 1, 2003, although early adoption is recommended.
F-16
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Management is currently evaluating the impact
that the adoption of Bulletin C-8 and Bulletin C-9
will have on its consolidated financial statements.
Note 5 — Related
Parties
Until April 4, 2001, the Peralta Group held
substantial ownership interest in the Company. The Peralta Group
holds ownership interests in various other entities, primarily
Industrias Unidas, S. A. de C. V. (IUSA) and related entities,
which still are customers of or suppliers to the Company.
Related party accounts receivable, including
interest, are with IUSA and related entities and amounted to
Ps.1,333 and Ps.5,788 at December 31, 2001 and 2000,
respectively. Accounts receivable result from the sale of
cellular telephone services and operating lease contracts.
Accounts and notes payable to related parties,
including interest, as of December 31, are as follows:
2001
2000
Verizon
Ps.
58,074
Ps.
155,134
Vodafone
2,008
—
Total
Ps.
60,082
Ps.
155,134
Accounts payable result from services rendered by
the seconded employees assigned by Verizon.
Old Iusacell made advance payments of U.S.$15,000
to Northern Telecom (CALA) Corporation (Nortel) in 1994. Legal
counsel believed that Nortel is legally obligated to refund the
U.S.$15,000 advance to Old Iusacell. Therefore in 2000, Verizon
acquired rights to a refund of the advance from Nortel to be
applied in future purchases by Verizon from Nortel, in exchange
for a dollar-for-dollar reduction in payables by the Company to
Verizon.
On May 8, 2001, in connection with the
negotiations for the purchase of Portatel, Verizon through one
of its affiliates, provided the Company with financing for
U.S.$7,800 which consisted of a two-year note payable due
May 8, 2003, bearing interest at a fixed annual interest
rate of 11.5%. Interest and principal are payable at the
maturity of the note.
The following is an analysis of the related party
transactions described above:
Years Ended December 31,
2001
2000
1999
Service revenue
Ps.
5,256
Ps.
12,088
Ps.
16,214
Lease income
—
—
4,790
Total income
Ps.
5,256
Ps.
12,088
Ps.
21,004
Cellular telephones repair expense
Ps.
15,619
Ps.
17,343
Ps.
—
Technical expense
59,333
88,959
6,285
Lease expense
6,154
7,744
6,397
Interest expense
5,438
—
—
Total expenses
Ps.
86,544
Ps.
114,046
Ps.
12,682
F-17
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 6 — Inventories, Net
As of December 31, inventories, net,
consisted of the following:
2001
2000
Cellular telephones and accessories
Ps.
357,249
Ps.
290,620
Less: Allowance for obsolete and slow-moving
    inventories
(110,756
)
(51,329
)
246,493
239,291
Goods in transit
6,521
6,808
Advances to suppliers
675
3,289
Ps.
253,689
Ps.
249,388
Note 7 — Investment:
As of December 31, the Company's
investments were as follows:
2001
2000
Entity
Ownership
Investment
Ownership
Investment
Editorial Celular, S.A. de C.V.
40.
00
%
Ps.
16,108
40.
00
%
Ps.
15,086
AMCEL
—
14,689
—
14,688
Other
—
3,266
—
3,178
Ps.
34,063
Ps.
32,952
Editorial Celular, S.A. de C.V. is accounted for
by the equity method. For each of the three years in the period
ended December 31, 2001, the Company's share of net
earnings (losses) of Editorial Celular, S.A. de C.V. was of
Ps.2,542, (Ps.19,647) and Ps.2,462, respectively.
For the years ended December 31, 2001 and
1999, the gain (loss) on sale of equity investments was of
Ps.3,976 and (Ps.56,622), respectively.
F-18
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 8 — Property and Equipment,
Net
a.     At
December 31, property and equipment, net, consisted of:
2001
2000
Buildings and facilities
Ps.1,623,380
Ps.1,605,917
Communications equipment
10,193,060
8,614,109
Furniture and fixtures
194,989
183,236
Transportation equipment
79,691
64,106
Computer equipment
1,446,470
1,142,450
Cellular rental telephones
9,137
1,399
13,546,727
11,611,217
Accumulated depreciation
(5,625,589
)
(4,207,703
)
7,921,138
7,403,514
Land
65,978
59,801
Construction in progress
1,480,969
934,314
Advances to suppliers
959
152,991
Ps.9,469,044
Ps.8,550,620
b.     Depreciation
expense was Ps.1,247,149, Ps.1,292,146 and Ps.788,430 for 2001,
2000 and 1999, respectively.
c.     In December 1999,
the Company entered into a series of agreements with MATC
Celular, S. de R. L. de C. V. (an affiliated company of
American Tower Corporation) ("MATC Celular"). These
agreements, among other things, gave MATC Celular the right to
acquire approximately 350 existing Old Iusacell non-strategic
towers. During 2001, Old Iusacell and some of its subsidiaries
sold 244 non-strategic towers to MATC Celular, for Ps.348,754
(U.S.$36,600) generating a gain on the sale, before taxes, of
Ps.307,886. As a part of this agreement, a subsidiary of New
Iusacell signed a lease contract for the same towers with MATC
Celular for a minimum mandatory term of ten years, a term that
could be automatically extended for two additional periods of
five years each (Note 13a.).
Under Mexican GAAP, Bulletin D-5,
"Leases", (Bulletin D-5) establishes the general
criteria for capital and operating lease transactions.
Sale-leaseback transactions are recognized with the use of the
general criteria of Bulletin D-5. The timing of the recognition
of a gain derived from sale-leaseback transactions should be
based on the subsequent lease classification criteria of the
leaseback portion of the transaction. If the subsequent
leaseback is accounted for as an operating lease, full immediate
gain recognition is allowed, whereas, if the subsequent
leaseback is accounted for as a capital lease, the gain is
deferred and amortized in proportion with the estimated useful
life of the asset leased. Based upon this criteria, the
sale-leaseback agreement with MATC Celular was recorded by the
Company as an operating lease and consequently, the Ps.307,886
gain was recognized at the date of the sale and has been
recorded as other operating income in the consolidated income
statement for the year ended December 31, 2001.
F-19
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 9 — Other Assets, Net
a.     At
December 31, other assets consisted of the following:
2001
2000
Concessions
Ps.1,472,474
Ps.1,094,698
Cellular telephones
3,322,914
2,919,915
Prepaid expenses
358,095
383,210
Advance payments
502,057
268,732
Pre-operating expenses
136,000
136,810
Other
99,156
156,289
Deferred income taxes (Note 12)
173,102
180,718
6,063,798
5,140,372
Accumulated amortization
(3,426,763
)
(2,433,372
)
Ps.2,637,035
Ps.2,707,000
b.     Concessions and
cellular telephone amortization expense was Ps.1,202,243,
Ps.951,833 and Ps.639,570 in 2001, 2000 and 1999, respectively.
Note 10 — Notes Payable and
Long-Term Debt
As of December 31, 2001 and 2000, the
long-term debt of the Company consisted of the following:
U.S. Dollars 2001
2001
2000
Senior notes due 2004
U.S.$150,000
Ps.1,375,425
Ps.1,504,895
Senior notes due 2006
350,000
3,209,325
3,511,422
BNP credit agreement
20,197
185,198
132,083
BNP refaccionario loan
3,564
32,682
23,308
Amended and restated syndicated loan
265,622
2,435,617
—
Long-term bank loan
—
—
1,057,913
Revolving credit facility
—
—
846,330
Eximbank financing
—
—
504,250
Commerzbank financing
—
—
256,389
BBVA Bancomer handset facilities
—
—
25,081
789,383
7,238,247
7,861,671
Current portion of long-term debt
2,911
26,690
1,344,059
U.S.$786,472
Ps.7,211,557
Ps.6,517,612
a.     Senior notes
due 2004
On July 25, 1997, Old Iusacell completed an
offering of long-term, senior notes due July 15, 2004 for
U.S.$150,000, accruing interest at a fixed rate of 10%, payable
semi-annually starting January 15, 1998 (the Notes Due
2004). The Notes Due 2004 are redeemable at the option of Old
Iusacell, in whole or in part, at any time on or after
July 15, 2001 starting at a redemption price of 105.0% of
principal amount plus accrued interest, if any, declining to
102.5% after July 15, 2002, and finally to 100.0% after
July 15, 2003.
F-20
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Notes Due 2004 may also be redeemed at a
price equal to 100.0% of principal amount plus accrued interest,
if any, in the case of legal changes adversely affecting the
treatment of the withholding taxes on payments to holders of the
Notes Due 2004.
b.     Senior notes
due 2006
On December 9, 1999, New Iusacell completed
an offering of long-term, senior notes due December 1, 2006
for U.S.$350,000, accruing interest at a fixed rate of 14.25%,
payable semi-annually starting June 1, 2000 (the Notes Due
2006). New Iusacell invested approximately U.S.$133,600 of the
net proceeds of the offering in securities in escrow to secure
the first six semi-annual payments in full of the interest on
the Notes Due 2006. This investment is restricted as to
withdrawal and may only be utilized to meet the Company's
interest commitment on the Notes Due 2006.
At any time prior to December 1, 2002, New
Iusacell may redeem in the aggregate up to 35% of the original
principal amount of the Notes Due 2006 with the proceeds of one
or more public equity offerings by New Iusacell at a redemption
price of 114.25% of principal amount plus accrued interest, if
any. The Notes Due 2006 may also be redeemed at a price equal to
100.0% of principal amount plus accrued interest, if any, in the
case of legal changes adversely affecting the treatment of the
withholding taxes on payments to holders of the Notes Due 2006.
c.     BNP credit
agreement
On July 12, 2000, a subsidiary of New
Iusacell obtained financing to acquire microwave transmission
equipment. The financing consists of a seven-year secured term
facility provided by BNP Paribas in the principal amount of up
to U.S.$30,479. At December 31, 2001, U.S.$20,197 of this
facility had been drawn down.
Loans outstanding under the BNP credit agreement
provide for interest at a rate per annum equal to 0.6% above
six-month LIBOR. The BNP credit agreement also includes a
commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest
under the credit agreement are paid semi-annually starting on
December 2000. Fees under the credit agreement are paid
quarterly starting on September 2000. Principal payments are due
in ten equal installments starting in December 2002.
For the year ended December 31, 2001 and for
the period from July 12 to December 31, 2000, the
weighted-average interest rates were 2.52% and 7.17%,
respectively.
d.     BNP
refaccionario loan
On July 12, 2000, a subsidiary of New
Iusacell obtained financing to acquire microwave transmission
equipment. The financing consists of a four year secured term
facility provided by BNP Paribas in the principal amount of
U.S.$5,379. At December 31, 2001, U.S.$3,564 of this
facility had been drawn down.
Loans outstanding under the BNP refaccionario
loan provide for interest at a rate per annum equal to 2% above
six-month LIBOR. The BNP refaccionario loan also includes a
commitment fee for the unutilized portion of the credit,
calculated by applying 0.40% to the available amount. Interest
under the refaccionario loan is paid semi-annually starting on
December 2000. Fees under the credit agreement are paid
quarterly starting on September 2000. Principal payments are due
in four equal installments starting in December 2002.
For the year ended December 31, 2001 and for
the period from July 12 to December 31, 2000, the
weighted-average interest rates were 3.92% and 8.57%,
respectively.
F-21
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
e.     Amended and
restated syndicated loan
On March 29, 2001, Old Iusacell completed
the restructuring of its long-term bank loan, its revolving
credit facility, and the payment of the Eximbank financing and
the Commerzbank financing by entering into an amended and
restated senior secured loan agreement (the amended and restated
syndicated loan), which consists of:
(i) The Tranche A Loan for an aggregate
    principal amount of U.S.$189,805 for the purpose of refinancing
    existing indebtedness under the long-term bank loan and the
    revolving credit facility and under a certain bridge loan used
    to pay the January 2001 principal amortization payments under
    the long-term bank loan and the revolving credit facility.
(ii) The Tranche B Loan for an aggregate
    principal amount of U.S.$75,817 for the purpose of paying
    existing indebtedness under the Eximbank financing and the
    Commerzbank financing and under a certain bridge loan used to
    pay also in January 2001 a principal amortization payment under
    the Commerzbank financing.
The amended and restated syndicated loan provides
for interest at a rate per annum equal to one, two, three or six
month LIBOR at Old Iusacell's option plus a spread ranging
from, depending on Old Iusacell's leverage ratio, 1.75% to
2.25% with quarterly interest payments which began on
May 29, 2001. Principal installments will be due beginning
2004 through 2006.
There was no gain or loss recognized from this
loan restructuring.
f.     Covenants and
collateral
The amended and restated syndicated loan, the BNP
credit agreement, the BNP refaccionario loan, the Notes Due 2004
and the Notes Due 2006 contain certain restrictive covenants,
including the maintenance of certain financial ratios,
restrictions on incurring additional debt, limitations on
capital expenditures and restrictions on the sale or lease of
Old Iusacell's assets. As of December 31, 2001 and
2000, New Iusacell and Old Iusacell had complied with such
covenants.
On November 30, 2000, Old Iusacell obtained
the Fourth Amendment to the long-term bank loan and the
revolving credit facility. On the same date, Old Iusacell also
obtained a waiver, consent and second amendment to the Eximbank
financing and to the Commerzbank financing (the Second
Amendment). The Second Amendment and the Fourth Amendment
allowed the Company, among other things, to: (i) dispose of
certain telecommunications equipment (Note 8c.) under certain
conditions such as the funds obtained on the sale be used to
acquire additional assets; (ii) the sublease of such
communications equipment by Old Iusacell or any of its
subsidiaries; (iii) the sale of one of Old Iusacell's
subsidiaries, Satelitrón, S. A. de C.V.; (iv) the
release of the mortgage of a real property and (v) Old
Iusacell's incurrence on or before March 31, 2001 of
unsecured indebtedness with maturities not to exceed 12 months
of an aggregate principal amount of not more than U.S.$20,000.
On December 7, 2001 the Amended and Restated
syndicated loan was amended and a waiver and consent was granted
in order to allow Old Iusacell to (i) create liens
encumbering initial deposits and margin deposits securing
indebtedness under any interest rate protection agreement or
other interest hedging agreement up to the principal amount of
indebtedness of Old Iusacell and its subsidiaries with floating
rate of interest; (ii) loan or advance to New Iusacell in
lieu of paying dividends at such times and in such amounts as
shall be necessary to permit New Iusacell to pay scheduled
interest (including any tax gross–up with respect thereto)
and principal payments as and when due in respect of the Notes
due 2006; and (iii) loan or advance to New Iusacell in lieu
of paying dividends in an amount not to exceed U.S.$5,000.
Old Iusacell's obligations under the amended
and restated syndicated loan are unconditionally guaranteed,
jointly and severally, by the principal operating and
concession-holding subsidiaries of Old Iusacell and
F-22
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
are secured by the pledge of substantially all
capital stock and equity interests held by Old Iusacell and by
all cellular concessions, and by a first lien on substantially
all assets used in connection with or related to such
concessions.
At December 31, 2001, the Company's
long-term debt matures as follows:
Years ended December 31,
U.S. Dollars
Mexican pesos
2002
U.S.$
2,911
Ps.
26,690
2003
5,821
53,381
2004
254,539
2,333,991
2005
136,850
1,254,848
2006
387,242
3,550,817
2007 and thereafter
2,020
18,520
Total
U.S.$
789,383
Ps.
7,238,247
g.     Notes
payable
As of December 31, notes payable consisted
of the following:
U.S. Dollars
2001
2001
2000
Handset facility
U.S.$
12,000
Ps.
110,034
Credit facility
—
—
Ps.
120,391
Total
U.S.$
12,000
Ps.
110,034
Ps.
120,391
In February 2001, Old Iusacell obtained a handset
acquisition financing facility from Banco Santander Mexicano,
which consisted of a one-year senior unsecured credit facility
in a principal amount of U.S.$12,000. Loans outstanding under
this facility provided for interest at an annual rate of
6.9938%. Interest is paid quarterly and the principal was paid
on February 19, 2002.
In December 2000, Old Iusacell obtained a credit
facility from Banco Santander Mexicano, to be used solely to
acquire cellular handsets, in the principal amount of
U.S.$12,000. Loans outstanding under this facility provided for
interest at an annual rate of LIBOR plus 1.85%. The Company drew
down the entire U.S.$12,000 during December 2000. This facility
was repaid on February 8, 2001.
Note 11 — Notes Payable to
Suppliers
As of December 31, notes payable to
suppliers consisted of the following:
2001
2000
Short-term:
The Motorola Facility
Ps.
83,501
—
The TV Azteca Facility
40,000
—
Total short-term
Ps.
123,501
—
Long-term:
The Harris Facility
Ps.
58,463
Ps.
25,587
F-23
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Motorola Facility
On March 31, 2000, Portatel, through one of
its subsidiaries, obtained a five-year credit facility from
Motorola Credit Corporation (Motorola) to be used solely to
acquire communications equipment, in the principal amount of
U.S.$9,106 (the Motorola Facility). Drawdowns under the Motorola
Facility were available for one year. Loans outstanding under
the Motorola Facility accrue interest at a variable annual rate
of six-month LIBOR plus 6%. Principal and interest are payable
in April 2002. Portatel drew down the entire U.S.$9,106 during
2000 and 2001. As a part of the agreement, Portatel was required
to keep an escrow account to deposit monthly the accrued
interest on the loans outstanding.
The Motorola Facility contains certain
restrictive covenants including the maintenance of certain
financial ratios and restrictions on the payment of dividends.
As of December 31, 2001, Portatel had complied with such
covenants.
The TV Azteca Facility
On November 5, 2001, the Company, through
one of its subsidiaries, obtained a credit facility from TV
Azteca, S. A. de C. V. to be used solely to acquire television
air time, in the principal amount of Ps.40,000 (the TV Azteca
Facility). The facility provides for interest at a variable
annual rate of TIIE times 1.5. Principal and interest are
payable in six monthly installments starting January 31,
2002.
The Harris Facility
In August 18, 2000, the Company, through one
of its subsidiaries, obtained a line of credit from its supplier
Harris, S. A. de C. V., for the construction and installation of
communications equipment. The line of credit consists of a
five-year unsecured facility in a principal amount of
U.S.$6,900. During 2001 and 2000, the Company drew down
U.S.$3,825 and U.S.$2,550, respectively, under this facility.
Loans outstanding under this facility bear
interest at an average term rate of LIBOR plus 1.25%. Interest
is paid semiannually starting in June 15, 2001. Principal
payments are due in six semi-annual installments starting on
June 2003.
Note 12 — Income Tax, Net
Assets Tax and Employee Profit Sharing
As of December 31, 2001, 2000 and 1999, the
provision for income taxes consisted of current income tax and
assets tax of Ps.146,404, Ps.156,335 and Ps.611,378,
respectively.
Old Iusacell has filed annual consolidated income
tax returns since the tax year beginning January 1, 1994.
Starting the year ended December 31, 2000, New Iusacell is
the holding company for tax consolidation purposes.
The statutory income tax rate in Mexico is 35%.
As a result of the amendment to the income tax law enacted on
January 1, 2002, the 35% statutory income tax rate will be
reduced annually starting in 2003, and continue to decrease
until the statutory rate is 32% in 2005. Consequently, the
effect of the gradual decrease in the statutory Income Tax rate
will reduce the deferred tax asset in 2003. For the years ended
December 31, 2001 and 2000, the Company generated tax
losses of Ps.206,244 and Ps.595,402, respectively. For the year
ended December 31, 1999 the Company generated a tax profit
of Ps.1,315,683.
F-24
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
At December 31, 2001 and 2000, the main
temporary differences the Company recognizes for the calculation
of deferred income taxes were as follows:
2001
2000
Allowance for doubtful accounts
Ps.
210,891
Ps.
221,684
Liability accruals
71,214
74,427
Income tax losses carry forwards and tax credits
3,878,807
3,699,873
Inventories
(253,689
)
(249,388
)
Property and equipment
(2,044,465
)
(1,388,102
)
Telephones to be amortized
(174,968
)
(731,636
)
Concessions
(308,239
)
(20,847
)
Temporary differences
1,379,551
1,606,011
Income tax rate
35
%
35
%
Deferred income tax asset
482,843
562,104
Valuation allowance
(309,741
)
(381,386
)
Net deferred income tax asset
Ps.
173,102
Ps.
180,718
The Company has recorded a net deferred tax asset
of Ps.173,102 reflecting, mainly, the benefit of tax loss carry
forwards, which expire in varying amounts between 2005 and 2010.
Realization is dependent on generating sufficient taxable income
prior to expiration of the loss carry forwards. Although
realization is not assured, management believes it is more
likely than not that most of the net deferred tax asset at
December 31, 2001 will be realized based on the
Company's business plan estimate of future taxable income
over the next five years in an amount sufficient to utilize the
net deferred tax losses recorded as of December 31, 2001.
The Company's estimate of future taxable
income is based primarily on and supported by (i) the
significant improvement in operating performance through 2001,
as evidenced by the success of the implementation of the Verizon
wireless business model. This model has produced strong
subscriber annual compound growth of 50% through 2001, improved
revenues mainly driven by subscriber growth and lower network
and operating costs, (ii) Vodafone's strong experience
and success in the prepay market, (iii) additional increase
in revenues generated by the Calling Party Pays feature with an
important taxable operating margin, (iv) the change in the
income tax law to increase the useful lives for network
equipment from 3.3 years to 12.5 years, representing
an important decrease in depreciation expense for income tax
purposes and (v) an increase in 2001 of the potential
effects of additional cost cutting.
The amount of the deferred tax asset considered
realizable could be reduced in the near term if estimates of
future taxable income during the carry forward periods are
reduced.
As of December 31, 2001 and 2000, the
Company had a valuation allowance of Ps.309,741 and Ps.381,386,
respectively, to reduce its deferred tax assets to estimated
realizable value. The valuation allowance primarily relates to
the deferred tax assets arising from tax loss carry forwards and
tax credits.
F-25
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
At December 31, 2001, the Company had the
following net operating losses for income tax purposes that may
be carried forward and applied against future taxable earnings:
Amount
Expiration
Year of loss
of loss
year
1995
Ps.771,716
2005
1996
17,087
2006
1997
545,001
2007
1998
461,950
2008
2000
595,402
2010
2001
206,244
2011
These losses are indexed for inflation from the
year incurred to the sixth month of the year utilized.
Accordingly, these amounts include inflation up to June 2001.
Due to the restructuring of the Company related to
Verizon's assumption of management control (Note 2), the
Company did not include additional tax losses for Ps.982,749,
relating to one of its subsidiaries, Iusatelecomunicaciones, and
may not be able to apply these losses against other
subsidiaries' profits in 2002 and beyond.
The 1.8% net assets tax is calculated on the
average value of substantially all assets less certain
liabilities. This tax is required to be paid if this computation
exceeds the amount of income tax. The 1.8% net assets tax paid
may be utilized as a credit against future income tax in the
years in which the Company generates an income tax in excess of
the assets tax. The assets tax is available as a carry forward
for up to ten years and is subject to restatement based on the
NCPI when used. As of December 31, 2001, net assets tax
available as a carry forward was Ps.428,025 which expires in
2007.
Employee profit sharing, generally 10%, is
computed on taxable income, with adjustments to exclude
inflationary effects and the restatement of depreciation
expense. In the years ended December 31, 2001 and 2000, the
Company did not generate any taxable income for profit sharing
purposes.
The effective rate reconciliation as of
December 31, was as follows:
2001
2000
1999
Loss (profit) on continuing operations
    before taxes
Ps.
(367,801
)
Ps.
(991,504
)
Ps.
511,905
Statutory Income Tax rate
35
%
35
%
35
%
Income tax (benefit) expense at statutory
    rate
(128,730
)
(347,026
)
179,167
Add (deduct):
Inventory purchases less cost of sales
(1,505
)
(13,897
)
44,006
Depreciation and amortization
(234,589
)
(184,671
)
(333,843
)
Differences between interest and inflationary
    gains or losses
75,893
80,398
154,717
Provision for doubtful accounts
(3,778
)
18,156
29,414
Telephones to be amortized
194,834
(41,492
)
223,850
Goodwill amortization
59,442
57,749
67,557
Other
(33,752
)
161,606
95,621
Income Tax (benefit) expense for the year
Ps.
(72,185
)
Ps.
(269,177
)
Ps.
460,489
Effective rate
20
%
27
%
90
%
Net assets tax
Ps.
146,404
Ps.
156,335
Ps.
150,889
F-26
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 13 — Commitments and
Contingencies
As of December 31, 2001, the Company had the
following commitments and contingent liabilities:
a.     The Company has
    entered into operating lease agreements for administrative
    offices, sales branches and service facilities and since 2001,
    operating lease agreements with MATC Celular for the lease of
    towers (Note 8c.). These lease agreements expire at various
    dates through 2011, and some agreements contain options for
    renewal. Lease expense was Ps.157,159, Ps.164,074 and Ps.129,954
    for the years ended December 31, 2001, 2000 and 1999,
    respectively.
Future annual minimum rental payments under
    existing leases as of December 31, 2001 are as follows:
2002
Ps.
280,878
2003
253,196
2004
237,189
2005
228,538
2006
218,801
Thereafter
862,755
Ps.
2,081,357
b.     The Company may
    have contingent liabilities for taxes and penalties that the tax
    authorities may assess based on audits of prior years' tax
    returns. During 1997, the Mexican tax authorities completed an
    audit of three companies of the Company (Old Iusacell, Iusacell,
    S. A. de C. V. and SOS Telecomunicaciones, S. A. de C. V.). As a
    result of those investigations, Old Iusacell was assessed and
    paid a Ps.21,881 penalty in 1999 by the tax authorities for an
    incorrectly deducted interest expense. The tax authorities have
    claimed no other assessment.
c.     In April 1998,
    Old Iusacell learned that the Montes Urales property was subject
    to two liens. Such liens were not identified when Inmobiliaria
    Montes Urales 460, S. A. de C. V. was acquired in 1994, nor was
    Old Iusacell notified of such liens subsequent to the
    acquisition. To date, the liens have not been removed and it is
    uncertain as to when the liens will be removed, if at all and
    consequently, Old Iusacell is not be able to sell the property.
    Such property is being leased to third parties.
d.     Old Iusacell has
    certain commitments derived from its joint venture agreement
    with Infomin, S. A. de C. V. (Note 2).
e.     During April
    2001, Iusatel, a subsidiary of the Company, reached an agreement
    to settle the outstanding amounts due related to the special
    projects implemented by Teléfonos de México,
    S. A. de C. V. (Telmex) to permit competition in
    long distance telephony. Iusatel agreed to pay for its portion
    of such special projects in two parts: (i) a fixed payment
    of approximately U.S.$13,600, payable in twelve equal monthly
    installments beginning in April 2001, and (ii) a
    U.S.$0.0053 per full minute, usage-based surcharge to the local
    wire line interconnection rate from January 1, 2001 through
    December 31, 2004 for long distance calls terminated in
    Telmex's local wire line network.
f.     Iusacell, S. A.
    de C.V., a subsidiary of the Company, decided to sue and seek
    compensatory damages from one of the Company's distributors
    as a result of the latter's decision to breach their
    distribution agreement.
g.     On
    January 1, 2002 the Mexican Congress approved a tax law
    reform that assesses an additional 10% excise tax on certain
    wireless telecommunications services. In February 2002, the
    Company filed an injunction action to challenge the Mexican
    government's implementation of the tax.
F-27
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 14 — Contributed
Capital
During the years ended December 31, 2001,
2000 and 1999, the following transactions took place:
On February 10, 1999, the Technical
Committee approved the subscription of 70,004 series L
shares of Old Iusacell for the Executive Employee Stock Purchase
Plan (the Stock Purchase Plan).
On March 3, 1999, Old Iusacell converted an
amount of Ps.446,805 (U.S.$31,000) into 44,285,714 series A
shares of Old Iusacell. The 44,285,714 series A shares of
Old Iusacell were initially subscribed by Verizon, of which 50%,
or 22,142,857, of such shares, were then sold to Carlos Peralta.
There was no gain or loss recognized from the sale.
On August 10, 1999, the Company concluded a
corporate reorganization. The Company's corporate
reorganization included the following transactions:
a.     An exchange offer
    by New Iusacell of its series A and V ADSs and shares, for
    Old Iusacell's series A, B, D and L ADSs and shares on
    a one-for-one basis. At the end of the exchange offer,
    approximately 6,890,617 series D and L shares were not
    tendered.
b.     The stockholders
    of Old Iusacell who participated in the exchange were also
    offered the option to purchase an aggregate of 22,419,716
    series V shares of New Iusacell, in the form of ADSs or
    shares. A total of 18,405,490 series V shares were
    subscribed. Total proceeds amounted to Ps.146,193 (U.S.$12,884).
c.     Primary and
    secondary offerings under which New Iusacell sold 23,596,780
    series V shares, and Verizon and the Peralta Group sold
    101,403,220 series V shares of New Iusacell. Total proceeds
    for the primary offering amounted to Ps.270,593 (U.S.$23,847).
On February 1, 2000, New Iusacell launched a
second exchange offer of its series V ADS and shares, for
Old Iusacell's series D and L ADSs and shares on a
one-for-one basis. At the end of the second exchange offer, New
Iusacell exchanged 5,670,360 series V shares for 33,070 Old
Iusacell series D shares and 5,637,290 Old Iusacell
series L shares.
In March 2000, Old Iusacell's ADS
depositary, The Bank of New York, converted 1,171,464
series L shares that had previously been held in the form
of series L ADSs into New Iusacell's series V shares.
In April 2000, New Iusacell launched a primary
public offering under which New Iusacell sold 10,529,700
series V ADSs at a price of U.S.$.015125 per ADS.
Pre-emptive stockholder rights were exercised for 71,752
series V shares. Proceeds from the offering amounted to
Ps.1,604,131 (U.S.$159,370) net of expenses.
At the September 29, 2001 Stockholders'
Meeting, the Company's stockholders approved a capital
increase of up to Ps.932,355 (U.S.$100,000) through the issuance
of 224,461,739 series A shares and 210,320,870
series V shares. The increase was subscribed by the
principal stockholders' of the Company and through a public
rights offering.
F-28
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The changes in the number of shares of common
stock for the period January 1, 1999 through
December 31, 2001 are as follows:
Old Iusacell's shares
New Iusacell's shares
Series A
Series B
Series D
Series L
Series A
Series V
Balance as of 1/01/99
891,753,409
5,562,450
186,904,725
151,326,154
8,750
8,750
Issuance of common stock for the Stock Purchase
    Plan
—
—
—
70,004
—
—
Issuance of common stock through the
    capitalization of debt
44,285,714
—
—
—
—
—
Exchange offer
(936,039,123
)
(5,562,450
)
(186,844,813
)
(144,565,453
)
736,821,995
536,189,844
Rights offer
—
—
—
—
—
18,405,490
Primary offering
—
—
—
—
—
23,596,780
Balance as of 12/31/99
—
—
59,912
6,830,705
736,830,745
578,200,864
Effect of second exchange offer
—
—
(33,070
)
(6,808,754
)
—
6,841,824
Effect of primary offering
—
—
—
—
—
105,297,000
Issuance of common stock upon exercise of
    preemptive rights
—
—
—
—
—
71,752
Effect of private offering
—
—
(392
)
(9,717
)
—
—
Balance as of 12/31/00
—
—
26,450
12,234
736,830,745
690,411,440
Effect of the reverse stock split
—
—
(26,450
)
(12,234
)
—
—
Issuance of common stock for the capital stock
    increase
—
—
—
—
224,461,739
210,320,870
Balance as of 12/31/01
—
—
—
—
961,292,484
900,732,310
Each series A and series V share
entitles the holder to one vote at any general meeting of the
stockholders of New Iusacell. Series A stockholders are
entitled to vote at a special meeting of the series A
stockholders to elect seven of the twelve members of the Board
of Directors and the corresponding alternate directors.
Series V stockholders are entitled to vote at a special
meeting of the series V stockholders to elect five of the
twelve members of the Board of Directors and the corresponding
alternate directors.
New Iusacell's bylaws require that, unless a
stockholders' meeting resolves otherwise, any capital
increase effected pursuant to a capital contribution be
represented by new series A and V shares in proportion to the
number of shares of each such series outstanding. The bylaws
provide that the series V shares may not exceed 50% less
one share of New Iusacell's capital stock.
Note 15 — Executive Employee Stock
Purchase Plan
The Stock Purchase Plan is administered by a
management trust with the assistance of the trust division of a
Mexican bank. Under the Stock Purchase Plan, a committee, which
is composed of certain executive officers of the Company (the
Technical Committee), determines to which executive employees
series V shares of New Iusacell will be offered for
purchase (prior to the exchange offer the shares subject to the
Stock Purchase Plan were series L shares of Old Iusacell,
which were exchanged for series V shares of the Company).
The Technical Committee also determines the number of
series V shares to be offered for purchase to such
executive employees, the purchase price per share, the vesting
schedule, the payment terms and all other terms and conditions
thereof.
The number of series V shares that may be
subject to purchase rights granted under the Stock Purchase Plan
cannot exceed 4.9% of the aggregate number of issued and
outstanding New Iusacell shares.
F-29
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
A summary of the changes of the stock options for
employees for the year ended December 31, is presented
below.
2001
2000
1999
Weighted-
Weighted-
Weighted-
average
average
average
exercise
exercise
exercise
Shares
price
Shares
price
Shares
price
Outstanding at beginning of year
6,485,124
Ps.10.84
7,695,234
Ps.10.26
7,899,890
Ps. 9.32
Granted
659,000
8.96
681,000
15.35
1,603,000
11.05
Exercised
—
—
1,210,110
11.02
274,660
4.87
Cancelled/Forfeited
659,000
6.92
681,000
8.44
1,532,996
7.20
Outstanding at the end of the year
6,485,124
11.05
6,485,124
10.84
7,695,234
10.26
Shares exercisable at year end
5,826,124
5,804,124
6,092,234
The following table summarizes Stock Purchase
Plan options outstanding as of December 31, 2001, 2000 and
1999:
Outstanding
Exercisable
Weighted-average
Weighted-
average
Remaining
Exercise
exercise
Range of prices
Number
life
price
Number
price
December 31, 1999
Ps.4.31 - 9.17
3,812,285
5.
40
Ps. 7.33
3,525,285
Ps. 7.18
11.46 - 14.31
3,882,949
6.
15
13.13
2,566,949
13.99
December 31, 2000
Ps.4.31 - 9.17
2,695,417
4.
48
7.16
2,695,417
Ps. 7.16
11.46 - 15.35
3,789,707
5.
58
13.46
3,108,707
13.04
December 31, 2001
Ps.4.31 - 9.17
2,036,417
3.
26
7.24
2,036,417
Ps. 7.24
11.46 - 15.35
4,448,707
4.
98
12.79
3,789,707
13.46
Note 16 — Earned
Capital
Under Mexican law, a legal reserve must be
created and increased annually by 5% of the annual net earnings
until it reaches 20% of the nominal amount of a
corporation's capital stock. This reserve is not available
for dividends, but may be used to reduce a deficit or be
transferred to capital.
Dividends paid will be free of income tax if paid
out of the Net Taxable Income Account (CUFIN). A 35% rate will
be paid on the amount exceeding the balance of the CUFIN by
multiplying the dividend paid by a factor of 1.5385. The
applicable tax will be payable by the Company, and it may be
credited against the income tax the Company is subject to in the
following three fiscal years. Dividends paid will not be subject
to any tax withholding.
At December 31, 2001, the balance on the
CUFIN is approximately Ps.133,419. New Iusacell currently cannot
pay dividends under the covenants for the Notes Due 2006.
F-30
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2001
Accumulated
adjustments for
Historical value
inflation
Total
Capital stock subscribed
Ps. 5,923,198
Ps. 831,351
Ps.6,754,549
Capital contributions
1,209,952
119,245
1,329,197
Legal reserve
16,688
2,295
18,983
Accumulated profits from prior years
(1,421,153
)
659,325
(761,828
)
Net loss for the year
(300,276
)
(199,713
)
(499,989
)
Accumulated other comprehensive income
173,102
23,809
196,911
Total
Ps. 5,601,511
Ps.1,436,312
Ps.7,037,823
December 31, 2000
Accumulated
adjustments for
Historical value
inflation
Total
Capital stock subscribed
Ps. 4,994,621
Ps. 827,573
Ps. 5,822,194
Capital contributions
1,209,952
119,245
1,329,197
Legal reserve
16,688
2,295
18,983
Accumulated profits from prior years
(324,247
)
684,932
360,685
Net loss for the year
(1,096,906
)
(25,607
)
(1,122,513
)
Accumulated other comprehensive income
173,102
23,809
196,911
Total
Ps. 4,973,210
Ps.1,632,247
Ps. 6,605,457
Note 17 — Foreign Currency
Position
The balance sheet as of December 31 includes
assets and liabilities denominated in U.S. Dollars, as follows:
2001
2000
Monetary assets
U.S.$
242,652
U.S.$
159,861
Monetary liabilities
896,115
879,247
Net monetary liability position in U.S. Dollars
U.S.$
653,463
U.S.$
719,386
Equivalent in nominal Mexican pesos
Ps.5,991,929
Ps.6,913,156
As of December 31, 2001 and 2000, most of
the communications equipment and inventories of cellular
telephones and accessories are of foreign origin (Notes 6
and 8).
During 2001, 2000 and 1999, interest income and
interest expense on assets and liabilities denominated in U.S.
Dollars were as follows:
2001
2000
1999
Interest income
U.S.$
9,446
U.S.$
7,459
U.S.$
769
Interest expense
90,128
74,017
36,130
Net interest expense
U.S.$
80,682
U.S.$
66,558
U.S.$
35,361
Equivalent in nominal Mexican Pesos
Ps.739,814
Ps.639,609
Ps.335,880
F-31
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Operating results for the years ended
December 31, 2001, 2000 and 1999 include depreciation and
amortization expenses, related to fixed assets and inventories
of foreign origin.
The exchange rates as of December 31, 2001
and 2000 were Ps.9.1695 and Ps.9.6098, per U.S. Dollar,
respectively. At the issuance date of these financial
statements, March 1, 2002, the exchange rate in effect was
Ps.9.1303 per U.S. Dollar.
Note 18 — Project 450
During 1994, Old Iusacell created a subsidiary to
provide fixed wireless local telephony services using the
450 MHz frequency band (Project 450). At
December 31, 2001 and 2000, Old Iusacell's investment
in Project 450 amounted to Ps.31,080 and Ps.35,309,
respectively.
Given the capabilities of digital technology and
the success the Company has had thus far with its deployment,
the Company is exploring alternatives for providing local
telephony service, including fixed or limited zone wireless
service in the 800 MHz and 1.9 GHz bands.
Note 19 — Discontinued
Operations
In December 1998, Old Iusacell decided to
discontinue the operations of Cellular Solutions, a subsidiary
entity dedicated to the sale of accessories for cellular
handsets. Cellular Solutions transferred all its existing
inventories as of December 31, 1998 to another subsidiary
of Old Iusacell and terminated all of Cellular Solutions'
employees during January and February 1999.
Financial information regarding Cellular
Solutions as of and for the years ended December 31, 2000
and 1999, was as follows:
2000
1999
Current assets
Ps.
2,070
Ps.
1,755
Total assets
2,070
1,755
Total liabilities
422
37,821
Revenues
—
—
Gross profit
—
—
Loss from operations before income taxes
—
—
Provision for income taxes
—
—
(Profit) loss on disposal
(8,865
)
1,748
Net (profit) loss
Ps.
(8,865
)
Ps.
1,748
Note 20 — Comprehensive
Income
For the years ended December 31, 2001, 2000
and 1999, comprehensive income consisted of the following:
2001
2000
1999
Net (loss) profit for the year
Ps.
(499,989
)
Ps.
(1,122,513
)
Ps.
379,668
Other comprehensive income:
Accumulated effect of deferred taxes
—
196,911
—
Total other comprehensive income
—
196,911
—
Total comprehensive income
Ps.
(499,989
)
Ps.
(925,602
)
Ps.
379,668
F-32
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 21 — Financial
Instruments
The Company determines the fair value of
outstanding financial instruments as follows:
a.     Cash and cash
    equivalents: the carrying value approximates fair value due to
    its short-term nature.
b.     Restricted cash:
    the Company estimates fair value of restricted cash, which is
    held in U.S.A. treasury bonds, based on public rates available
    for U.S. treasury bonds of the same duration.
c.     Accounts
    receivable and payable: the carrying value approximates fair
    value due to its short-term nature.
d.     Notes payable:
    Carrying value approximates fair value due to its short-term
    nature.
e.     Long-term debt:
    the Company estimates the fair value of its long-term debt based
    on public and current rates available for debt of the same
    remaining duration.
f.     Derivatives: the
    Company determines the fair value of derivative financial
    instruments as follows:
Foreign-currency exchange forward
contracts
The Company purchases foreign-currency exchange
forward contracts with contract terms of up to three years to
protect itself against the adverse effect that exchange rate
fluctuations may have on foreign currency-denominated
liabilities, principally U.S. dollars.
During 2001, 2000 and 1999, the Company used
derivative instruments to hedge its foreign-currency exposure of
approximately 50% of the principal and interest payments coming
due over the next year. In August and October 2001, the Company
also used foreign-currency exchange forward contracts to hedge
its exchange rate exposure on the senior notes due 2004 for
U.S.$150,000 and its interest payments of U.S.$51,000. These
derivatives were highly effective since a foreign currency rate
change on the forward contract is offset by a corresponding
change in the value of the hedged loan.
These contracts are at a fixed price and have
maturity dates through July 2004 and forward rates ranging from
U.S.$9.1707 to U.S.$12.8035.
For the year ended December 31, 2001, due to
the strength of the Mexican Peso to the U.S. Dollar, the
Company recognized an exchange loss of Ps.16,759 on the
derivatives, which was offset by the gain on the hedged
liabilities.
The Company is exposed to credit loss from
counterpart nonperformance, but does not anticipate any such
loss from the foreign-currency exchange forward rate contracts,
which are with major financial institutions.
Interest rate collars
In July 1998, Old Iusacell entered into an
interest rate collar agreement for a notional amount of
U.S.$35,000 until July 30, 2002. The collar agreement
limits the maximum effective LIBOR cost to 6.12% if six-month
LIBOR is lower than 7.12% and 7.12% if LIBOR equals or exceeds
7.12%. Old Iusacell can participate in a decline in LIBOR to
5.30%.
On February 26, 1999, Old Iusacell entered
into an additional interest rate collar agreement to limit the
maximum interest rate, which must be paid on U.S.$15,000 of its
floating rate debt until July 2002. This collar agreement limits
the maximum effective LIBOR cost to 5.82% if six-month LIBOR is
lower than 6.82% and 6.82% if LIBOR equals or exceeds 6.82%. Old
Iusacell can participate in a decline in LIBOR to 4.75%.
F-33
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
For the year ended December 31, 2001, due to
the significant decrease in the LIBOR interest rates, the
Company recognized additional interest expense of Ps.5,390 for
the interest rate collars, which was offset by the lower
interest expense on its floating rate debt. Accordingly, these
derivatives were highly effective.
The U.S.$50,000 aggregate notional amount of the
interest rate collar agreements does not quantify risk or
represent assets or liabilities of the Company, but is used in
the determination of cash settlements under the agreements.
The Company is exposed to credit loss from
counterpart nonperformance, but does not anticipate any such
loss from the interest rate collar agreements, which are with a
major financial institution.
At December 31, the fair values of financial
instruments were as follows:
2001
2000
Carrying value
Fair value
Carrying value
Fair value
Cash and cash equivalents
Ps.
415,501
Ps.
415,501
Ps.
687,124
Ps.
687,124
Restricted cash
439,791
451,741
935,086
936,665
Accounts receivable
1,246,893
1,246,893
1,223,535
1,223,535
Accounts payable
1,753,089
1,753,089
1,639,510
1,639,510
Foreign currency hedge contracts
—
(169,416
)
—
(44,181
)
Interest rate collars
—
(14,460
)
—
161
Notes payable
110,034
110,034
120,391
120,391
Long-term debt:
Senior notes due 2004
1,375,425
1,416,688
1,504,895
1,459,748
Senior notes due 2006
3,209,325
3,450,024
3,511,422
3,467,529
BNP credit agreement
185,198
185,198
132,083
132,083
BNP refaccionario loan
32,682
32,682
23,308
23,308
Amended and restated syndicated loan
2,435,617
2,435,617
—
—
Long-term bank loan
—
—
1,057,913
1,057,913
Revolving credit facility
—
—
846,330
846,330
Eximbank financing
—
—
504,250
504,250
Commerzbank financing
—
—
256,389
256,389
BBVA Bancomer handset facilities
—
—
25,081
25,081
Note 22 — Segment
Information
The Company's segment data is prepared in
accordance with International Accounting Standard No. 14
(revised). Reportable segments are those that are based on the
Company's method of internal reporting.
The Company has three reportable segments that it
operates and manages as strategic business units that offer
different products and services. The Company measures its
reportable segments based on operating profit (loss), including
inter-segment revenues and corporate expenses that are allocated
to the operating segments and excluding any non-recurring items.
Inter-segment transactions are accounted for at current market
prices. The Company evaluates the performance of its segments
and allocates resources to them based on earnings before
interest, taxes, depreciation and amortization (EBITDA) and
operating income (loss). The accounting policies underlying the
reported segment data are the same as those described in the
summary of significant accounting policies (Note 4).
F-34
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company's three reportable segments and
their principal activities are:
Cellular
—
The Company operates and provides wireless cellular telephone
services in five of the nine Regions in the Mexican market. The
Company serves customers in large metropolitan areas such as
Mexico City, Guadalajara, León, Puebla and Mérida. The
Company's services include "value added services"
such as voice mail and caller identification of incoming calling
numbers.
Long
distance
— The Company
provides long distance services for which its first natural
market is its cellular subscriber base. The Company is also
providing these services to residential and commercial entities.
The Company uses its own switches and transmission equipment and
a combination of fiber optic lines, microwave links, satellite
transmission and lines leased from Telmex to provide these
services.
Other
businesses
— The Company
provides paging, local telephony, microwave links and data
transmission services. It has concessions for PCS services which
started to be provided at the end of 2001.
The tables below present information about
reportable segments for the years ended December 31, 2001,
2000 and 1999 under Mexican GAAP measurement:
Year Ended December 31, 2001
Long
Other
Total
Reconciling
Total
Cellular
distance
businesses
segments
items(2)
consolidated
Revenues — third party
Ps.
5,881,162
Ps.
293,478
Ps.
66,797
Ps.
6,241,437
Ps.
—
Ps.
6,241,437
Revenues — affiliates
3,012,463
632,848
1,378,396
5,023,707
(5,023,707
)
—
Depreciation and amortization
2,475,508
101,916
49,874
2,627,298
(8,073
)
2,619,225
Operating profit (loss)
(419,392
)
(117,818
)
(75,056
)
(612,266
)
555,207
(57,059
)
EBITDA(1)
2,056,116
(15,902
)
(25,182
)
2,015,032
547,134
2,562,166
Total assets
27,683,281
934,973
2,117,069
30,735,323
(14,163,631
)
16,571,692
Capital expenditures
1,541,316
89,482
162,678
1,793,476
—
1,793,476
Year Ended December 31, 2000
Long
Other
Total
Reconciling
Total
Cellular
distance
businesses
segments
items(2)
consolidated
Revenues — third party
Ps.
5,550,534
Ps.
69,566
Ps.
112,785
Ps.
5,732,885
Ps.
(3,175
)
Ps.
5,729,710
Revenues — affiliates
2,773,585
529,206
668,500
3,971,291
(3,971,291
)
—
Depreciation and amortization
2,303,326
90,594
22,797
2,416,717
(7,740
)
2,408,977
Operating profit (loss)
(131,636
)
(123,002
)
(160,486
)
(415,124
)
(8,194
)
(423,318
)
EBITDA(1)
2,171,690
(32,408
)
(137,689
)
2,001,593
(15,934
)
1,985,659
Total assets
26,821,641
1,120,342
2,064,373
30,006,356
(13,531,581
)
16,474,775
Capital expenditures
1,762,368
81,759
306,319
2,150,446
—
2,150,446
Year Ended December 31, 1999
Long
Other
Total
Reconciling
Total
Cellular
distance
businesses
segments
items(2)
consolidated
Revenues — third party
Ps.
4,470,081
Ps.
126,160
Ps.
185,029
Ps.
4,781,270
Ps.
1,701
Ps.
4,782,971
Revenues — affiliates
2,065,321
392,312
509,132
2,966,765
(2,966,765
)
—
Depreciation and
amortization
1,557,521
61,097
9,357
1,627,975
(6,952
)
1,621,023
Operating profit (loss)
101,447
(136,279
)
(81,571
)
(116,403
)
106,336
(10,067
)
EBITDA(1)
1,658,968
(75,182
)
(72,214
)
1,511,572
99,384
1,610,956
Total assets
16,529,401
362,663
817,651
17,709,715
(834,991
)
16,874,724
Capital expenditures
1,817,748
119,396
12,513
1,949,657
—
1,949,657
F-35
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(1)
EBITDA as used by the Company is operating profit
    (loss) plus the sum of depreciation and amortization. The
    Company's reconciliation of EBITDA to consolidated net
    profit (loss) under Mexican GAAP as of December 31,
    2001, 2000 and 1999, is as follows:
Years Ended December 31,
2001
2000
1999
EBITDA
Ps.
2,562,166
Ps.
1,985,659
Ps.
1,610,956
Depreciation and amortization
(2,619,225
)
(2,408,977
)
(1,621,023
)
Other (expense) income, net
—
—
(26,225
)
Integral financing (cost) gain
(317,260
)
(548,539
)
602,357
Equity participation in net gain (loss) of
    associated companies and net gain (loss) on sale of equity
    investments
6,518
(19,647
)
(54,160
)
Assets tax
(146,404
)
(156,335
)
(150,889
)
Minority interest
20,694
16,461
20,400
Profit (loss) from discontinued operations
—
8,865
(1,748
)
Cumulative effect of the adoption of the new
    accounting pronouncements
(6,478
)
—
—
Net (loss) profit for the year
Ps.
(499,989
)
Ps.
(1,122,513
)
Ps.
379,668
(2)
Reconciling items primarily reflect inter-segment
    eliminations and certain non-recurring items.
Note 23 — Significant Differences
Between Mexican GAAP and United States Generally Accepted
Accounting Principles
The Company's consolidated financial
statements are prepared on a Mexican GAAP basis, which differs
in certain significant respects from United States generally
accepted accounting principles (U.S. GAAP).
The reconciliation to U.S. GAAP does not include
the reversal of the adjustments to the financial statements for
the effects of inflation required under Mexican
Bulletin B-10. The application of Bulletin B-10
represents a comprehensive measure of the effects of price-level
changes in the financial statements based on historical cost for
Mexican and U.S. accounting purposes. The principal differences,
other than inflation accounting, between Mexican and U.S. GAAP
are listed below together with an explanation, where
appropriate, of the adjustments that affect consolidated net
income for each of the three years in the period ended
December 31, 2001, 2000 and 1999 and stockholders'
equity as of December 31, 2001 and 2000.
a.     Deferred
income taxes
As mentioned in Note 4m., as of
January 1, 2000, the Company adopted revised
Bulletin D-4. Under the new methodology of
Bulletin D-4, the Company recognized future tax
consequences based on the difference between the financial
statements and tax basis of assets and liabilities —
temporary differences — as of the date of the
financial statements. Until December 31, 1999, deferred
income taxes were provided for identifiable, non-recurring
timing differences (those expected to reverse over a definite
period of time) at rates in effect at the time such differences
originated, and benefits from tax loss carryforwards were not
allowed to be recognized before the period in which the
carryforward was utilized. For purposes of the reconciliation to
U.S. GAAP, the Company has applied Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes", for all periods presented.
SFAS 109 requires an asset and liability method
of accounting whereby deferred taxes are recognized for the tax
consequences of all temporary differences between the financial
statement carrying amounts and the
F-36
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
related tax basis of assets and liabilities.
Under U.S. GAAP, the effect on deferred taxes of a change in tax
rate is recognized in income in the period that includes the
enactment date.
b.     Pre-operating
costs
Under Mexican GAAP, the Company capitalized
certain pre-operating costs, primarily related to the
development of the PCS network. Under U.S. GAAP, pre-operating
costs are expensed as incurred.
c.     Derivative
financial instruments
As mentioned in Note 21, the Company has
entered into interest rate collar agreements to hedge an
aggregate notional amount of U.S.$50,000 of its floating rate
debt. Additionally, the Company purchased foreign-currency
forward exchange contracts, which at December 31, 2001,
hedged a notional amount of U.S.$201,000 in debt. The Company
employs risk management strategies using foreign currency
forwards and interest rate collar agreements. The Company does
not hold derivatives for trading purposes.
As mentioned in Note 4e., effective
January 1, 2001, the Company adopted Bulletin C-2,
which requires that all financial instruments, including those
used for hedging purposes, be recorded in the balance sheet at
their fair value and changes in the fair value to be recorded in
the income statement for each period. Bulletin C-2 also
requires that derivative financial instruments used for hedging
purposes, be recorded in the balance sheet and valued using the
same valuation criteria used to value the hedged asset or
liability. Based on this valuation criteria, under Mexican GAAP
since the hedged liabilities are not carried at fair value, the
Company did not record the derivative financial instruments
related to those hedged liabilities at fair value but rather,
the Company keeps the derivative financial instruments valued at
the exchange rate at the end of the year. Prior to
January 1, 2001, derivative financial instruments were
recorded on a cash basis under Mexican GAAP.
On December 30, 1999 Old Iusacell entered
into a foreign currency hedge utilizing forward-rate contracts,
hedging its exchange rate exposure for up to U.S.$77,000 or
approximately 50% of the principal and interest payments coming
due over the period April 2000 to April 2001.
Under U.S. GAAP, effective January 1, 2001,
the Company adopted SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended
by SFAS 137 and 138. Under SFAS 133, all derivatives
are also recognized on the balance sheet at their fair value.
The Company's derivative financial
instruments are classified as cash flow hedges based on certain
criteria established by SFAS 133. Accordingly, the effective
portion of the gain or loss of the hedged instrument is reported
in accumulated other comprehensive income, and its ineffective
portion is reported in earnings. All of the Company's
derivatives were considered highly effective. The portion of
accumulated other comprehensive income to be reclassified into
earnings over the next 12 months is expected to be
immaterial.
Prior to January 1, 2001, the differential
to be paid or received as interest rates changed was accrued and
recognized as an adjustment of interest expenses at the balance
sheet date. Additionally, the related amount payable or
receivable from counter-parties was included in accrued other
expenses at the balance sheet date.
The cumulative effect on the adoption of this new
accounting pronouncement amounted to Ps.6,478 as of
January 1, 2001.
d.     Gain from the
exchange of non-monetary assets
In 2001, the Company entered into a fiber optic
cable swap agreement with Telereunión to exchange certain
long-distance fiber optic cables fair valued at Ps.142,679.
Under Mexican GAAP, the Company recorded the transaction as both
an acquisition (at the carrying value of the asset sold) and
sale of fixed assets based on the contract amount, resulting in
a gain on the sale of Ps.137,397, for the year ended
December 31,
F-37
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
2001. Under U.S. GAAP, because the assets
exchanged are similar productive assets and, on a net basis, no
cash was exchanged, the transaction does not result in the
recognition of earnings. Consequently, under U.S. GAAP, the
acquisition and sale would not have been recorded.
In December 1998, the Company entered into
another similar fiber optic cable swap agreement with Bestel for
Ps.244,663, resulting in a gain on the sale of Ps.213,063 that
was not recorded under U.S. GAAP.
The cumulative effect of this type of
transactions at December 31, 2001 is Ps.350,460.
e.     Sale-leaseback
transaction with MATC Celular
As mentioned in Note 8c., during 2001 the Company
sold and leased-back 244 non strategic towers to MATC Celular.
Under Mexican GAAP, sale-leaseback transactions
are recognized with the use of the general criteria for capital
and operating lease transactions pursuant to Bulletin D-5,
"Leases". The timing of the recognition of a gain
derived from sale-leaseback transactions should be based on the
subsequent lease classification criteria of the leaseback
portion of the transaction. If the subsequent leaseback is
accounted for as an operating lease, full immediate gain
recognition is allowed whereas if the subsequent leaseback is
accounted for as a capital lease, the gain is deferred and
amortized in proportion with the estimated useful life of the
asset leased. Based upon these criteria, the sale-leaseback
agreement with MATC was recorded by the Company as an operating
lease and consequently, the Ps.307,886 gain was recognized at
the date of the sale.
Under U.S. GAAP, SFAS 28, "Accounting
for Sales with Lease Backs", this sale-leaseback
transactions should be recognized as a single financing
transaction in which any profit or loss on the sale is deferred
and amortized by the seller, who becomes the lessee. As the
Company retained "more than a minor part but less than
substantially all" of the use of the assets leased and the
profit on the sale does not exceed the present value of the
minimum lease payments, the Company deferred Ps.270,879 of the
gain at the transaction date. In addition, as the leaseback
qualified as an operating lease, the Company is amortizing the
deferred gain against the gross rental charged to expense over
the lease term. Consequently, the U.S. GAAP net income for the
year ended December 31, 2001 was decreased Ps.261,124.
f.     Capitalized
interest
Mexican GAAP allows, but does not require,
capitalization of financing costs as part of the cost of assets
under construction. Financing costs capitalized include interest
costs, gains from monetary position and foreign exchange losses.
U.S. GAAP requires the capitalization of interest
during the construction of qualifying assets. In an inflationary
economy, such as Mexico, acceptable practice is to capitalize
interest net of the monetary gain on the related Mexican Peso
debt, but not on U.S. dollar or other stable currency debt.
U.S.GAAP does not allow the capitalization of foreign exchange
losses.
g.     Amortization
of goodwill
Under Mexican GAAP, the Company amortizes
goodwill on a straight-line basis over a period of 20 years.
In July 2001, the FASB issued SFAS 141,
"Business Combinations," and No. 142,
"Goodwill and Other Intangible Assets." SFAS 141
supercedes Accounting Principles Board Opinion
(APB) No. 16, "Business Combinations" and
amends or supercedes a number of related interpretations of
APB 16. SFAS 141 eliminates the pooling-of-interests
method of accounting for business combinations and changes the
criteria to recognize intangible assets apart from goodwill.
SFAS 142 supercedes APB 17, "Intangible
Assets." Under
F-38
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
SFAS 142, goodwill and indefinite-lived
intangible assets are no longer amortized but are reviewed
annually, or more frequently if impairment indicators arise, for
impairment.
SFAS 141 is effective for any business
combination accounted for by the purchase method that is
completed after June 30, 2001. Accordingly, the Company
applied SFAS 141 to the Portatel acquisition and
SFAS 142 to the intangible assets acquired therein.
The provisions of SFAS 142 are required to
be applied to goodwill and other intangible assets acquired
prior to July 1, 2001 starting with fiscal years beginning
after December 15, 2001. The Company expects that due to
the adoption of SFAS 141 and 142, amortization of
approximately Ps.169,833, corresponding to all of the
Company's goodwill at December 31, 2001, will not be
recorded during 2002, which previously would have been.
h.     Effect of
inflation accounting on U.S. GAAP adjustments
In order to determine the net effect on the
financial statements of recognizing certain of the adjustments
described above, it is necessary to recognize the effects of
applying the Mexican GAAP inflation accounting principles (see
Note 4b.) to such adjustments.
i.     Minority
interest
Under Mexican GAAP, the minority interest in
consolidated subsidiaries is presented as a separate component
within the stockholders' equity section of the consolidated
balance sheet. For U.S. GAAP purposes, minority interest is not
included in stockholders' equity and accordingly, is
excluded to arrive at U.S. GAAP stockholders' equity.
j.     Provision for
consolidation of facilities
During the year ended December 31, 1996, the
Company recorded a provision for consolidation of facilities
related to the sale of its then corporate headquarters. Since
the Company has not had the ability to remove such headquarters
from operations, under U.S. GAAP, pursuant to the provisions of
SFAS 121, "Accounting for the Impairment of Long-Lived
assets and for Long-Lived Assets to Be Disposed Of," an
impairment charge would not have been recorded at
December 31, 1996, therefore, for U.S. GAAP, the provision
is reversed.
F-39
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
k.     Net income
(loss) and stockholders' equity under U.S.
GAAP
The following is a summary of net
(loss) profit and stockholders' equity adjusted to
take into account certain material differences between Mexican
GAAP and U.S. GAAP:
Years Ended December 31,
2001
2000
1999
Net (loss) profit under Mexican GAAP
Ps.
(499,989
)
Ps.
(1,122,513
)
Ps.
379,668
Deferred income taxes (Note 23a.)
—
—
(13,885
)
Pre-operating costs (Note 23b.)
(38,383
)
(19,095
)
(78,522
)
Derivative financial instruments (Note 23c.)
—
6,146
7,732
Gain from the exchange of non-monetary assets,
    net (Note 23d.)
(116,091
)
—
—
Gain on the sale lease-back transaction
    (Note 23e.)
(261,124
)
—
—
Capitalized interest (Note 23f.)
96,344
—
—
Amortization of goodwill (Note 23g.)
1,989
—
—
Minority interest (Note 23i.)
7,878
—
—
Effect of inflation accounting on U.S. GAAP
    adjustments (Note 23h.)
288
(253
)
(22,345
)
Net (loss) profit under U.S. GAAP
Ps.
(809,088
)
Ps.
(1,135,715
)
Ps.
272,648
Weighted-average number of shares outstanding
    basic (thousands)
1,495,140
1,396,672
1,286,844
Basic and diluted net (loss) profit per
    share (pesos)
Ps.
(0.54
)
Ps.
(0.81
)
Ps.
0.21
The effect on the loss per share calculation for
the cumulative effect of the adoption of the new accounting
pronouncement was de minimus.
The weighted-average number of shares outstanding
under the Stock Purchase Plan at December 31, 2001 and 2000
was 6,485,124, and 7,695,234 at December 31, 1999. Because
of the anti-dilutive effect, outstanding options during 2001 and
2000 are not included in the computation of diluted
(loss) per share for 2001 and 2000. Dilutive profit per
share for 1999 would not have differed from basic.
As of December 31,
2001
2000
Stockholders' equity under Mexican GAAP
Ps.
7,162,908
Ps.
6,630,900
Pre-operating costs (Note 23b.)
(136,000
)
(97,617
)
Derivative financial instruments (Note 23c.)
(183,876
)
161
Gain from the exchange of non-monetary assets,
    net (Note 23d.)
(329,154
)
(213,063
)
Gain on the sale lease-back transaction
    (Note 23e.)
(261,124
)
—
Capitalized interest (Note 23f.)
96,344
—
Amortization of goodwill (Note 23g.)
1,989
—
Minority interest (Note 23i.)
(117,207
)
(25,443
)
Provision for consolidation of facilities
    (Note 23j.)
19,741
19,741
Stockholders' equity under U.S. GAAP
Ps.
6,253,621
Ps.
6,314,679
F-40
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Provided below is an analysis of changes in
stockholders' equity under U.S. GAAP:
As of December 31,
2001
2000
Opening balance
Ps.
6,314,679
5,846,010
Increase in capital stock
932,355
1,604,131
Net loss for the year
(809,088
)
(1,135,715
)
Other comprehensive income
(184,325
)
253
Closing balance
Ps.
6,253,621
Ps.
6,314,679
l) Discontinued operations
As described in Note 19, in December 1998,
Old Iusacell decided to discontinue the operations of its
subsidiary, Cellular Solutions, which was in the business of
selling accessories for cellular handsets, and consequently,
recognized a gain (loss) from discontinued operations
amounting to Ps.8,865 and (Ps.1,748), for the years ended
December 31, 2000 and 1999, respectively. Under U.S. GAAP,
the closing of this subsidiary does not constitute a
discontinued operation under APB No. 30. Accordingly, the
gain (loss) from discontinued operations is recorded as
operating income (expense).
m) Extraordinary item
Under Mexican GAAP, the utilization of the
Company's tax loss carryforwards in 1999 is classified as
an extraordinary item and presented as a separate line item in
the consolidated income statement. Under U.S. GAAP, the
utilization of the Company's tax loss carryforward is
recorded as a component of the taxation expense.
n) Depreciation
Under Mexican GAAP, depreciation is not included
in the measure of gross profit. Under U.S. GAAP, Ps.1,225,843,
Ps.1,292,146 and Ps.788,430 for the years ended
December 31, 2001, 2000 and 1999, respectively, are
reclassified to cost of sales.
o) Supplementary U.S. GAAP
disclosures
1) Cash flow information
Under U.S. GAAP, SFAS 95, "Statement of
Cash Flows", a statement of cash flows is required, which
presents only movements in cash and excludes non-cash items.
SFAS 95 does not provide any specific guidance with respect to
inflation-adjusted financial statements. However, it is accepted
practice to adjust cash flows from operating activities for the
monetary gains and losses and unrealized foreign exchange gains
and losses.
F-41
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Years Ended December 31,
2001
2000(*)
1999(*)
Operating activities:
Net (loss) profit under U.S. GAAP
Ps.
(809,088
)
Ps.
(1,135,715
)
Ps.
272,648
Adjustments to reconcile net loss to cash
    provided (used in) by operating activities:
Depreciation
1,225,843
1,292,146
788,430
Amortization
1,370,087
1,116,831
832,593
Gain on the sale of towers
(46,762
)
—
—
Equity in (profit) loss of associated
    companies
(2,542
)
19,647
(2,462
)
Gain on sale of equity investments
(3,976
)
—
56,622
Increase in allowance for doubtful accounts
108,432
94,531
105,526
Increase (decrease) in allowance for
    obsolete and slow-moving inventories
66,014
42,408
(5,443
)
Minority interest
(28,572
)
(16,461
)
(20,400
)
Deferred income taxes and employee profit sharing
—
—
164,774
Gain on net monetary position and foreign
    exchange losses
(491,706
)
(433,670
)
(911,511
)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable
(145,240
)
115,707
(645,696
)
Inventories
(56,917
)
(82,115
)
32,157
Increase (decrease) in:
Trade accounts payable and related parties
154,394
7,734
186,749
Taxes and other payable
(262,303
)
153,840
221,584
Income tax
20,694
36,169
(210,683
)
Other
(11,334
)
724
(571
)
Net cash provided by operating activities
1,087,024
1,211,776
864,317
Financing activities:
Proceeds from notes payable and long-term debt
808,073
702,018
4,953,038
Payments of notes payable and long-term debt
(752,605
)
(1,360,242
)
(789,454
)
Decrease (increase) in escrow account
437,104
507,390
(1,442,475
)
Proceeds from related parties financing
76,960
—
—
Effect of equity offerings
932,355
1,604,131
416,786
Net cash provided by financing activities
1,501,887
1,453,297
3,137,895
F-42
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Years Ended December 31,
2001
2000(*)
1999(*)
Investing activities:
Purchase of property and equipment, net
(1,943,364
)
(2,140,344
)
(1,708,907
)
Proceeds from sales of investments in associated
    companies
3,976
(19,602
)
(6,066
)
Proceeds from the sale of towers
358,499
—
—
Acquisition of Portatel, net of cash
(495,320
)
—
—
Purchase of other assets
(738,232
)
(1,021,313
)
(1,263,661
)
Net cash used in investing activities
(2,814,441
)
(3,181,259
)
(2,978,634
)
Translation and inflation effects in cash
(46,093
)
(107,095
)
(39,271
)
Net (decrease) increase in cash
(271,623
)
(623,281
)
984,307
Cash at beginning of year
687,124
1,310,405
326,098
Cash at the end of year
Ps.
415,501
Ps.
687,124
Ps.
1,310,405
Interest paid
Ps.
467,908
Ps.
877,034
Ps.
390,386
Income tax paid
Ps.
114,268
Ps.
140,784
Ps.
102,516
Supplemental disclosures of non-cash activities:
Conversion of debt to equity
Ps.
—
Ps.
—
Ps.
446,805
(*)
Certain reclassifications were made in prior
    years to conform to classifications used in the most recent year.
2) The assets tax charged to the provision
for assets tax for the years ended December 31, 2001, 2000
and 1999 was as follows:
Years Ended December 31,
2001
2000
1999
Assets tax not offset by current taxes
Ps.146,404
Ps.156,335
Ps.150,889
Deferred tax
—
—
13,885
Provision for taxes
Ps.146,404
Ps.156,335
Ps.164,774
3) Deferred income taxes
F-43
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Significant components of deferred income taxes
under U.S. GAAP are as follows:
December 31, 2001
SFAS 109
SFAS 109
applied to
applied to
Mexican GAAP
U.S. GAAP
Balances
adjustments
Total
Deferred assets:
Allowance for doubtful accounts
73,812
73,812
Net operating loss carryforwards and tax credits
1,357,582
1,357,582
Reorganization reserve
24,925
24,925
Gain from the exchange of non-monetary assets
—
115,204
115,204
Pre-operating costs
—
47,600
47,600
Derivative financial instruments
—
64,357
64,357
Gain on the sale lease-back transaction
—
91,393
91,393
Valuation allowance
(309,741
)
(284,834
)
(594,575
)
Deferred tax assets
1,146,578
33,720
1,180,298
Deferred liabilities:
Inventories
Ps.
88,791
Ps.
88,791
Property and equipment
715,552
715,552
Cellular telephones to be amortized
61,239
61,239
Concessions
107,894
107,894
Capitalized interest
—
Ps.
33,720
33,720
Deferred tax liabilities
973,476
33,720
1,007,196
Net deferred tax assets
Ps.
173,102
Ps.
—
Ps.
173,102
F-44
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
December 31, 2000
SFAS 109
SFAS 109
applied to
applied to
Mexican GAAP
U.S. GAAP
Balances
adjustments
Total
Deferred assets:
Allowance for doubtful accounts
77,589
—
77,589
Net operating loss carryforwards and tax credits
1,294,956
—
1,294,956
Reorganization reserve
26,050
—
26,050
Gain from the exchange of non-monetary assets
—
74,572
74,572
Pre-operating costs
—
34,166
34,166
Valuation allowance
(381,386
)
(108,682
)
(490,068
)
Deferred tax assets
1,017,209
56
1,017,265
Deferred liabilities:
Inventories
Ps.
87,286
Ps.
—
Ps.
87,286
Property and equipment
485,836
—
485,836
Cellular telephones to be amortized
256,072
—
256,072
Concessions
7,297
—
7,297
Derivative financial instruments
—
56
56
Deferred tax liabilities
836,491
56
836,547
Net deferred tax assets
Ps.
180,718
Ps.
—
Ps.
180,718
F-45
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
4) Stock Purchase Plan
As mentioned in Note 15, the Company has a
fixed stock option plan, the Stock Purchase Plan. This plan
grants options to purchase New Iusacell common stock at a price
equal to the market price of the stock at the date of the grant.
The Company applies APB 25, "Accounting for Stock
Issued to Employees," and related interpretations in
accounting for its plan. The Company has adopted the
disclosure-only provisions of SFAS 123, "Accounting
for Stock Based Compensation". The Company recognizes no
compensation expense for its Stock Purchase Plan as the exercise
price of the options equals the market price of the stock on the
grant date. If the Company had elected to recognize compensation
expense based on the fair value at the grant dates for 2001,
2000 and 1999, in accordance with the provisions of
SFAS 123, net (loss) profit and earnings per share would
have been changed to the following pro forma amounts:
Years Ended December 31,
2001
2000
1999
Under Mexican GAAP:
Net (loss) profit
As reported
Ps.(499,989
)
Ps.(1,122,513
)
Ps.379,668
Pro forma
(507,367
)
(1,132,767
)
368,163
Basic and fully diluted
As reported
(0.33
)
(0.80
)
0.29
(loss) profit per share
Pro forma
(0.34
)
(0.81
)
0.29
Under U.S. GAAP:
Net (loss) profit
As reported
Ps.(809,088
)
Ps.(1,135,715
)
Ps.272,648
Pro forma
(816,466
)
(1,145,969
)
261,143
Basic and fully diluted
As reported
(0.54
)
(0.81
)
0.21
(loss) profit per share
Pro forma
(0.55
)
(0.82
)
0.20
These results may not be representative of the
effects on pro forma net income for future years.
The Company determined the pro forma amounts
using the Black-Scholes option-pricing model based on the
following weighted-average assumptions:
2001
2000
1999
Dividend yield
0
%
0
%
0
%
Expected volatility
74
%
67
%
71
%
Risk-free interest rate
4
%
14
%
20
%
Expected lives (in years)
4.0
4.0
4.0
5) New Accounting Pronouncements
The FASB recently issued SFAS 143,
"Accounting for Obligations Associated with the Retirement
of Long-Lived Assets", which is effective for fiscal years
beginning after June 15, 2002. The objectives of
SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation
and its associated asset retirement cost.
In 2001, the FASB issued SFAS No. 144
"Accounting for the Impairment of Long-Lived Assets"
(SFAS 144) which supersedes SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed Of" (SFAS 121), and APB No. 30,
"Reporting the Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and
Transactions". SFAS 144 provides new guidance on
(1) the recognition of impairment losses on long-lived
assets to be held and used or to be disposed of and (2) how
the results of a discontinued
F-46
Table of Contents
GRUPO IUSACELL, S.A. DE C.V. AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
operation are to be measured and presented. It
also broadens the definition of what constitutes a discontinued
operation. It is effective for fiscal years beginning after
December 15, 2001.
In April of 2002, the FASB issued SFAS 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections."
As a result, companies will no longer be allowed to classify
gains and losses from extinguishments of debt as extraordinary
items unless they meet the criteria of APB 30. Gain and losses
from extinguishments of debt that have been classified as
extraordinary in prior years that do not meet the criteria of
APB 30 shall be reclassified on a going forward basis. In
addition, SFAS 145 requires that capital leases that are
modified so that the resulting lease agreement is classified as
an operating lease be accounted for under the sale-leaseback
provisions of SFAS 28 or 98, as applicable, instead of SFAS 13.
The provisions of this statement with regard to SFAS 4 will be
effective for fiscal years beginning after May 15, 2002,
and those for SFAS 13 will be effective for transactions
occurring after May 15, 2002.
The Company is presently evaluating the impact,
if any, that these new standards will have on its consolidated
financial statements.
6) U.S. GAAP requires the desegregation of
the account balances as disclosed below. There is no similar
requirement under Mexican GAAP. As of December 31, the
account balances were as follows:
2001
2000
Recoverable taxes and other:
Interconnection fees
Ps.
88,463
Ps.
142,425
Recoverable VAT
321,840
204,624
Other taxes
22,093
60,296
Other
217,878
173,301
Ps.
650,274
Ps.
580,646
2001
2000
Taxes and other payables:
Taxes and rights payable
Ps.
205,595
Ps.
178,413
Interest payable
122,214
164,560
Other
537,583
749,679
Ps.
865,392
Ps.
1,092,652
7) A significant portion of our trade
receivables is represented by a small number of distributors. In
2001, our three largest distributors accounted for 44% and 24%
of our net trade accounts receivables as of December 31,
2001 and 2000. Management has established certain measures to
reduce the risk associated with this concentration such as
certain guarantees and property liens. Management believes that
this distributor concentration will be reduced over time as the
size of our operations grows. However, results of operations
could be negatively affected, at least in the short term, if any
defaults on payment occur with respect to these distributors.
Note 24 — Subsequent
Events
As mentioned in Note 13c., the Montes Urales
property was subject to a lien. On May 29, 2002, the
Company's complaint was resolved in its favor.
Consequently, the lien will be lifted in the Public Registry of
Property.
F-47
Table of Contents
GRUPO IUSACELL
SCHEDULE II — VALUATION AND
QUALIFYING ACCOUNTS
Years Ended 1999, 2000 and 2001
(Amounts expressed in Thousands of Mexican
Pesos (Ps.)
with Purchasing Power as of December 31,
2001)
Balance at
Charged to
Charged to
Balance at
beginning
costs and
other
end of
of period
expenses
accounts
Deductions
period
Allowance for obsolete and slow-moving inventories
1999
Ps.
14,364
Ps.
(5,443
)
Ps.
0
Ps.
0
Ps.
8,921
2000
8,921
42,408
0
0
51,329
2001
51,329
66,014
0
6,587
110,756
Allowance for doubtful accounts
1999
Ps.
85,771
Ps.
105,526
Ps.
0
Ps.
21,487
Ps.
169,810
2000
169,810
94,531
0
42,657
221,684
2001
221,684
108,432
0
119,225
210,891
S-II
Table of Contents
ITEM 19.     EXHIBITS
Documents filed as exhibits to this annual report.
Exhibit
No.
Exhibit
1
.1
By-laws (estatutos) of Grupo Iusacell, S.A. de
    C.V effective April 30, 2002. (incorporated herein by
    reference to Exhibit 1 of Grupo Iusacell's Annual
    Report on Form 20-F for fiscal 2000)
2
.1
Shareholders Agreement dated as of March 30,
    2001 by and among Iusacell, Bell Atlantic Latin America
    Holdings, Inc., Bell Atlantic International, Inc., Bell Atlantic
    New Zealand Holdings, Inc. and Vodafone Americas B.V.
    (incorporated herein by reference to Exhibit 2(a) of Grupo
    Iusacell's Annual Report on Form 20-F for fiscal 2000)
2
.2
Indenture dated as of December 16, 1999
    among Grupo Iusacell, S.A. de C.V., Verizon Communications Inc.
    and The Bank of New York, as trustee. (incorporated herein by
    reference to Exhibit 4.1 of the Registration
    Statement F-4 — Registration
    Number 333-95547).
2
.3
Indenture dated as of July 25, 1997 among
    Grupo Iusacell Celular, S.A. de C.V., certain subsidiaries of
    Iusacell Celular, S.A. de C.V. and First Union National Bank, as
    trustee. (incorporated herein by reference to Exhibit 4.1
    of the Registration Statement F-4 — Registration
    Number 333-37431).
4
.1
Agreement for Equipment, Furnish and Installation
    for Iusacell's Cellular Network, dated as of
    December 10, 1997 among Grupo Iusacell Celular, S.A. de
    C.V., Lucent Technologies World Services, Inc. and Lucent
    Technologies de México, S.A. de C.V. pursuant to which
    Grupo Iusacell Celular, S.A. de C.V. (incorporated herein by
    reference to Exhibit A of Iusacell Celular Annual Report on
    Form 20-F for fiscal 1997)
4
.2
Amended and Restated Credit Agreement, dated as
    of July 25, 1997, as amended and restated as of
    March 29, 2001 among Grupo Iusacell Celular, S.A. de C.V.
    and JP Morgan, as sole Bookrunner and Lead Arranger, and The
    Chase Manhattan Bank, as Administrative Agent and Collateral
    Agent, BNP Paribas, Citibank N.A., The Toronto-Dominion Bank and
    BBVA Bancomer S.A., as Arrangers. (incorporated herein by
    reference to Exhibit 4(b) of Grupo Iusacell's Annual
    Report on Form 20-F for fiscal 2000)
4
.3
First Amendment and Waiver dated as of
    December 7, 2001, to the Amended and Restated Credit
    Agreement, dated as of July 25, 1997, as amended and
    restated as of March 29, 2001 among Grupo Iusacell Celular,
    S.A. de C.V., the lenders party thereto, and JP Morgan Chase
    Bank as Administrative Agent and Collateral Agent.
7
.1
Computation of earnings to fixed charges.
8
.1
List of subsidiaries
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GLOSSARY OF TELECOMMUNICATIONS TERMS
1XRTT:
A member of CDMA 2000 which is a family of
    standards that defines the radio interface allowing a smooth
    transition from CDMA (1S-95) systems. This family of standards
    involve some variants and the services, offerings, such as voice
    and packet data on a single carrier (1XRTT), data only (1X-DO).
Analog:
A transmission method employing a continuous
    electrical signal that varies in amplitude or frequency in
    response to changes in sound, light, position, etc., impressed
    on a transducer in the sending device.
Band:
A range of frequencies between two defined limits.
CDMA:
Code Division Multiple Access, the
    highest-capacity commercial digital standard available. CDMA
    increases capacity by transmitting a large number of
    simultaneous conversations over a single channel, assigning
    unique codes that can be re-assembled at the receiving end.
Cellular A-band:
The range of frequencies used to provide cellular
    wireless service between 825-835 MHz and between 870-880 MHz of
    the radio spectrum.
Cellular B-band:
The range of frequencies used to provide cellular
    wireless service between 835-845 MHz and between 880-890 MHz of
    the radio spectrum.
Channel:
A pathway for the transmission of information
    between a sending point and a receiving point.
Covered POPS:
The number of POPs in a defined area for whom a
    cellular signal is accessible.
CPP:
Calling Party Pays is a cellular telephony
    payment structure in which the party that places a call to a
    cellular telephone is billed for interconnection access, and the
    recipient is not billed for the airtime charges corresponding to
    the call.
Digital:
A method of storing, processing and transmitting
    information through the use of distinct electronic or optical
    pulses that represent the binary digits 0 and 1. Digital
    transmission and switching technologies employ a sequence of
    discrete, distinct pulses to represent information, as opposed
    to the continuous analog signal.
Hertz:
The unit measuring the frequency with which an
    alternating electromagnetic signal cycles through the zero-value
    state between lowest and highest states. One hertz (abbreviated
    Hz) equals one cycle per second; KHz (kilohertz) stands for
    thousands of hertz; MHz (megahertz) stands for millions of
    hertz; and GHz (gigahertz) stands for billions of hertz.
IMTS:
Improved mobile telephone service; IMTS systems
    are analog mobile telephone systems that employ a single
    powerful radio base station to communicate with IMTS mobile
    telephones that are within approximately a 25-mile radius.
LATA:
Local access and transport area; an area in which
    a local exchange carrier is permitted to provide service as
    designated by the 1982 United
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States federal court decree resulting from
    antitrust litigation brought by the United States Department of
    Justice against AT&T corporation.
PCS:
Personal communications services. PCS represents
    a digital wireless communications service with the ability to
    provide features such as voice, video and data applications,
    short messaging, voicemail, caller identification, call
    conferencing and call forwarding.
PCS A-Band:
The range of frequencies used to provide PCS
    wireless services between 1.850-1.865 GHz and between
    1.930-1.945 GHz of the radio spectrum.
PCS B-Band:
The range of frequencies used to provide PCS
    wireless services between 1.870-1.885 GHz and between
    1.950-1.965 GHz of the radio spectrum.
PCS D-Band:
The range of frequencies used to provide PCS
    wireless services between 1.865-1.870 GHz and between
    1.945-1.950 GHz of the radio spectrum.
PCS E-Band:
The range of frequencies used to provide PCS
    wireless services between 1.885-1.890 GHz and between
    1.965-1.970 GHz of the radio spectrum.
Penetration Rate:
A cellular operator's subscribers within a
    defined area derived by total POPs within that area.
POPs:
The population for a particular area based on the
    2000 Mexican census. Population figures for 1996, 1997, 1998 and
    1999 have been calculated by applying the forecast annual
    population growth rate for 1995, as published by the Instituto
    Nacional de Estadística, Geografía e Informática
    (the National Institute of Statistics, Geography and Information
    Processing, "INEGI") to the official 1990 census
    figures. Population figures for 2001 have been calculated by
    applying the forecast annual population growth rate for 2001 to
    the data derived from the 2000 Mexico census. Where the
    population information is set forth without reference to a year,
    the information given is as of December 31, 2001. The SCT
    divides Mexico into nine geographic Regions for the provision of
    cellular service (individually a "Region" and
    collectively the "Regions"). Information regarding the
    numbers of POPs within a given Region has been calculated using
    the national population growth rate, as published by INEGI.
    Information regarding the number of POPs within a given city has
    been calculated using the growth rate for that city, as
    published by INEGI, which may not be the same as the national
    growth rate published by INEGI. The number of POPs in any Region
    or other geographic area should not be confused with the current
    number of users of wireless services in that Region or other
    geographic area and is not indicative of the number of users of
    wireless services in the future.
Roaming:
A service offered by mobile communications
    providers which allows a subscriber to use his or her telephone
    while in the service area of another carrier.
Switch:
A device that opens or closes circuits or selects
    the paths or circuits to be used for transmission of
    information. Switching is the process of interconnecting
    circuits to form a transmission path between users.
TDMA:
Time division multiple access, a standard of
    digital cellular technology, which provides more call carrying
    capacity than analog, but less than CDMA, by interlacing
    conversations on a single channel through time-sharing methods.
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SIGNATURES
Pursuant to the requirements of Section 12
of the Securities Exchange Act of 1934, the registrant certifies
that it meets all requirements for filing on Form 20-F and
has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GRUPO IUSACELL, S.A. DE C.V.
By:
/s/ PETER H. BURROWES
Peter H. Burrowes
President and Director General
By:
/s/ RUSSELL A. OLSON
Russell A. Olson
Executive Vice President Finance, and
Chief Financial Officer
Date: June 28, 2002
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